There is a risk to the productivity-based incentive system, due to Ryanair need to hire more employees. Other than that, Irish Aviation Authority (IAA) will oversee the safety aspects. That means government provided full security system to the Ryanair. However, the tightened security system could increase operating costs whereby it will incur regular activities of monitoring and maintenance. If Ryanair fails to fulfill the criteria of the security system, Ryanair may fail to get a Certificate of Airworthiness so they can 't run their business.
Thus, it is safe to say that there is low-to-moderate bargaining power of buyers in this sector Bargaining Power of Suppliers The three main costs for the airlines are fuel, labour and Airport charges. Fuel efficiency depends upon various factors, like the type of carrier and the distance travelled. Labour, on the other hand might have high bargaining power but Ryanair
For instance the introduction of baggage charges was intended to reduce the number of bags checked-in, thus cutting short the handling costs. Weaknesses 1. Perception of the Brand Due to the recent pilot scheduling error that led to rescheduling and cancelling flights for up to three quarters for Ryanair, the brand had to deal with tough times to regain its position in the industry. Ryanair has been successful in offering to the customers what it believed they needed namely secure air journey at a low price. However, Ryanair 's brand has performed poorly in a range of polls and surveys in recent
An airline company must make sure that the services provided don’t have any substitutes in the market. This is because the passenger will tend to go for the airlines company that offer lower price and high quality provided by the airlines services. In the market, there are a lot of competitors that provide a lower total cost of a trip that the passengers can grab compared to what Ryanair Holdings had offer. This is because, even though this airlines company offer low cost, eventually the price would still be expensive due to the additional cost for the services that are supposedly included in the ticket price such as online travel cot and golf clubs. There are also cost that are irrelevant to be charged to the passenger such as delay or cancellation fees that make the substitution are readily in the market because other airlines company are not charging their passenger with this kind of costs.
Although Southwest Airlines themselves are not making the aircrafts, it allows their manufactures cost to remain low due to they are buying products in bulk. The third of those being the advantages gained by spreading fixed production cost over a large production volume. (Hill, Schilling, & Jones, 2017) Again, aircrafts are not a simple process. Big aircraft companies such as Boeing and Airbus produce aircrafts as quick as possible. It does indeed help though, when Southwest Airline deals with just
Partners also have the advantage of a large fleet pool. Airlines within the group have been able to lease aircraft from each other in order to maximise utilisation and open new routes. This type of resourcing also works for people. While restructuring is taking place in airlines such as Alitalia and Air Berlin with the need to reduce staff numbers, Etihad itself is in a period of natural growth, requiring more cabin crew and
Sustainability of free cash flow. Sustainability of operating margin structure. Competitive advantages in hubs and network structure that will allow both airlines to maintain their relative margins to peers over time." Q12d Why did you give that rating? [Reasons for overall opinion of the airline industry as an investment opportunity] "4 [6-pt scale].
Also, some airport hubs cannot consolidate traffic bound for many itineraries. Having this limitation and knowing the fact that some passengers prefer non-stop flights, consideration of both hub-stop and non-stop routing strategies can be more cost-efficient than a pure hub-and-spoke network (Jeng 1987). In other words, non-stop flights are always the most desirable in terms of convenience but on the other hand less desirable in terms of price for price sensitive customers. Moreover, the stops at the hub airports increase the expenses for the airline companies due to the facility charges and landing fees. Therefore, the airlines can generate more revenue by considering these key parameters and applying best network routing
Topic no 11 Kulula Airlines a) The airline industry like other industries, is extreming time dependent and sensitive, with certain tasks laid out at all times that need to be completed, often before the next task can commence. Every different aspect of the business has different schedules that need to co-exist in order to ensure smooth operations. Problems faced by the Kulula and the airline industry are often similar to problems faced by other industries. Such as: Kulula cannot have the entire market to themselves, so determining the size of the market is key as well as figuring out the future growth of the market. It is key in any industry to be in the correct market.
There is also price discrimination used by AirAsia. There are different types of price discrimination such as seasonal discounts, incentive discounts and general prices that depends on location. Penetration pricing strategy This is the most common pricing strategy that AirAsia provided. This strategy is working best for AirAsia airline to have low production and conducting a large-scale operation and long run production. This is due to AirAsia set a low initial price for customers and also launch a low cost carrier.