Ryanair Porter's Five Forces Analysis

Ryanair is leading low cost airline in Europe. It provides low cost travel on frequent point-to-point flights on short-haul routes. Ryanair’s vision and mission is to ‘’ To firmly establish itself as Europe’s low fare, schedule passenger airline through continued improvements and expanded offerings of its low fare service and to become Europe’s most profitable, low cost airline by rolling-out proven low fare, no-frills service in all markets in which we operate to the benefit of passengers, people and stake-holders”. (Our Strategy, Ryanair). The aim of this report is to analyse the attractiveness of the industry for Ryanair using Porter’s Five Forces model and to research Ryanair’s strategy.

2. Findings

2.1 Summary of Ryanair

Ryanair is

2.2.1 Threat of new entrants

Threat of new entrants is minimal for Ryanair. It would be difficult and nearly impossible to beat Ryanair in Europe’s market. Gaining contracts with distribution companies could be one of the barriers for new entrants. Cost advantage related with business expansion is believed to be one of the biggest barriers to entry in airline industry.

2.2.2 Threat of substitute

There is a big amount of substitutes available, including railway, sea, coach and car rental, but it is safe to say that they are not significant to airline industry, especially Ryanair because in most of the cases Ryanair’s flight fares are cheaper than options given above.

2.2.3 Power of customers

Power of customers is very high due to amount of substitutes available. Customers can pick and switch between different types of transport. In fact customers are not happy with Ryanair’s service and that could be the main reason to switch for another low-cost airline or other type of

Ryanair can lose their lead in competition because of lack of advertising. With their growing fleet and number of flights the competitive rivalry is low.

2.3 Strategy of Ryanair

2.3.1 Low Fares

Ryanair sets their fares depending on demand on a particular flight and also by outstanding time before departure. If it is closer to the departure date the fare will rise due there will be a higher demand for it. Also Ryanair sets the low fares to stimulate the demand of their service. More people will choose their low cost fares even though most of them are not happy with the customer service provided.

2.3.2 Customer Service

In recent years Ryanair aimed to change their customer service to become more pleasant to the customers. They have achieved better punctuality (quickest turnover time), smaller amount of lost bags and less cancelation than any other airline.

2.3.3 Frequent point-to-point short-haul