Thomson, N. & Baden-Fuller, C. 2010, Basic Strategy in Context: European text and cases, John Wiley & Sons, London. JP Morgan's analyst Harry Gowers upgraded the rating on the company from Sell to Neutral. Ryanairs dependence on regional airports gives it a situational disadvantage while EasyJet compromises on low fare by using the facilities of primary airports. For example, it has stolen customers in the business class segment (Malighetti et al. Concisely, Easyjet trails Ryanair air by commanding 31% of the market in the low-cost Airline sector (Air France 2011). Ryanair and EasyJet focus on low fares thus compromising on customer services. 11 in 2010 to 0. In response to the new eco tax imposed by the government in Germany, Ryanair has reduced the number of flights that travel over German routes. There also exists internal rivalry between low fare airlines like Ryanair and EasyJet. Also, profitability of low fare airlines like Ryanair depends on the customers perception on low fare services. Web. 1 PESTEL Analysis for EasyJet Ltd. However, the company changed this strategy after realising it needed a differentiation strategy that would set it apart from its competitors. | April 27, 2023 This can pose stiff competition for Ryanair. EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. Increased incomes make people quality, customer service and comfort conscious during flights. We use cookies to give you the best experience possible. Your privacy is extremely important to us. Natural calamities and also human events like flight accidents and terrorist attacks can drastically reduce flight demand as mode of travel. Based at Londons Luton Airport, the company travels to more than 700 destinations and has a market presence in more than 30 countries (Mayer 2008). This makes EasyJet second best low fare airline in Europe after Ryanair in terms of cost. Specifically, in Q1 2022's revenue was $910M; in Q2 2022, it was $2.1B; in Q3 2022, it was $2.2B; in Q4 2022, easyJet's revenue was $1.8B. The primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. As far as information technology goes Ryanair operates a multi-featured website for selling flight tickets. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. 22%, 10. Retrieved from https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. The net income after tax for years 2010, 2011 and 2012 as a percentage of total revenue of the respective years has been 10. The success of these two airlines is primarily owing to innovative approach to business as against the age old practices and conventions of their older full fare rivals. 0% increase in total assets between 2010 and 2012. It created a huge demand for the airlines services because it attracted price-conscious customers who would have chosen alternative modes of travel, or failed to travel at all, because of the high costs of air tickets. Political. Comprehensively, the two organisations share almost similar strategies. Comparatively between the two airlines, Ryanair has outperformed EasyJet in the given period between 2010 2012 in terms of Gross Income as a percentage of Total Revenue This indicates that Ryanair is more efficient in terms of cost control and earnings margin. 1. With the help of this analysis companies design strategies to reduce risks attached to development and expansions beyond the borders of the country of origin. WebThis report 'Two Major Airlines EasyJet and Ryanair' aims at providing a complete overview of the two major airlines of Europe, EasyJet, and Ryanair. The constant threat of a Middle East (Iran) war can adversely affect the oil price. 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. 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. Contact us: [emailprotected]. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. This makes EasyJet second best low fare airline in Europe after Ryanair. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." Ryanair. Short distance routes are also limited to low-cost airlines because European Union (EU) policies favour train services as opposed to airline services (Air France 2011). A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. Finally, EasyJet must convince people that it is the safest mode of air travel at lowest cost. One common economic factor that affects a low fare airline like Ryanair is overbooking by customers and their compensation later on. Today EasyJet has in its service 175 aircrafts over 400 routes in 27 countries. Ryanair mainly flies to secondary airports, while Easyjet flies to primary airports. Here too, Ryanair marginally outperforms EasyJet over the three years of study. Ryanairs operating profit as percentage of total revenue for years 2010, 2011 and 2012 have been 13. 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 low-fare services of Ryanair are structured in the manner to entice passengers who travel for leisure or business. report, Comparative Financial Analysis of Easyjet & Ryanair. Ryanair plans schedules for aircrafts in the manner that they stay in air for longer periods thus avoiding loss incurred from grounded aircrafts. Furthermore, a comparison between Ryanair and other major low-cost model airlines such as easy Jet revealed better corporate reputation and perception of easy Jet, which impacts negatively on Ryanairs competitiveness. writing your own paper, but remember to for only $11.00 $9.35/page. Then there is also a growing interest in multiple product features, product quality and service which may cause people to try other airlines merely to get a different kind of experience (Muller, 2011, p. 39). Need a custom essay sample written specially to meet your The commitment and dedication towards work that stimulates the employees of EasyJet kept its workforce going and provide uninterrupted world class service. To cope with these challenges, both airlines have one dominant strategy that hinges on three factors low costs of operations, low fares, and low frills. Aviation industry is largely ruled by political, economical, environmental and technological frameworks. Massive flight cancellations led to Euro 50 million loss for Ryanair. Higher the gearing, higher is the risk to investor. This clearly establishes that EasyJets funds management vis-a-vis trade, credit and cash cycle is far superior to Ryanairs. The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. For instance, there are two major aircraft manufacturers namely Airbus and Boeing. In case of potential new entrant in the low fare segment, the strategy adopted by EasyJet and Ryanair thwarts competitions and renders entry of new companies financially unviable. Nearly three times as many of its flights were cancelled at the last minute as with Ryanair and Jet2. Ryanair is currently looking at operating 5% more flights this December than it did in 2019, though this may still change. In this case, both EasyJet and Ryanair have a witnessed a declining trend in the ratio from 2010 to 2012. To do so, the company uses a simplified airline network. The two firms have witnessed a decline in gross margin. EasyJet has done it exceptionally well in comparison to Ryanair. WebEasyjet Financial Ratios for Analysis 2014-2023 | EJTTF. This understanding shows where the corporate strategies of both companies converge. Although this is a strategy for keeping fares low by cutting cost, people are denied extra service value and this may affect the demand pattern of Ryanair flights. WebDiscover how Lions Financial provides expert analysis and risk management for Ryanair investments. Choose skilled expert on your subject and get original paper with free plagiarism Ryanair's operating profit grew by 40% to EUR1,460 million, and revenue increased by 16% to EUR6,536 million. The total liabilities have grown by 21% between 2010 and 2012 (non-current liabilities by 23% and current liabilities by 17%). Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). Technology Ryanair needs to keep itself updated on the technological innovations that can lead to enhancement of airport service efficiency, security efficiency and cost efficiency. 40, loc. It also realised that its low-cost pricing strategy could not sustain its business because the margins made from such a strategy were low (Malighetti et al. The top 10 competitors average 11.6B. The company brands itself as Europes only ultra low-cost airliner because it is the regions largest low-cost airline company (Mayer 2008). Of importance, experts say the European low-cost airline sector is more brutal for low-cost airline companies than the American market because both markets have different structures (CAPA 2014). Regular review is done by management to monitor demand of flights (Ryanair: Annual reports and financial statements 2010, pp. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. A business enterprise before its establishment needs to study the forces that will impact its profitability, and a tool for such assessment is Porters 5 forces analysis, which includes bargaining power of customers, bargaining power of suppliers, threat of new entrants, threat of substitutes and competitive rivalry. 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. EasyJets net profit (after tax) has been 6. EasyJet is a British airline company whose headquarter is based at Londons Luton Airport. Automobiles, bus services and railways can act as substitutes but where time saving is important, there can be no substitute to airlines. British multinational low-cost airline group headquartered at London Luton Airport. However at the end, EasyJet with low working capital and yet maintaining a growth trend in profitability, lower gearing/leverage as opposed to Ryanair, consistent positive growth in net worth and, the fact that it remains competitive in spite of utilizing full service airports and providing free refreshment for long haul flights, EasyJet emerges a better buy for long term growth and potential. There are some infrequent environmental issues that can disrupt services of airlines like volcanic eruptions, pandemics ike swine flu and government regulations like reduction of carbon emissions. In case you can't find a relevant example, our professional writers are ready 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. Comparatively, Ryanair flies to Beauvais-Till Airport, which is almost one hour away from the city (Ryans 2009). 59-60). 1, pp. Therefore, a key part of their strategy is meeting the minimum contractual obligations required by airlines to their customers. All rights reserved. As such, low fare airlines are regarded as inferior in the entire aviation industry. 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. In case of EasyJet, the Gross Income ratio has improved from 0. On the 28th of last month, it said that it could realistically raise this sum money through the sale of its aircraft. 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. 3 Easyjet non-current assets 2021 Fig. & Williams, G. 2012, Air Transport in the 21st Century: Key Strategic Developments, Ashgate Publishing, Ltd., New York.
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