Comprehensively, the two organisations share almost similar strategies. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. To meet the demand, management focuses on maintaining enough flights every day. Not sure if you can write a paper on Managing Corporate Reputation the Case of Ryanair by yourself? To expand its customer base, the company tried to please all their customers by trying to meet the customer needs of every type of market in the industry (Malighetti et al. 4 Easyjet non-current assets 2022 Furthermore, the no-frill strategy works by eliminating in-flight services to lower operating costs. This is the biggest market share in the European low-cost airline sector. 2006). External factors like increasing oil price can severely impact fare structure since the fare is already low. Ryanair in particular has had a major role in the development of secondary and regional airports in continental Europe. (Sorenson, 2005, p. 56) Threat of substitutes Unlike other industries, this factor is less applicable in aviation industry. 46%, 13. Most of its income stems from selling flight tickets and the add-ons associated with them. Therefore, the company decided to use secondary airports, where their customers would get efficient services. WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned Social Airline profits are highly dependent on the behavioral and demand patterns of customers. Web1759 Words. The low-cost airline sector has been a ruthless industry for aviation players. Ryanair is currently looking at operating 5% more flights this December than it did in 2019, though this may still change. 3. Web. They have earned more incomes and have flown more people than ever before. Differentiating services for airlines is not viable for many primary airports. Ryanair and EasyJet focus on low fares thus compromising on customer services. 2014, Ryanair: Strategy Report. We will write a custom Essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) specifically for you for only 11.00 9.35/page. assume youre on board with our, Financial Analysis on Galaxy Entertainment Group, https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/. 2006). Researchers such as Kim and Mauborgne (cited in Thomson & Baden-Fuller 2010) have always supported a differentiated strategy, but these developments have proved them wrong. EasyJet has earned a Net Interest margin of 7% as compared to Ryanairs 6% in the financial year 2012 indicating that EasyJets utilization of assets is better than that of Ryanairs. The two firms have witnessed a decline in gross margin. Ryanair also focuses on faster pre-flight preparation; this minimizes the grounded time of aircraft (Hoffman, 2007, p. 6). WebThe seats don't recline and have a width of 17 inches and a pitch of 30 inches. Regular review is done by management to monitor demand of flights (Ryanair: Annual reports and financial statements 2010, pp. easyJet financial profile is strong, leaving capacity for taking on further debt, it has a strong working capital, and an attractive current ratio 169. You may use it as a guide or sample for Copyright 2023 - IvyPanda is operated by, Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay), EasyJet: more aircraft come in as more cash to shareholders goes out, Alliance Supermarket' Point-of-Sale System, Caterpillar Company Analysis Using Porters 5 Forces Model, An Investment Analysis of EasyJet on Behalf of a Pension Fund, EasyJet Company: Strategic Management and Business Policy, Operations and Process Management of EasyJet, Ryanair and easyJet Competitive Positions, Ryanair and easyJet Value for Shareholders, Macbeth & Frankenstein: Compare & Contrast, Nationalism Versus Capitalism: Compare & Contrast, Organisational Design and Performance Management. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." In doing so, a company tends to improve its earnings per share (EPS). However, because it could not protect this strategic approach from duplication by other airline companies, it lost a significant market share to other companies, such as Easyjet. EasyJets routes within the EU boundaries face stiff competition from other low fare airlines like Jet2, BMI Baby, Ryanair. & Stredwick, J. Researchers say when the airline adopted this strategy, it succeeded because it was a blue ocean strategy no other airline had adopted this strategy before (Ryans 2009). News & Analysis; Financial Trading Blog; 03-Oct-17; Financial Trading Blog. Over the last four quarters, easyJet's revenue has decreased by 48.8%. 22%, 10. Their endeavor to cut costs also result in doing way with personal one-to-one interface with customers. While EasyJets net worth has consistently witnessed growth, albeit as a percentage of total assets, the net worth of Ryanair has in fact shrunk percentage wise from year 2010 to year 2012. PESTEL analysis helps to assess the prospects of expansion and the risks involved. Also, lower ratio means the two airlines have improved profitability in 2012. Vertical analysis measures all the items in terms of total revenue in the income statement and total assets in the financial position statement. Both airlines also have similar performance indicators in the aviation sector. writing your own paper, but remember to Copyright 2023 service.graduateway.com. Ryanair is not much affected by buyers bargaining power since airline customers are scattered throughout Europe and no single customer makes bulk purchase of airline tickets. Headquarter of the company is situated at Dublin Airport. PESTEL analysis, Porters 5 forces, a summary strength and weakness analysis, various key financial ratios for comparison and eventually conclude by giving a general recommendation of findings. Analysis of the financial results reported by both airlines shows that 1 phyneas 2 yr. ago Haven't flown Easyjet, but Ryanair is fine as long as you read the rules and know what you're getting and what you aren't. Ryanairs working capital needs as a percentage of total assets has been consistently around the 15% mark whereas for EasyJet it has been 5. Horizontal analysis Comparing the sales, operating profit (O. P) and net profit (N. P) of EasyJet and Ryanair it can be seen that all the three elements have witnessed substantive growth between fiscal year 2009-2010 to fiscal year 2011-2012. As such, low fare airlines are regarded as inferior in the entire aviation industry. This affirmation aligns with the goal of Ryanair, which is to firmly set up itself as Europes leading low-fare scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service (Freire 2014, p. 4). Therefore, the takeoff costs, additional customer expenses, and meal costs as reduced. Ryanair plans schedules for aircrafts in the manner that they stay in air for longer periods thus avoiding loss incurred from grounded aircrafts. 14, no. The unstable political scenario in the Middle East is in a perpetual war like condition. According to Dobruszkes (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. While the total revenues for Ryanair has grown at a steady and faster pace than EasyJet, the passenger revenue as a percentage of EasyJet is far higher than that of Ryanair. This is because globalization has enhanced alliance between nations for trade, technology, labor etc. This restructuring affirmed the views of Mennen (2005) who said a corporate strategy should have more value as a holistic entity as opposed to the sum of its parts. Financials. IvyPanda. Furthermore, since the airline uses paperless booking, customers can easily buy their tickets and walk to the security gate without enduring any other sign-in rules. This makes EasyJet the second best low fare airline in Europe, second to Ryanair. 9 billion during 2011 and to Euro 3. 0% increase in total assets between 2010 and 2012. This paper attempts to financially analyze and compare the two airlines. The net worth as a percentage of total assets for the years 2010, 2011 and 2012 have been 37. The lower the ratio, the better. Choose skilled expert on your subject and get original paper with free plagiarism For a long time, Easyjet has branded itself as a committed airline that strives to optimise customer experience, always. (Appendix, Graphs 1 & 2). 3.10 Peer 18 February. All these factors can severely impact Ryanair. Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). Analysis. By doing so, it believes that its customers can get around to where they are going in good time. Web. This target can be fulfilled with constant developments and widening of its low-fare services, without ignoring efficient operational services. Its long thrived on an unambitious reputation for being better than Ryanair, but it came close to losing even that shabby crown in the travel chaos of spring 2022. At first Lastly, in Europe, too much competition in the low-cost airline sector offers minimal profit margins for existing players in the industry. Ryanair has had no air accidents with casualties till date. Also, there are speculations that oil supply all over the world will decline as oil production will reach optimum level and there will be need for new sources of oil. The emphasis must be on cost-cutting strategies and expansion of route network. The recent availability of price comparison websites have increased the bargaining power of buyers especially between two low fare airlines like EasyJet and Ryanair. 1, pp. In case of EasyJet, the Gross Income ratio has improved from 0. EasyJet EasyJets strength lies in its strategically low fare air service. 16 in 2012 for EasyJet and whereas 0. 2005, Business Environment: Managing in a Strategic Context Chartered Institute of Personnel and Development, CIPD Publishing, New York. In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). High tax rates on aviation industry affect these airlines since they strive to keep their fare low. Both airlines have perfected this strategy by introducing new price reduction measures, such as paperless booking. Wallach, B. This in turn helps them to keep the fare down and become competitive. In tandem, the net worth of the company too has registered healthy growth from GBP 1500 million to GBP 1794 million between 2010 and 2012. There has been a tremendous growth in the European aviation industry in last few years, and the likes of Ryanair and EasyJet have emerged as dominant players in the European market. Ryanair does not take the services of primary airports to avoid high airport charges and opts for regional airports. EASYJET PLC : Forcasts, revenue, earnings, analysts expectations, ratios for EASYJET PLC Stock | EZJ | GB00B7KR2P84 . professional specifically for you? However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. WebAn Analysis and Assessment of easyJets Strategy and Options 45 3.5.3 Leasing Costs Leasing costs are an important profitability driver for airlines 128.Over the review period, easyJet decreased its leasing costs from 3.4% of total revenues in 2010 to 2.7% in 2016. Retrieved from https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/, EasyJet emarketing strategies and its implementation Analysis, Competitive strategy that Easyjet have utilised Analysis, The Low Fares Airline Ryanair And The Five Forces Analysis Business, Ryanair Strategic Analysis And Recommendations For The Future. Easyjet relies on the low-cost strategy because it believes that it cannot successfully compete with large aircraft carriers because they would use their economies of scale to crash the competition. While Easyjet flies to Leonardo da VinciFiumicino Airport, which is close to the city, Ryanair flies to CiampinoG. Its strategy was to steal customers from dominant players in the airline industry by offering lower ticket prices compared to its rivals. Revenue WebRyanair in comparison to Easyjet has increased its turnover to 2,171 million (2008) This factor is more applicable on EasyJet since it is a low fare airline and availability of other low fare airlines on same route can be a threat to EasyJet. The primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. They cut down staff costs to the bare minimum necessity and as such do not provide for staffs at the reception or ticketing. More recently, Ryanair has reduced the number of flights that travel over German routes because of the new eco tax imposed by government which can drastically reduce the level of profit. It is a key matter for EasyJet. However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. ensure the integrity of our platform while keeping your private information safe. Stock of the day 03/10/2017 easyJet PLC news of its CEO search and an idea of how the firm may benefit from Ryanairs recent troubles and the collapse of Monarch Airlines. Ryanair and EasyJet have concentrated their corporate strategies on the cost leadership model because they both strive to become the best companies in the low-cost market segment. For example, Easyjet has maximised its productivity by operating in airports where it enjoys market leadership (CAPA 2014). February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. In the beginning of 2011 the Board of EasyJet decided to start the practice of dividend payments during profitable phases without ignoring the fact that the company always needs to have a strong financial base with a strong balance sheet. To attract more customers EasyJet must also concentrate on designing user-friendly websites for easy booking experience. Since EasyJets mission is to provide air services at low costs, high fuel price can adversely affect the economic viability and structure of the company. Although both the airlines have witnessed growth in operating expenses between year 2010 and year 2012, the operating profit margin of EasyJet has shown greater improvement over that of Ryanair. Any air disaster even if with other airlines can affect Ryanair since people will start believing low fare airlines compromise on safety measures in order to cut costs (Sorenson, 2005, pp. For example, it has focused on improving its performance in many routes where Easyjet does not service (Easyjet operates in 702 routes, while Ryanair operates in 1,600 routes) (CAPA 2014). The growing rate of employment can have both positive and adverse effects on EasyJet and Ryanair. WebEasyjet Financial Ratios for Analysis 2014-2023 | EJTTF. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Hence Ryanair needs to consider labor markets and government regulations of both countries. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of a business. It was established in the year 1995 by Sir Stelios Haji-loannou with the purpose of providing scheduled air services at low costs. Similar to other low-cost carriers, the airline also had no in-flight meals and a rapid turnaround. This view affirms the opinions of researchers who say price leadership is pivotal to creating market dominance, compared to cost leadership advantages (Mayer 2008). Thompson, J. Their no frills strategy has been a core tenet of their low-cost strategy because both airlines do not accommodate passenger meals, pre-arranged sitting arrangements, or paper-based ticketing services (Malighetti et al. 81%, 7. Raccomandazioni degli analisti su EASYJET PLC: 27/04: easyJet plc: JPMorgan cambia rotta e passa a un giudizio Neutral Chief Financial Officer & Director: Stephen Alan Michael Hester 4 601: SINGAPORE AIRLINES LIMITED: 5.06%: 28 092: AIR CHINA LIMITED: 0.86%: 21 445: DELTA AIR LINES, INC.-0.33%: 21 317: RYANAIR (2016, Oct 07). This is IvyPanda's free database of academic paper samples. However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. 2009, Beating Low Cost Competition: How Premium Brands can respond to Cut-Price Rivals, John Wiley & Sons, London. In EasyJet air travel there is no arrangement for free meal services in flights that are not longer than 2 hours (EasyJet Airline Company Limited, n. d. ). It operates almost 1,000 short-to-medium-haul routes in and around the continent. IvyPanda. 56% respectively. In this case, Ryanair does better than EasyJet. Evidence of this fact emerges in Paris as a common destination for both airlines. 40, loc. The first ever flight of this company had its route from Luton to Edinburgh and Glasgow. If the oil price increases then it will be difficult for EasyJet to maintain its policy of providing air services at low costs. It also uses single type of aircraft which is Boeing to save on training costs of flyers (O Cuilleanain, et al, 2004, pp. 76%. In their effort to standardize all activities and primarily maintenance of aircrafts, RyanAir and EasyJet like all other low fare airlines buy standard configuration identical aircrafts with a high density seating. In Europe, major airline companies, such as Flybe, Wizz Air and Aer Lingus, dominate this space (Dobruszkes 2006). In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of Ryans, A. Mennen (2005) says it is important for low-cost airlines to adopt a low-cost structure if they want to create value for their shareholders. Environmental Since UK has a saturated market for air travel and prospect of growth is limited, therefore EasyJets focus must be on the continental and Eastern European market. 16 over the same period. EasyJets net profit (after tax) has been 6. As such EasyJet has the advantage of providing low fare which will be difficult for new entrants to offer, and also EasyJet has a goodwill attached to its name which is something a new entrant will take years to replicate. However, this scenario has changed in recent times because of availability of price comparison websites like Orbitz, Travelocity, MrJet or Priceline which allow customers to compare air fares and customer services of different airlines (Sorenson, 2005, p. 65). For example, it has stolen customers in the business class segment (Malighetti et al. Its high seat density arrangements on board allow optimum use of aircrafts. In the last three financial years both these airlines Ryanair and EasyJet have shown good performances financially and otherwise. Low fare can be an advantage for EasyJet but airline customers often emphasize more on comfort and services to cost factors both of which are strong elements in high fare airlines. The database is updated daily, so anyone can easily find a relevant essay example. This strategy emerged after learning that many flag carriers use large airports, such as Heathrow, thereby limiting its competitiveness on this platform. For more visit Lions Lions Financial Neil Sorahan Directeur financier de Ryanair 2014.10 - aujourd'hui Wizz Air et EasyJet, RyanAir dessert prs de 4 fois le nombre de passagers que chacun de ces concurrents. 1, pp. The aviation industry also gets influenced by volatilities in international currency markets. British multinational low-cost airline group headquartered at London Luton Airport. IvyPanda. Concisely, Easyjet trails Ryanair air by commanding 31% of the market in the low-cost Airline sector (Air France 2011). A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies.

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