Ryanair and EasyJet Firms’ Strategies Case Study

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The air travel sector has been struggling for decades, with numerous high-profile merges indicating the market’s shifts caused primarily by rising fuel prices and several recessions. Despite the bankruptcies and failures of full-service carriers (FSCs), low-cost carriers (LCCs) slowly continue to become more dominant in various regions, namely Europe. As of 2014, the profits of Ryanair and EasyJet, two of the most prominent LCCs in Europe, were €523 million and €474 million accordingly. Apart from such massive profits, the rate of growth these enterprises have managed to achieve is truly remarkable. Ryanair is the pioneer of a successful low-cost airline model and now has a 30 percent market share. While the company certainly enjoys great profitability and a dominant market position, it faces the risk of caving in because of EasyJet, which now has a market share of 20 percent. EasyJet is a smaller LCC, which is less profitable, yet more attractive to shareholders. Data demonstrates €10,000 invested in EasyJet in 2000 now amounts to €62,510, which is a far larger figure than €33,742 in the case of Ryanair. Thus, it is apparent EasyJet generates more value for the shareholders.

In regards to the carriers’ strategies, they are rather similar as they both utilize the low-cost model. Ryanair and EasyJet target the same customer segment with relatively high price sensitivity and no regard for additional comfort during flights. Both carriers offer frequent flights with no layovers, flying passengers point to point, which saves a lot on transferring baggage. The strategies of both airlines are to cut costs as much as possible by reducing staffing needs and excluding food or beverage options during flights. Not offering food during a 3-hour flight seems reasonable to passengers, yet saves the carriers much money since they do not have to spend on the food itself as well as cleaning afterward. In addition, both EasyJet and Ryanair fly only one or two types of planes. For Ryanair, the aircraft of choice is Boeing 737, whereas, for EasyJet, Airbus 320 and Airbus 319 are the top choices. Having all the planes be the same ensures that the carriers cut costs on maintenance and staff training. Furthermore, both airlines are notorious for cost reductions in terms of inflight merchandise, referrals, insurance, and baggage.

Despite all the aforementioned similarities, the strategies of Ryanair and EasyJet have differences as well. Firstly, EasyJet aims to cater to other customer segments as well, individuals with lower price sensitivity and a higher need for comfort. In order to target them, the carrier offers the features Ryanair seems to be neglectful of, including assigned seating, additional legroom, and in-advance seat bookings. Secondly, EasyJet chooses to and from primary airports, whereas Ryanair sticks to secondary airports. While this way Ryanair cuts costs, EasyJet provides passengers with an opportunity for flights to and from well-connected airports with a great infrastructure that are usually situated not far from major cities. Thirdly, EasyJet adopts a differentiation strategy by focusing on the quality of its customer service. In contrast to Ryanair, EasyJet invests financial resources in training its staff to be as friendly and helpful as possible. Such a strategy seems to be extremely effective as EasyJet now flies out more than 65.3 million passengers. All in all, it is evident that EasyJet attempts to move a bit closer to the FSC model while still offering the passengers the benefits of the low-cost one.

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