These destinations spread across 29 different countries in the region. Both EasyJet and Ryanair have shown a reducing trend from 2010 to 2012. professional specifically for you? Massive flight cancellations led to Euro 50 million loss for Ryanair. In EasyJet air travel there is no arrangement for free meal services in flights that are not longer than 2 hours (EasyJet Airline Company Limited, n. d. ). Competitive rivalry Because of increased competition in the European aviation industry, rivalry between airlines has increased. In line with this low-cost strategy is a simplified pricing structure. Raccomandazioni degli analisti su EASYJET PLC: 27/04: easyJet plc: JPMorgan cambia rotta e passa a un giudizio Neutral Chief Financial Officer & Director: Stephen Alan Michael Hester 4 601: SINGAPORE AIRLINES LIMITED: 5.06%: 28 092: AIR CHINA LIMITED: 0.86%: 21 445: DELTA AIR LINES, INC.-0.33%: 21 317: RYANAIR 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). EasyJets routes within the EU boundaries face stiff competition from other low fare airlines like Jet2, BMI Baby, Ryanair. 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. We utilize security vendors that protect and Ryanairs market strategy has focused on cost leadership because it strives to become the best company in the low-cost market segment (Mayer 2008; Thomson & Baden-Fuller 2010). Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. To do so, both airlines use the single fleet type of operation and optimize flight crew productivity (Air France 2011). Contact us: [emailprotected]. Other than this, factors like rise in price of oil and imposition of high tax rates by different governments impact low fare airlines more than high fare airlines. Even with these adjustments, the company has still increased its passenger numbers and remained profitable for a long time. Price-Earnings ratio Price-Earnings ratio is an important analysis for investors because it shows how much investors are willing to pay for each unit of profit of the company. The database is updated daily, so anyone can easily find a relevant essay example. easyJet By managing and controlling competition in the sector, both Ryanair and Easyjet have generated superior values for their investors. For example, both airlines fly to different types of airports. Therefore, both airlines strive to minimise their operating costs by cutting expenses such as salaries and fuel costs. In order to become a competitive low fare airline, it is important that costs be economized or minimized. The increased seating leaves very little leg room for a relaxed travel. Need a custom Compare & Contrast Essay sample written from scratch by 249264. 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. Horizontal analysis Comparing the sales, operating profit (O. P) and net profit (N. P) of EasyJet and Ryanair it can be seen that all the three elements have witnessed substantive growth between fiscal year 2009-2010 to fiscal year 2011-2012. 9 billion during 2011 and to Euro 3. Analysis. Legal EU laws related to aviation industry do not allow monopolization of airports. 34% for the years 2010, 2011 and 2012 of the respective years total revenue. To achieve these results, Ryanair has used three levers: Labor Utilization: A large majority of Ryanairs pilots are actually not salaried employees but third party contractors [5]. Easyjet also strives to become a market leader in the low-cost market segment. This paper analyses the corporate and competitive strategies of Ryanair and Easyjet. 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. Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. 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. Ryanair cabins are pretty bare-bones and the seat in front of you has a tray table but not a seat pocket. & Stredwick, J. Ryanair also focuses on faster pre-flight preparation; this minimizes the grounded time of aircraft (Hoffman, 2007, p. 6). Finally, EasyJet must convince people that it is the safest mode of air travel at lowest cost. The need is to always stay technologically up to date in regard to aircrafts so that the aircrafts are fuel efficient to deal to mitigate the risk arising out of rise in oil price in the international markets. EasyJet cabin staff in Portugal plan early April strike over pay : More Must read. These strategic factors made the airline more profitable than other flag carriers did. This motivates the employees towards efficient contribution to EasyJets strategic objectives (EasyJet: Annual reports & accounts 2011, p. 35). Employees are not engaged in any one particular activity, they do various jobs thus reducing the need of multiple personnel. However at the end, EasyJet with low working capital and yet maintaining a growth trend in profitability, lower gearing/leverage as opposed to Ryanair, consistent positive growth in net worth and, the fact that it remains competitive in spite of utilizing full service airports and providing free refreshment for long haul flights, EasyJet emerges a better buy for long term growth and potential. 9 million. Then there is also a growing interest in multiple product features, product quality and service which may cause people to try other airlines merely to get a different kind of experience (Muller, 2011, p. 39). In the year 2010 there was a reduction in the costs of fuel from Euro 1,257 million o Euro 893. Registration number: 7252303643 Ryanair 22%, 10. Also, profitability of low fare airlines like Ryanair depends on the customers perception on low fare services. WebAn Analysis and Assessment of easyJets Strategy and Options 60 despite of its efficient operations rather low EBIT and EBITDA margins, returns on equity and on invested capital as compared to its peers. This has resulted in an overall increase of 7. 126 the perceived close relationship between total - Course Hero Comparatively, Ryanair flies to Beauvais-Till Airport, which is almost one hour away from the city (Ryans 2009). 2006). For example, in the quest to increase the seating density, the count of washrooms are kept at bare minimum. Irish ultra low-cost carrier founded in 1984. Economic The growing rate of employment increases the spending capacity of people with more money at disposal. As far as information technology goes Ryanair operates a multi-featured website for selling flight tickets. In doing so, a company tends to improve its earnings per share (EPS). , Department of Transport, the Irish Aviation Association, the European Commission and the European Aviation Safety Agency. This indicates that EasyJet has overall managed its assets and liabilities efficiently without compromising in profitability; the net profit during the same period has grown by 57%. JP Morgan's analyst Harry Gowers upgraded the rating on the company from Sell to Neutral. Thompson, J. EasyJet's orange-and-gray cabin is slightly less intense, but not by much. The primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. Managing Corporate Reputation the Case The European airline industry is also distinct because charter planes play a greater role in the industry, compared to other markets (Air France 2011). To cope with these challenges, both airlines have one dominant strategy that hinges on three factors low costs of operations, low fares, and low frills. easyJet In later sections of the study, this paper shows the operational areas where the organisational strategies of both organisations converge and diverge. Thus, EasyJet must design its strategy for a broader customer base. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost However, EasyJet has a policy of serving free refreshments to customers for long haul flights but this service is not available in Ryanair. easyJet vs Ryanair vs The one weakness of Ryanair that is quite apparent in its no-frills approach by which they do not serve any free refreshments to customers on flight. Ryanair and easyJet Case Study Ryanairs reliance on secondary and regional airports is a huge cost cutting strategy on their part, but it also has the added situational disadvantage since most regional airports are situated far away from passenger destinations. Ryanair and EasyJet are targeting markets 16 in 2012 for EasyJet and whereas 0. Ryanair has also focused on creating value for its shareholders by focusing its strengths on markets that it enjoys dominance. This is because globalization has enhanced alliance between nations for trade, technology, labor etc. 53 to 21. 3 Easyjet non-current assets 2021 Fig. EasyJet uses reward policies to motivate its employees by giving an annual performance-driven bonus and grants of performance shares to eligible employees. This will be a stimulating factor for the shareholders in profitable years even as the company continues to enjoy market share (EasyJet: Annual reports & accounts 2011, pp. 18 February. This is IvyPanda's free database of academic paper samples. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Unlike EasyJet which has base only in Europe, Ryanair is regulated by both EU and Irish authorities. is an Irish airline company. Financial Analysis However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. IvyPanda. Low fare airlines also face the problems of overbooking and cancellations which add to their compensation expenses. If this happens then demand will fall which will add to the cost. 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%). However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction Prices. The pervasive risk of terrorism means airlines like EasyJet have to emphasize on strict security measures which will warrant higher costs. easyJet It created a huge demand for the airlines services because it attracted price-conscious customers who would have chosen alternative modes of travel, or failed to travel at all, because of the high costs of air tickets. Moreover, governments are also planning to restrict expansion of aviation industry in order to protect the environment. Partly, this is why the company commands the highest market share in the European low-cost airline market segment. You are free to use it for research and reference purposes in order to write your own paper; however, you The company brands itself as Europes only ultra low-cost airliner because it is the regions largest low-cost airline company (Mayer 2008). 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. 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). EasyJet focuses on passenger comfort by offering them free refreshments in flights whose durations are more than two and a half hours thus giving the passengers a comfortable journey (EasyJet Airline Company Limited, n. d. ). easyJet easyJet Shares | Latest easyJet Stock News and Analysis 2023 Just talk to our smart assistant Amy and she'll connect you with the best The market differences are profound because profitable routes in Europe already have large airline companies that serve them. This kind of differentiation has created an advantage over competitors. 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. After the terrorist attacks in America people have become anxious regarding traveling by air, and such threats of terrorist attacks can further influence flight demands of European airlines including EasyJet. High tax rates on aviation industry affect these airlines since they strive to keep their fare low. 14, no. easyJet Web. Since the factors cannot be influenced by a business enterprise, so it is upon the business to adapt itself to the factors. 32% and 12. Both the airlines have shown good financial performance, this means they can promptly meet all payment obligations to creditors and suppliers. Ryans, A. To meet the demand, management focuses on maintaining enough flights every day. 8-9). 0% increase in total assets between 2010 and 2012. I.INTRODUCTIONThis report outlines the analysis of two low-cost airlines performance in Europe, namely easyJet PLC and Ryanair Hldgs during their financial year between 2006 and 2008. 56% respectively. Their performance will mainly depend on their ability to sustain their operational models. Edward Russell. Low fare airlines primarily focus on keeping the costs down by cutting down on costs of customer service and airport facilities. 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). Meanwhile, easyJet's aforementioned free bag dimensions yield a volume of 32.4 liters, representing over 60% more capacity. The target price is lowered from GBX 370 to GBX 350. Dobruszkes, F. 2006, An analysis of European low-cost airlines and their networks, Journal of Transport Geography, vol. 2006). A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. CAPA 2014, EasyJet: more aircraft come in as more cash to shareholders goes out. Headquarter of the company is situated at Dublin Airport. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/, IvyPanda. Ryanair Researchers such as Kim and Mauborgne (cited in Thomson & Baden-Fuller 2010) have always supported a differentiated strategy, but these developments have proved them wrong. Ever since, these two airlines have survived all odds and thrived to grow, changing the way people travelled. 1 millions allowed the company to make an unprecedented profit on regular functions. EasyJet has broadened its customer base by targeting both business and leisure travelers which is an advantage over Ryanair. Ryanair vs In line with this strategy, the company also introduced value-added services to its core strategy. Comparative Financial Analysis of Easyjet & Ryanair - GraduateWay However, to get a correct understanding of this assessment, this paper demonstrates how both companies create value for their shareholders and reveals the strategic choices pursued by both organisations. Both the airlines are known for their operational efficiency and financial stability. The company conveys these advantages to its customers by operating in secondary airports where long queues and complicated security rules rarely inconvenience customers (OConnell & Williams 2012). 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. The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. Financials. Freire, A. 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. It was established in the year 1995 by Sir Stelios Haji-loannou with the purpose of providing scheduled air services at low costs. This affirmation aligns with the goal of Ryanair, which is to firmly set up itself as Europes leading low-fare scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service (Freire 2014, p. 4). Ryanair However in the measure of Return on Assets, EasyJet consistently outperforms Ryanair over the study period of three years (2010, 2011 and 2012).
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