For instance, in 2004, Ryanair put aviation industrys first paperless pilot training program into practice (Muller, 2011, p. 39). Ryanair, when they offer the cheapest option or youre afraid that EasyJet will charge you for your 10kg cabin bag. EasyJet Ryanair News & Analysis; Financial Trading Blog; 03-Oct-17; Financial Trading Blog. Therefore, the risk of overcapacity in the industry is real. Environment Airline services can be drastically disrupted by natural calamities, for instance the 2010 Eyjafjalla volcanic eruption in Iceland disrupted European air space for several days. The primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. https://www.easyjet.com. In the year 2010 there was a reduction in the costs of fuel from Euro 1,257 million o Euro 893. Massive flight cancellations led to Euro 50 million loss for Ryanair. 84-85). 3 Easyjet non-current assets 2021 Fig. Its strength lies in reducing cost of activities on board. 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). Furthermore, the no-frill strategy works by eliminating in-flight services to lower operating costs. 0 millions to Euro 2,988. For instance, there are two major aircraft manufacturers namely Airbus and Boeing. Profitability ratio In both the cases i. e. EasyJet & Ryanair, the Gross Income ratio has increased from 2010 to 2012 and remained more or less stable. This article aims to compare the two largest Low-cost carrier (LCCs) in However in the measure of Return on Assets, EasyJet consistently outperforms Ryanair over the study period of three years (2010, 2011 and 2012). 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. In case you can't find a relevant example, our professional writers are ready As such EasyJet has the advantage of providing low fare which will be difficult for new entrants to offer, and also EasyJet has a goodwill attached to its name which is something a new entrant will take years to replicate. easyJet This factor combined with a rise in revenues from Euro 2,942. 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%. 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. In their 2021 fiscal year, EasyJet's revenue continued to decline, Retrieved from https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. The net income after tax for years 2010, 2011 and 2012 as a percentage of total revenue of the respective years has been 10. | April 27, 2023 Retrieved from https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/, EasyJet emarketing strategies and its implementation Analysis, Competitive strategy that Easyjet have utilised Analysis, The Low Fares Airline Ryanair And The Five Forces Analysis Business, Ryanair Strategic Analysis And Recommendations For The Future. IvyPanda. OConnell, J. In case of Ryanair, the assets and liabilities have both registered positive growth. 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 There was the eruption of Eyjafjalla volcano that produced ash which induced problems in European airspace. This factor is more applicable on EasyJet since it is a low fare airline and availability of other low fare airlines on same route can be a threat to EasyJet. Of importance, experts say the European low-cost airline sector is more brutal for low-cost airline companies than the American market because both markets have different structures (CAPA 2014). Ryanairs working capital needs as a percentage of total assets has been consistently around the 15% mark whereas for EasyJet it has been 5. Low fare airlines primarily focus on keeping the costs down by cutting down on costs of customer service and airport facilities. This view affirms the opinions of researchers who say price leadership is pivotal to creating market dominance, compared to cost leadership advantages (Mayer 2008). It also flies to more than 180 destinations in Europe (Mayer 2008). EasyJet has done it exceptionally well in comparison to Ryanair. Liquidity and Current ratio Under this ratio, we measure the companys ability to meet it short term expenses. The sustained economic recession with the European Union with no signs of it abating in the near future induces business travelers to reduce their travel expenses. The total revenue for Ryanair has grown by 21% and 47% over 2010 levels for years 2011 and 2012, while for EasyJet the total revenues have grown by 16% and 30% over 2010 for years 2011 and 2012. Dowling, T. 2010, Ryanair v easyJet. For a long time, Easyjet has branded itself as a committed airline that strives to optimise customer experience, always. Thus, it is apparent EasyJet generates more value for the shareholders. 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. ). 59-60). 40, loc. Ryanair and EasyJet have concentrated their corporate strategies on the cost leadership model because they both strive to become the best companies in the low-cost market segment. This encourages customers to use Ryanair even if other cheaper flying options are available. Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. WebThis report 'Two Major Airlines EasyJet and Ryanair' aims at providing a complete overview of the two major airlines of Europe, EasyJet, and Ryanair. 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. 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). Ryanairs inaugural flight had its daily route from Waterford in Ireland to London Gatwick. Both airlines have perfected this strategy by introducing new price reduction measures, such as paperless booking. Easy entry of new airlines and restriction of monopolization of airports can pose stiff competition for EasyJet and Ryanair. Results centre easyJet plc Ryanair vs EasyJet vs Eurowings Although revenues have picked up, profits continue to lag behind as a result of elevated fuel and labour costs. Here too, Ryanair marginally outperforms EasyJet over the three years of study. With more purchasing power people will tend to travel by flight, but also people become more quality conscious and hence prefer high fare airlines for better customer service. This paper has already demonstrated that Ryanair and Easyjet use the same business model low-cost strategy. 14, no. WebThe advantages of a spend analysis is that it contains detailed files on what a company buys, how much they spend, and who they buy from. In response to the new eco tax imposed by the government in Germany, Ryanair has reduced the number of flights that travel over German routes. Another program that is used by Ryanair is frequent-flyer program which means customers are given a free flight after they complete a specific number of flights in a given period with Ryanair. The growing rate of employment can have both positive and adverse effects on EasyJet and Ryanair. 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). Furthermore, like Ryanair, Easyjet also bases its corporate strategy on Southwests business model. It was established in the year 1995 by Sir Stelios Haji-loannou with the purpose of providing scheduled air services at low costs. 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. Moreover, pandemics like swine flu can adversely affect flight demands. WebThe gross margin of EasyJet is 8.00%, and 7.80%, while that of Ryanair is 11.16%, and 11.52%, for years 2017 and 2018 respectively. For example, in 2014, both organisations reported increased passenger numbers (Wallach 2015). Although Easyjet borrowed its strategic focus from Southwest Airline, its market strategy differed from Southwest because instead of relying on sales agents to make sales, the Airline relies on a direct sales strategy (Sull 1999). Analysis: the Ryanair-Wizz showdown in depth - Aviacionline.com Ryanair Today, the airline still reaps the benefit of being among the first airline companies, in Europe, to adopt the low-cost airline strategy. Most of its income stems from selling flight tickets and the add-ons associated with them. submit it as your own as it will be considered plagiarism. However, in spite of all the givings and primarily the shortcomings compared to the legacy full service/full fare airlines, the low fare airlines has transformed the way people travelled. The two airlines are also the most popular low-cost airlines in Europe. Elderman, H. 2014, EasyJet Vs. Ryanair: The Curious Case Of 2 Budget Airlines. Ryanair and Easyjet understand these limitations and adopted elaborate strategies to navigate the economic challenges of operating in the low-cost airline sector (Mayer 2008). 91% and 7. Ryanair vs Although Ryanair was not immune from an industry downturn following the financial crisis in 2008-2009, the company rebounded to solid profitability in fiscal 2010. Then there were incidents like heavy snowfall and major ATC industrial unrest. However, because it could not protect this strategic approach from duplication by other airline companies, it lost a significant market share to other companies, such as Easyjet. This way, shareholders in both airlines get value for their investments through structured competition and increased productivity. The fuel, administrative and engine maintenance costs are declined. More recently, Ryanair has reduced the number of flights that travel over German routes because of the new eco tax imposed by government which can drastically reduce the level of profit. Other than government laws like low carbon emission, sound reduction, passenger safety and security measures, there are competition legislations that restrict the activities of low cost airlines like Ryanair and EasyJet. 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. 2 Ryanair non-current assets 2022 Fig. PESTEL analysis, Porters 5 forces, a summary strength and weakness analysis, various key financial ratios for comparison and eventually conclude by giving a general recommendation of findings. easyJet PLC has a consensus rating of Hold with an average target price of 12.42. WebBCP Business & Management EMFRM 2022 Volume 38 (2023) 2360 Fig. Economic The price of oil primarily affects any airline companys viability. This makes EasyJet second best low fare airline in Europe after Ryanair in terms of cost. Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. For example, it has stolen customers in the business class segment (Malighetti et al. 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). Ryanair being an existing airline can lower its air fare to wipe out new entrants. ensure the integrity of our platform while keeping your private information safe. The total assets have increased by 19% (non-current assets 14% and current assets 27%) over the two year period between 2010 and 2012. From where the investors sit, Lisa and Mark might reject the project. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/, IvyPanda. Ever since, these two airlines have survived all odds and thrived to grow, changing the way people travelled. easyJet Alternative modes of transport do not form a threat to low fare airlines like EasyJet and Ryanair for distance more than 400 km. Every effort has to be paid in order to keep the costs of operations at the bare minimum albeit without compromising on safety and security of passengers. This can end up with the new entrant leaving the industry. Other segments of its working model appear below. On the other hand, EasyJet has been earning at a modest rate of 5. Thus EasyJet cannot achieve low cost in all activities and so has ended up being the second best low fare airline in Europe after Ryanair (Sorenson, 2005, pp. . Contact us: [emailprotected]. Social Airline profits are highly dependent on the behavioral and demand patterns of customers. WebAdditional ESG information - Financial Year 2021; Investors. However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. Social Unlike other low fare airlines that focus primarily on leisure travel, EasyJet has discriminated by targeting both business and leisure travelers. Profit reinvestment is a common way that the airlines create value for their shareholders (Mennen 2005). This is most common in aviation industry since only few companies manufacture aircrafts. Analysis. Furthermore, a comparison between Ryanair and other major low-cost model airlines such as easy Jet revealed better corporate reputation and perception of easy Jet, which impacts negatively on Ryanairs competitiveness. 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. This can pose stiff competition for Ryanair. Meanwhile, easyJet's aforementioned free bag dimensions yield a volume of 32.4 liters, representing over 60% more capacity. February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. In the first part, PESTEL analysis has been done along with comparisons of both the airlines. Ryanair Secondly, there still exist problems like unwillingness to use credit cards over phone or via internet among the French and German customers which cause problems in online booking facilities. Ryanair, EasyJet Make Progress on Pandemic Recovery Expansion Easyjet flies to Charles de Gaulle Airport and Orly Airport (two main airports in the city) (Thompson 2005). 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. 11 in 2010 to 0. Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). EasyJet keeps its focus on environmental awareness programs while making any future strategies. 79% and 8. 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. EasyJet and Ryanair lag behind high fare airlines regarding customer comfort during flights because of their cost saving strategies. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of a business. Gearing ratio assesses the companys financial position in the long run. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." easyJet EasyJet and Ryanair have differences within their strategies. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. From 67 operational bases, Ryanair makes more than 1,600 flights daily. Finally, the government has imposed higher taxes on flights which add to the cost thereby resulting in increasing air fares. Therefore, the takeoff costs, additional customer expenses, and meal costs as reduced. Similar to other low-cost carriers, the airline also had no in-flight meals and a rapid turnaround. easyJet Shares | Latest easyJet Stock News and Analysis 2023 Increased incomes make people quality, customer service and comfort conscious during flights. Compared to other leading airlines in the short-haul market segment, the two airlines are among the top ten aviation companies with the highest passenger numbers in Europe. It also realised that its low-cost pricing strategy could not sustain its business because the margins made from such a strategy were low (Malighetti et al. In such case Ryanairs current oil price strategies may not hold good. easyJet CEO Johan Lundgren concerned about reliability . 58 to 6. Higher the ratio means higher the perceived value of the company and vice versa. 12 in 2010 to 0. 56% respectively. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of This paper analyses the corporate and competitive strategies of Ryanair and Easyjet. If this happens then demand will fall which will add to the cost. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. By swiftly adopting and adapting to advancements in technology, EasyJet can to a great extent counter the adverse impact of rising fuel costs, e. g. , the modern state-of-the-art aircrafts are significantly more fuel efficient in comparison to the older aircrafts of yesteryears. easyJet WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned The low-cost airline sector has been a ruthless industry for aviation players. (Appendix, Graphs 1 & 2). Based at Londons Luton Airport, the company travels to more than 700 destinations and has a market presence in more than 30 countries (Mayer 2008). (Doc) Financial Analysis for Ryanair and Easyjet All these along with various functional problems presented immense challenge to the performance level of EasyJet. This fact shows that this market has limitations that would ordinarily curtail the growth of companies that do not adopt an elaborate strategy. This lack of personal service can induce people to opt for other low fare airlines. student. 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. The logic behind this strategic approach is to eliminate commissions by not using travel agents. professional specifically for you? Ryanair V.S
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