Ryanair: a Low-Cost success story

 

During the couple days off that we had during the holidays, I went back to France to see my family. While looking at several options that I could choose from to go back home, many were way too expensive for my student budget: with usual airlines offering prices going from 250 euros and above, I could not imagine paying that amount of money! I thus decided to use Ryanair, which is one of the most well-known low-cost airlines in the world, and my wallet can now thank me for the few pennies I saved!

 

ryanair-aircraft-12

 

How do they do that? You ask (I ask myself that too… 😉 )

 

Well it’s easy, they became the best player in logistics in the airline industry. First of all, they managed to master inbound logistics. Indeed, they managed to take off and to land from smaller airports with lower landing fees. For example, in Brussels, the company mostly lands in Charleroi Airport rather than in Zaventem Airport (which is closer to the capital). This also helps the company to reduce their costs, and thus to offer cheaper flights.

Furthermore, they managed to create an efficient operation system. Indeed, through a fully automated system that enables customers to book their flight without the help of employees, the company managed to significantly reduce labor costs. They also managed to drastically reduce the costs by removing every unnecessary items that we could find on regular airlines: in person check in, food, drink, Wi-Fi, entertainment, luggage etc. Every added features will be paid by the customer.

Using outbound logistics, they realized that they did not need to rely on travel agency, as this would increase the price offered to clients because of the commissions that would have to be paid. The only way someone can buy a ticket from Ryanair is through their online platform. Ryanair also focuses on short turnaround times (TAT) (http://economics-files.pomona.edu/jlikens/seniorseminars/likens2013/reports/ryanair.pdf) : this means that every plane must be in the air most of the time, as when it is on land, the company loses money.

Ryanair has also been able to secure a strong partnership with its suppliers, such as Boeing. In March 2018, they had a fleet of 429 Boeing 737, which they bought in batches in order to reduce the costs. (https://www.airline-suppliers.com/tag/ryanair/)

 

Ryanair is thus a success story of the low-cost airline industry thanks to its performant strategy in inbound logistics, operations management and outbound logistics.

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