WebDiscover how Lions Financial provides expert analysis and risk management for Ryanair investments. This is IvyPanda's free database of academic paper samples. It is a key matter for EasyJet. Other segments of its working model appear below. Contact us: [emailprotected]. Gearing ratio assesses the companys financial position in the long run. The highest 12-month target stood at 900p while the lowest was 460p per share. Evidence of this fact emerges in Paris as a common destination for both airlines. The passenger revenue as a percentage of total revenue for Ryanair is approximately 80%, whereas for EasyJet it is in excess of 95%. Within this space, Ryanair and Easyjet are the two biggest low-cost airlines in the region (Elderman 2014; Dowling 2010). Although Ryanair has hinted at loyalty programmes, the airline doesnt Ryanair by virtue of its scale of operations, fleet size and leverage consistently earns operating revenues at a margin of more than 10% of total revenues while in case of EasyJet it has been always below 10% for the last three years. , Department of Transport, the Irish Aviation Association, the European Commission and the European Aviation Safety Agency. Therefore, the risk of overcapacity in the industry is real. However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. Ryanair can either lower air fare to level with that of the new entrant or else can lower further which will make the new entrant struggle to survive because of its low capital base. The interest cover ratio for EasyJet has improved from 13. Easyjet relies on the low-cost strategy because it believes that it cannot successfully compete with large aircraft carriers because they would use their economies of scale to crash the competition. Based on these competencies, Ryanair has always argued that its success does not only depend on its low-cost strategy because its innovative on-time record and its value-added services also support its growth (OConnell & Williams 2012). professional specifically for you? 1 PESTEL Analysis for EasyJet Ltd. In case of EasyJet, the Gross Income ratio has improved from 0. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." This is because new airlines emerge with more market demand, and lower operational and labor costs by 30-40% as they start their business with inexpensive second-hand aircrafts (Sorenson, 2005, p. 37). 79% and 8. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. Their performance will mainly depend on their ability to sustain their operational models. Airfrance 2011, Low-cost carriers. Web. CAPA 2014, EasyJet: more aircraft come in as more cash to shareholders goes out. In order to abide by governments regulations of carbon emissions, Ryanair operates flights that consume less fuel and makes low noise level. student. However, EasyJet pays high fees to use the services of primary airports thus not achieving low costs in all its activities. However, in absolute terms the net worth has grown from Euro 2. Such competitions set limitations to EasyJets pricing policies on less revenue routes. The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. Bargaining power of suppliers EasyJet being a low fare airline may have disadvantages regarding the availability of the best air routes which will be taken by larger airlines. Since the launching of single currency in Europe, the nation has become more integrated and this has increased flight demands in EasyJet (Mayer, 2007, p. 16). The profit was declared after making all tax payments in 2010 financial year that amounted to Euro 305. EasyJet being a British airline company is performing within the political framework of Europe. This clearly establishes that EasyJets funds management vis-a-vis trade, credit and cash cycle is far superior to Ryanairs. Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. Today EasyJet has in its service 175 aircrafts over 400 routes in 27 countries. WebThis report 'Two Major Airlines EasyJet and Ryanair' aims at providing a complete overview of the two major airlines of Europe, EasyJet, and Ryanair. This makes EasyJet second best low fare airline in Europe after Ryanair. WebeasyJet is currently c.55% hedged for fuel in the financial year ending on 30 September 2022 at c.US$498 per metric tonne with the spot price as at 29 November 2021 being US$658. Ryanair is projecting a strong summer; it has capacity on sale at 114% of High tax rates on aviation industry affect these airlines since they strive to keep their fare low. The net worth as a percentage of total assets for the years 2010, 2011 and 2012 have been 37. Thompson, J. Factors like growing terrorist threats and air accidents affect these airlines most because people tend to lose confidence over their security measures due to their low cost strategy. Financial Summary Headline loss before tax of 1,136 million (2020: 835 million loss) ahead of consensus. The purpose is to build a low-carbon European economy (Mayer, 2007, pp. Pharapreising and interpretation due to major educational standards released by a particular educational institution as well as tailored to your educational institution if different; WebRyanair in comparison charges 115 if its done online, and a whopping 160 if you only This also reflected in the Interest Cover ratio. Moreover, national airlines like Ryanair get additional benefits from governments during periods of huge losses. WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned Since Ryanair provides services at low costs, its demand is very high. Ryanair has always branded itself as an airline company that regards punctuality and efficiency as key segments of its service model (OConnell & Williams 2012). WebBCP Business & Management EMFRM 2022 Volume 38 (2023) 2360 Fig. Secondly, trade unions are creating problems all over Europe with their increasing demands. One principal weakness of EasyJet is that it strives to keep fares low as well as focus on consumer satisfaction, and keeping balance between the two becomes difficult. Ryanair cabins are pretty bare-bones and the seat in front of you has a tray table but not a seat pocket. According to Malighetti et al. According to Dobruszkes (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. PESTEL Analysis of Ryanair Ltd. In doing so, a company tends to improve its earnings per share (EPS). easyJet (1995) is a low-cost airline carrier operating only in Europe. IvyPanda, 18 Feb. 2023, ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. WebEasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. EasyJet and Ryanair lag behind high fare airlines regarding customer comfort during flights because of their cost saving strategies. Ryanair has had no air accidents with casualties till date. 1 phyneas 2 yr. ago Haven't flown Easyjet, but Ryanair is fine as long as you read the rules and know what you're getting and what you aren't. writing your own paper, but remember to Ryanair, when they offer the cheapest option or youre afraid that EasyJet will charge you for your 10kg cabin bag. Dont Web1617 Words7 Pages. easyJet is slightly smaller than Ryanair but also packs a punch in the low-cost market. Catering to a slightly different market, the carrier was founded in March 1995. This makes the airline 24 years old. easyJet operates aircraft from the A320 family, with an average fleet age of around seven years. 53-54,58). The first operating aircraft was a 15-seater Bandeirante that carried 5000 passengers in its first year of operations. Internal rivalry also exists between low fare airlines like EasyJet and Ryanair. This makes EasyJet the second best low fare airline in Europe, second to Ryanair. 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. Both these airlines ever since they have come into existence in 1984 (Ryanair) and 1995 (EasyJet) have proliferated all over Europe mainly due to conducive economic conditions and environment, made possible owing to the formation of European Union which allowed airlines from member states to operate within the union without hindrance. However, easyJet, in a financial report, says that 99.8% of flights are operated regardless. 34% for the years 2010, 2011 and 2012 of the respective years total revenue. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. 2015, A World Made for Money: Economy, Geography, and the Way We Live Today, U of Nebraska Press, Lincoln. News & Analysis; Financial Trading Blog; 03-Oct-17; Financial Trading Blog. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of 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. It provides a common size comparison between different organizations with regard to their respective individual performances. Increasing oil prices can have severe impact especially on a low fare airline like Ryanair, and to off-set this they use high density seating arrangements on board; that way fuel price per passenger is reduced. For example, it has focused on improving its performance in many routes where Easyjet does not service (Easyjet operates in 702 routes, while Ryanair operates in 1,600 routes) (CAPA 2014). 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. Equity ratio for EasyJet has marginally increased in 2012 compared to the As far as information technology goes Ryanair operates a multi-featured website for selling flight tickets. One positive factor is globalization which can increase flight demand in the long run. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). Easyjet is Ryanairs main rival. Web1759 Words. 500 Since it trails Ryanair in market strength, in some airports, the company has allocated 29% of its seats to such facilities (CAPA 2014). To do so, both airlines use the single fleet type of operation and optimize flight crew productivity (Air France 2011). This calls for constantly reinventing processes and upgrading and adopting the latest in the technology to keep ahead of the race. Borrowing from the Southwest low-cost model, EasyJet operated using one type of aircraft and a point-to-point short-haul travel (Kew & Stredwick 2005). But it's not worth paying a load more than Ryanair for in my opinion. This shows that Ryanair can make reasonable profits from its sales. Porters 5 forces analysis of EasyJet Threat of new entrants The deregulation policy encourages new airlines to emerge, but since initial capital investment is too high it becomes difficult for new entrants to compete with well established airlines like EasyJet. easyJet PLC has a consensus rating of Hold with an average target price of 12.42. Edward Russell. 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. This paper analyses the corporate and competitive strategies of Ryanair and Easyjet. By conducting a spend analysis the controller can consolidate purchases in order to increase buying volume with a smaller number of preferred suppliers. . The company has also adopted the same strategy to improve passenger comfort and expand its operational network. Massive flight cancellations led to Euro 50 million loss for Ryanair. The first ever flight of this company had its route from Luton to Edinburgh and Glasgow. This has resulted in an overall increase of 7. Kew, J. This can end up with the new entrant leaving the industry. This is because the strategy of these airlines to keep their cost low suffers and this affects the demand patterns since they are forced to raise fares to meet rising expenses. Therefore, a differentiated strategy is not exclusive. 84-85). Easyjet also strives to become a market leader in the low-cost market segment. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. Ryanair and EasyJet are targeting markets Both the airlines are known for their operational efficiency and financial stability. From 67 operational bases, Ryanair makes more than 1,600 flights daily. Unlike EasyJet which has base only in Europe, Ryanair is regulated by both EU and Irish authorities. 14, no. to help you write a unique paper. 2038. 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). 249264. EasyJets aircrafts have distinctive features that make them distinguishable from aircrafts of rival airlines. These strategies although have helped them in keeping the costs low, but they certainly are a cause of inconvenience to the discerning customers. Introduction The main objective of the paper to explain the accounting practices of easyJet plc. In this study it has been found that Ryanair bases its competitiveness by using secondary and regional airports in order to avoid congestion, keep airport charges at minimum and afford a fast and efficient turnaround time for its aircrafts. Also, primary airports prefer to do business with high fare airlines since low fare airlines like EasyJet are not favorably poised to pay for many of the sophisticated landings, baggage and check-in services. 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. 18 February. 97-102). Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). British multinational low-cost airline group headquartered at London Luton Airport. Financials. They have caught the fancy of those people (in the low-to-middle income bracket) who have found air travel through these low fare airlines as an alternative to other modes of travel road and railways. EasyJet has earned a Net Interest margin of 7% as compared to Ryanairs 6% in the financial year 2012 indicating that EasyJets utilization of assets is better than that of Ryanairs. Ryanair is currently looking at operating 5% more flights this December than it did in 2019, though this may still change. 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. Since the company has succeeded by adopting this strategy, it has proved that a differentiated market strategy is still vulnerable to competition. But EasyJet does not compromise on airport facilities and uses the expensive services of primary airports. 76%. 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. Low fare airlines have the problem of working with primary airports because of the expensive aerobridges and elaborate check-in-services of these airports. Both airlines are in a better position to make all payments. By flying to primary airports, the latter has had an edge above its competition because its customers can get to their destinations faster than Ryanairs customers who have to board a taxi, or train, to get to major cities. 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). Liquidity and Current ratio Under this ratio, we measure the companys ability to meet it short term expenses. To expand its customer base, the company tried to please all their customers by trying to meet the customer needs of every type of market in the industry (Malighetti et al. A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. Economic The price of oil primarily affects any airline companys viability. Efficiency ratio has increased in 2012 for both EasyJet and Ryanair which means they can make all payments because of greater profitability and higher sales volumes. While all airlines have similar characteristics and make similar responses to situations, yet each airline has some distinctive features and characteristics in order to maintain competitiveness in the aviation industry. 249264. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. In order to become a competitive low fare airline, it is important that costs be economized or minimized. Ryanairs fuel expenses are 45% of its total operational expenses, and so any rise in fuel price will affect Ryanairs decision regarding no-fuel surcharge policy to earn profit (Muller, 2011, p. 38). 59-60). For more visit Lions Lions Financial Neil Sorahan Directeur financier de Ryanair 2014.10 - aujourd'hui Wizz Air et EasyJet, RyanAir dessert prs de 4 fois le nombre de passagers que chacun de ces concurrents. To meet the demand, management focuses on maintaining enough flights every day. EasyJet has an average turnaround time of 30 minutes or below which goes to prove its service efficiency and reliability. 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 primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. In Europe, major airline companies, such as Flybe, Wizz Air and Aer Lingus, dominate this space (Dobruszkes 2006). 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. 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. JP Morgan's analyst Harry Gowers upgraded the rating on the company from Sell to Neutral. Environmental Since UK has a saturated market for air travel and prospect of growth is limited, therefore EasyJets focus must be on the continental and Eastern European market. All these factors can severely impact Ryanair. It chose to lower its costs by eliminating these expenses. Researchers say when the airline adopted this strategy, it succeeded because it was a blue ocean strategy no other airline had adopted this strategy before (Ryans 2009). Both the airlines have shown good financial performance, this means they can promptly meet all payment obligations to creditors and suppliers. Experts say Southwest Airlines was among the first aviation companies to exploit the opportunities that existed in the low-cost airline market segment (Dobruszkes 2006; Kew & Stredwick 2005). The diagram below shows the current market shares of Ryanair and Easyjet in the European low-cost market. Also, there are speculations that oil supply all over the world will decline as oil production will reach optimum level and there will be need for new sources of oil. 8-9). WebEasyjet's operating profit margins declined sharply, reaching only 3.85% from 10.16% Both airlines also have similar marketing strategies because besides marketing themselves as low-cost airlines, both companies do not use agents to reach their customers. 07%, 5. WebFar more of you flew with easyJet than any other carrier. This target can be fulfilled with constant developments and widening of its low-fare services, without ignoring efficient operational services. WebEasyjet Financial Ratios for Analysis 2014-2023 | EJTTF. According to the diagram above, other low-cost airlines command only 29% of the market, while Ryanair and Easyjet dominate the rest of the market. Ryanair and Easyjet have always strived to support their market dominance by increasing passenger traffic through cost containment (Mayer 2008). This fact shows that this market has limitations that would ordinarily curtail the growth of companies that do not adopt an elaborate strategy. Ryanairs dependence on regional airports gives it a situational disadvantage while EasyJet compromises on low fare by using the facilities of primary airports. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. Customer satisfaction is another element that this company keeps track of by measuring it online or by passenger surveys. The commitment and dedication towards work that stimulates the employees of EasyJet kept its workforce going and provide uninterrupted world class service. 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 In relation to each airline generating ancillary revenue, Easyjet activities have diversified into various market segments and achieved higher revenue returns beyond that of Ryanair, as detailed within each airlines Income Statement. In line with this low-cost strategy is a simplified pricing structure.