The most successful airline company in the world, Ryanair, relies on cost management for its business model. Before the financial crisis, Ryanair had a high gross profit margin of ca. 20%, today this margin decreased to around 15%. Traditional airliners have a gross profit margin around 5%.

What are the intelligent measures which Ryanair applies to have a low cost structure, which has no negative impact on the quality of its service?

• The aircraft fleet of Ryanair does 1400 flights a day. On average, each aircraft flies 5 times a day. Because the cabine crew cleans the airplanes, they can quickly depart again: on average a Ryanair plane is 25 minutes on the ground before it departs again. Traditional airline companies in Europe fly 3 to 4 flights each day.
• The airplanes are new, which decreases the fuel consumption, as well as technical problems. After a few years the aircrafts still have a high resale value.
• The 275 aircrafts are the same type (Boeing 737-800), which decreases the support costs and technical education of the personnel.
• Ryanair offers only point-to-point flights. By avoiding stops in between, the bagage handling cost decreases.

Besides these intelligent cost management measures, Ryanair also applies a lot of cost reducing measures which do impact the service. These measures are interesting if your company chooses explicitly for a low budget brand, and the customers are aware of this.

• Decreasing the surface each passenger uses in the airplane (increasing the number of passengers per airplane)
• Ryanair mainly picks small and local airports, because they demand low landing and departure faires. Due to this choice, passengers are often obliged to search for extra transport.
• No ’free’ food or drinks on flights.
• One piece of luggage is free. There is a fee for additional luggage.
• Ryanair has no frequent flyer program. The management of this program would only means extra costs for Ryainair.
• Employees of Ryanair are prohibited charging their mobile phones during work hours. By doing this, the company saves a few eurocents each time.
• Ryanair sells the interior and exterior of their airplanes for publicity.
• Customers have to print their own boarding pass. If they forget to do so, Ryanair charges an additional fee.
• There is no business class, all seats are equal and you don’t have a place assigned to your ticket.
• Ryainair sells publicity space on the inside and outside of its aircrafts.

By doing this, Ryanair can sell its tickets on average for 39 €!

Categories : Case studies | Tags : Travel | 0 commentaire associé