In line with this strategy, the company also introduced value-added services to its core strategy. This included legal expenses for its no compensation policy. 07%, 5. EasyJet is also affected by other environmental issues like inflation, per capita income, gross domestic product and government taxes. EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. 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. There are many low-cost airlines in the world. Employees are not engaged in any one particular activity, they do various jobs thus reducing the need of multiple personnel. Revenue WebAdditional ESG information - Financial Year 2021; Investors. easyJet vs Ryan air 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. Although Ryanair has hinted at loyalty programmes, the airline doesnt 500 At this stage it is noteworthy that the total revenues for EasyJet have consistently grown year upon year by 16% and 30% over 2010 base year. Ryanair has also focused on creating value for its shareholders by focusing its strengths on markets that it enjoys dominance. While Ryanair does not provide any free refreshments irrespective of distance or duration travelled, EasyJet on the other hand provides free refreshments and meals for all flights of more than 2 hours duration. However, EasyJet does not compete with high fare airlines whose customers are mostly business or elite passengers who prefer added comforts and services during flight. Nearly three times as many of its flights were cancelled at the last minute as with Ryanair and Jet2. 2005, Strategic Management: Awareness and Change, Cengage Learning EMEA, London. Furthermore, like Ryanair, Easyjet also bases its corporate strategy on Southwests business model. However, easyJet, in a financial report, says that 99.8% of flights are operated regardless. With rising employment, the purchasing power of people also improves. While easyJet was a profitable business prior to the pandemic, it hasnt been profitable since. Partly, this is why the company commands the highest market share in the European low-cost airline market segment. Another key aspect of its strategic competence was high aircraft use (Thompson 2005). 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). EasyJet is a British airline company whose headquarter is based at Londons Luton Airport. The highest 12-month target stood at 900p while the lowest was 460p per share. EASYJET However, EasyJet has a policy of serving free refreshments to customers for long haul flights but this service is not available in Ryanair. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. 77% respectively. Registered address: Gabriela Narutowicza Street, No. WebDiscover how Lions Financial provides expert analysis and risk management for Ryanair investments. A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. Figure One: Position of Easyjet and Ryanair in the global low-cost airline market (Source: Elderman 2014). Financial Summary Headline loss before tax of 1,136 million (2020: 835 million loss) ahead of consensus. Copyright 2023 service.graduateway.com. However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. The emphasis must be on cost-cutting strategies and expansion of route network. 91% and 7. Also, lower ratio means the two airlines have improved profitability in 2012. The dominant market share enjoyed by Ryanair also mirrors its high customer traffic because, compared to Easyjet, the company carries 4.5 million passengers, annually, while its rival carries 3,000,000 passengers annually (Dowling 2010). to help you write a unique paper. Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. Financial Decision Making, Easyjet in comparison with While Ryanair was better hedged its fuel expenses raised 560% versus They could compare with other investment opportunities by NPV method. EasyJet keeps its focus on environmental awareness programs while making any future strategies. easyJet PLC has a consensus rating of Hold with an average target price of 12.42. The websites they have need to be updated regularly so that customer experience is enhanced and need of travel agents get reduced to save costs. Ryanair. WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned (2023) 'Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)'. Ryanair mainly flies to secondary airports, while Easyjet flies to primary airports. easyJet Ryanairs operating expenses have increased by 43% from 2010 to 2012 and EasyJets by 27%. Ryanair allows 10kg while EasyJet only 8. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost airline operating out of the UK, and is the second-largest budget airline behind Ryanair in Europe by number of passengers carried. The average easyJet stock price forecast from analysts was set at 734.5p per share resulting in a potential 34% gain from its last closing price of 546.20 (as of 1 March) if that target is hit. Bargaining power of buyers Usually a number of aircrafts from various airlines fly on the same air route thus increasing the bargaining power of buyers because of availability of alternatives. Ryanair In EasyJet the ratio has shown a reduction from 2011 to 2012, while in Ryanair it increased gradually from 2010 to 2012. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of a business. 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. Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). Since its low-cost strategy started increasing sales, Ryanair has always branded itself as a low-cost airline. 3 billion in the year 2012. Relative to this development, Ryanair has also adopted a red ocean strategy where it steals customers from other market segments (predominantly the customers of major airlines) (Thomson & Baden-Fuller 2010). WebThis case study "The Strengths and Weaknesses of ryanair" is about the analysis and external factors that include economic, social, cultural, technological and political, and industry analysis, recommendations are made on how Ryanair can maintain its strengths and improve on of weaknesses. usiness modelTraditionally airlines based their On the liabilities side, the non-current liabilities have fallen by 14% over 2010 levels and where as the current liabilities have registered a growth of 19% during the similar period. From 67 operational bases, Ryanair makes more than 1,600 flights daily. Financial Analysis According to the NPV analysis, if the predicted cash flow is correct, opening the sixth restaurant could bring limited profit to the company. Prices. Although these strategies do help in keeping the costs down, they also deter those customers who prefer being served while flying. Moreover, pandemics like swine flu can adversely affect flight demands. Ryans, A. This understanding shows where the corporate strategies of both companies converge. Since Ryanair provides services at low costs, its demand is very high. 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. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." For instance, flight attendants also do the work of cleaners or gate agents. The net worth of Ryanair has been more or less remained same as a percentage of total assets 38%, 34% and 37% for years 2010, 2011 and 2012. In 2009, EasyJet catered to passengers with 50% having passports of countries other than that of UK. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." Liquidity and Current ratio Under this ratio, we measure the companys ability to meet it short term expenses. WebFar more of you flew with easyJet than any other carrier. Focusing on market strength is also another tenet of the airlines competitive strategies. High tax rates on aviation industry affect these airlines since they strive to keep their fare low. More than 20 airlines have collapsed after adopting the low-cost strategy (Air France 2011). The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. In terms of on-time performance, easyJet performs in line with some of Europes top airlines, such as Ryanair (>92%), Aeroflot (>92%), or KLM (>90%). For example, both airlines fly to different types of airports. Gearing ratio and Interest Cover ratio This ratio indicates how efficiently (multiple) the capital of the company has been leveraged, meaning for every unit of capital employed how many units of loan is raised. This in turn helps them to keep the fare down and become competitive. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. Today, the airline still reaps the benefit of being among the first airline companies, in Europe, to adopt the low-cost airline strategy. The market differences are profound because profitable routes in Europe already have large airline companies that serve them. Since fuel prices can become very high, people often prefer air travel to automobiles for distance more than 400 km (Sorenson, 2005, pp. The general public responses swell towards cheap flights however it adds to their grievance if promotions in newspapers promise flights at a particular rate when in reality they cost much higher (Mayer, 2007, p. 16). 81%, 7. IvyPanda. 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). must. Easyjet also strives to become a market leader in the low-cost market segment. https://www.easyjet.com. PESTEL analysis provides different reports depending on whether the analysis is done in domestic or international arenas. Both EasyJet and Ryanair have shown a reducing trend from 2010 to 2012. 53 to 21. While this brings in new people who can afford to fly, the low fare airlines tends to lose travelers to full fare airlines whose preferences shift to experience greater comfort while flying. Legal In the EU, due to deregulation policy, there are less restrictions regarding entry of new airline ventures which means governments strict control over airlines have been modified to provide new opportunities for new airlines leading to free competition. Equity ratio for EasyJet has marginally increased in 2012 compared to the previous year and similarly for Ryanair in 2013. Social Airline profits are highly dependent on the behavioral and demand patterns of customers. 9 million. Ryanairs inaugural flight had its daily route from Waterford in Ireland to London Gatwick. But it's not worth paying a load more than Ryanair for in my opinion.
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