Master’s thesis M.Sc. in EU Business & Law An analysis of the European low fare airline industry - with focus on Ryanair Student: Thomas C. Sørensen Student number: 256487 Academic advisor: Philipp Schröder Aarhus School of Business September 13, 2005 1 Table of contents 1. Introduction 1.1. Preface 1.2. Research problem 1.3. Problem formulation 1.4. Delimitation 6 6 7 7 2. Science and methodology approach 2.1. Approaches to science 2.1.1. Ontology 2.1.1.1. Objectivism 2.1.1.2. Constructivism 2.1.2. Epismotology 2.1.2.1. Positivism 2.1.2.2. Hermeneutics 2.2. Methodology 2.2.1. Types of research 2.2.2. Types of data 2.2.2.1. Quantitative data 2.2.2.2. Qualitative data 2.2.2.3. Primary and secondary data 2.5 Reliability and …show more content…
SWOT analysis 9.1. Strengths 9.1.1. Resources 9.1.1.1. Large route network 9.1.1.2. Network of business partners 9.1.1.3. Financial resources 9.1.1.4. Human resources 9.1.2 Competences 9.1.1.1. Non-scheduled revenues 9.1.1.2. Cost leadership 9.1.3. Core competence 9.2. Weaknesses 9.2.1. The service factor 9.2.2. Secondary and provincial airports 9.3. Opportunities 9.3.1. Industry consolidation 9.3.2. Introducing the “Eighth freedom of the air” 9.3.3. Expansion 9.4. Threats 9.4.1. Oil prices 9.4.2. EU legislation 9.4.2.1. Airport fees 9.4.2.2. Passenger rights 9.4.3. Air disaster 93 93 93 93 93 94 94 94 94 95 96 96 97 97 98 99 99 100 100 101 101 101 102 10. Conclusion 11. Epilogue 12. Summary 13. References 14. Appendix 103 108 109 111 120 5 1. Introduction 1.2. Preface As I have studied a M.Sc. in EU Business & Law, I found it ideal to find a topic that would encompass both European business matters as well as aspects of EU law. The European airline industry suits this choice of topic very well as it is a business operating largely across European borders, but it has also been the center of a substantial amount of EU legislation through the deregulation of the industry and the abandonment of state aid for national carriers. This has contributed to great changes in the dynamics and structure of the European airline industry, which I find fascinating and have therefore chosen to analyse this development in more detail through
The opening of new markets within the EU exposed many national carriers to strong competition. This trend has been furthered by the continuous liberalization of the global aviation industry and specifically the recent OpenSkies agreement between EU and the US which allows the national carriers to arrange the Atlantic flights from the airports that are not airlines’ ports of origin. (BATA, 2010).
Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.
3,4- The Airline industry and the market The airline industry is large, specially in the United States, mainly due to the “ Deregulation” of the industry. In 1938, the Civil Aeronautics Board was created to control the growth of the air transportation industry. This board had the authority to control entry, exit, prices and methods of competition. In the late 1970 this structure was found inefficient and in 1978 deregulation took place. Due to the deregulation of the industry competition intensified, prices dropped, and the number of people travelling increased. Many new companies emerged and regional airlines saw deregulation as an opportunity to expand. Due to the rise in competition, by 1986 mergers started to take place and in 1987 64.8% of the market was controlled by the four largest airlines. The demand for air travel is determined mainly by price, studies revealed that half of the leisure travellers and on quarter of business travellers did not have a preference for a particular airline, which means that prices determined the
1. According to the authors of the case study, some of the market conditions of the U.S. airline industry in the early 1990s were triggered by the Airline Deregulation Act of
The research for this report, which is focused on a S.W.A.T. analysis on Ryanair, was fully based on internet web sites. For full information, refer to the bibliography at the end of he report.
Contents1. Background22. Theoretical framework33. SWOT analysis of Ryanair44. Challenges and recommendations for the future75. References81. BackgroundThe subject of this report is Ryanair - the first Low Cost Carrier in Europe - which was founded in 1985 (Ryanair.com History 2008). The firm began operations with a staff of 25 and a single 15-seat airplane flying between Waterford and London. In 1986 Ryanair received permission to begin flying four flights a day on the Dublin-London route. In doing so, they challenged the monopoly of British Airways and Aer Lingus with fares that were much lower. Ryanair's strategy was to offer simple, low-cost fairs and exemplary customer service. During the later part of the 80s Ryanair continued to
In 2004 Europe’s largest airline group was formed after the European Commission had approved a merger between French Air France and Dutch KLM. A merger of this dimension certainly has major influences on the economy. This paper will give an insight on the incidents of this instance, the economic consequences and it will deal with the question whether the European Commission’s decision was reasonable.
Ryanair established in 1985 carrying more than 5,000 passengers between its route Waterford Airport in Ireland to
Introduction: The last few years has seen an exponential growth in the aviation industry. Aviation infrastructure has expanded to include hundreds of airports and airlines around the world. New airports have mushroomed in places which were hardly known to the world, existing airports have upgraded their facilities, new terminals have come up and multiple airlines have been setup.
The Airlines Industry was originally initiated in USA as a fastest and luxury mean of travel in the 30s¡¯. With the tremendous development on technological, we have numerous airlines in the world. Yet, just like any industry, there are always winners and losers in the long run. This paper is use to analyze the factors from an economics perspective that drive the industry prospect and their threats in the recent years.
In terms of financial achievements the airline industry has not performed well over the past
prof. dr. ir. M.A.J.S. van Boekel, Wageningen Universiteit, Nederland prof. dr. K.G. Grunert, The Aarhus School of Business, Denmark prof. dr. C.M.J. van Woerkum, Wageningen Universiteit, Nederland prof. dr. J.P.L. Schoormans, Technische Universiteit Delft, Nederland
The aim of this report is to explain and analyse the role of Human Resource Management in the airline company Ryanair. To provide a background information of organisational structure, their vision, mission and strategic goals. Outline the key challenges and opportunities faced by their Human Resource Management.
Civil aviation is a powerful force for progress in our modern global society. It creates and supports millions of jobs worldwide. It forms part of the economic lifeline of many countries. It is a catalyst for travel and tourism, the world's largest industry. Beyond economics, air transport enriches the social and cultural fabric of society and contributes to the attainment of peace and prosperity throughout the world. Therefore, providing a cohesive, global form of organization for such activities is essential in ensuring their quality, stability and effectiveness.