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Ryanair, Monarch this year have ranked EasyJet as one of the worst performing companies in the airline business. The company has so far dropped from the 84th position it took in the year 2016 to an 87th ending being categorized among airlines such as Smart Wings and Bulgaria Air. The poor performance occurs despite the company being a high quantity carrier and cheap and affordable airline services for it customers. According to De Neufville (2016), cost of traveling using Monarch ranges between 20 to 25 Euros during winter and allow its skis, customers, to carry additional hold bag with a weight allowance of up to 20 kilograms. In terms operations, EasyJet and Singapore Airline share a lot in common. They are both categorized as low-cost carries offering a moderate number of amenities. Zaino (2017) argues that EasyJet provides more comfort form the seats to flight service when compared to Singapore airline. Regarding booking, both airline companies allow the customer to make one-way and round-trip flights with the option to pay for extra services. For those interested in making reservations for transportations, travel insurances and lodging, both the companies offer these opportunities. However, EasyJet has lower costs compared to Singapore.
Check-in for both companies is quite hectic as the corporations lack any check-in counters, not automated computer kiosk to assist in speeding up the process. The baggage policies in both the companies differ as EasyJet offer a laxer restriction when compare to Singapore airlines. According to Zaino (2017), EasyJet allows the customer to carry a maximum of 56 cm x 45 cm x 25 cm language which is higher as compared to 55 cm x 40 cm x 20 cm allowance for the sake of Singapore airline. To stay in the airline market while still offering low price and better services EasyJet company has initiatives such as secondary airports, first turn around time, a highly incentive workforce that keeps on attracting more customers. The business model, both EasyJet and Singapore airlines, have adopted include use of Technology to improve on flight schedule, give the customers value for their money. In this case, both the Technological and Marketing aspect play a significant role in their business model.
|Standard Operational Measure||Measurement Units||Singapore Airways (2016)||EasyJet |
|(USD)||(GBX) / (EURO)||(USD)|
|Utilization measure||% Load Factor||79.60%||91.50%|
|Cost measure||Cost (US Cents) per ASK||8.50||4.77||6.39|
|Productivity Measure||Revenue (US Cents) per ASK (for occupied and unoccupied seats)||Revenue passenger per kilometer||94,267.40||91,590|
|Available Seat per Kilometer||118,366.50||0.80||83,846||1.09|
Table 1: Comparison between EasyJet and Singapore Airlines’ 2016 Standard Operational Measures
The utilization measure is the passenger load factor that is used to assess the maximum capacity an airline uses to carry passengers to generate maximum revenue above its operational costs. It is calculated by expressing the revenue passenger in every kilometer as a percentage of the available seat per kilometer. The productivity measure is the revenue generated from each passenger per kilometer expressed as a percentage of the available seat per kilometer. Passenger unit cost per kilometer is the cost that the airline incurs to fly each available seat per kilometer. It is obtained by dividing total operating costs in (US cents) by available seat per kilometer (Aviation Economics).
Using the compared results, it can be concluded that EasyJet is a more efficient airline than Singapore Airways in performance. This is because EasyJet posts a higher utilization rate at 91.5% as compared to 79.60%. It can also be observed that EasyJet keeps its operating cost low at $6.39 to Singapore’s $ 8.50. Things get better for EasyJet since it high utilization rate and the low operational cost has translated to revenue performance of 1.09, higher than that of Singapore airways at 0.80.
|1GBX= 1.34 USD||https://coinmill.com/GBX_USD.html|
|1 Euro= 1.18 USD||https://coinmill.com/EUR_USD.html|
Table 2: Ryanair 2014 Standard Operational Measures
|Standard Operational Measure||Measurement Units||Ryanair (2014)|
|Utilization measure||% Load Factor||83%|
|Cost measure||Cost (US Cents) per ASK||Cost (US Cents) per ASM||0.065|
|Productivity Measure||Revenue (US Cents) per ASK (for occupied and unoccupied seats)||Revenue (US Cents) passenger per mile||76,075|
|Available Seat per Kilometer||77,916||0.98|
Report on Ryanair Strategy Change in 2014
Ryanair is the largest low-cost carrier in Europe and is one of the largest trading stocks in the European stock market. In 2013, however, the airline failed to meet its targets, and for the first time since it began operations, the company reported a drop-in revenue prompted by stiff competition from its rivals. This followed a fall in the airline’s shares by 11% as compared to its closest competitor, easyJet, at 3%. The management was prompted to change the strategy to pay attention to their customers to solve the problem (Kaplan and Norton, 2005). In 2014, the airline embarked on introducing new service products to its portfolio to attract customers to beat a target of 112,000,000 passengers by the year 2019. The overhaul saw the airline increase the capacity of its business class in line with the growing demand. Sauaia (2014) suggested that Ryanair had rolled out a digital plan that would enable more customers to book their tickets online to increase performance at the airports. Among the different changes that were proposed includes the following areas of focus.
Ryanair used to fly only to cheap secondary airports to keep its operational costs low. It plans to start flying to costlier primary airports such as Amsterdam and London Heathrow airports to attract more traffic from a higher class of passengers and achieve a 50% increase in the number of these passengers by the year 2019 (Heracleous & Wirtz, 2012). The increased costs that accompany this change in airport mix-strategy will see Ryanair maintain its unit costs (excluding fuel) at a higher percentage than it is in the current year but lower than same unit costs of its competitors such as the Norwegian. The budget carrier also focuses on offering inclusive fares to its passengers for services they get at the airports to improve the efficiency of its services. To increase its market share across Europe, the airline saw its tickets sold through the Global Distribution System. The airline plans to double its success by employing another similar platform. The carrier reported that it plans to increase its number of flights during winter to increase its number of passengers.
In conclusion, the management of Ryanair has quite a lot of work to review to achieve a more competitive advantage and avert future performance crisis. The administration will need to continually study the market and adopt a prevention strategy instead of a responsive one like in the case above. As this is being done, the approach approved needs to be tested for cost-effectiveness more so when it relates to a change in technology. For now, Ryanair can be said to be back on track, and its business model is likely to see it increase in market value and market coverage soon.
with any paper
- Aviation Economics. Retrieved December 6, 2017, from http://www.aviationeconomics.com/NewsItem.aspx?title=Will-Ryanair%27s-change-of-strategy-pay-dividends%3F
- De Neufville, R., 2016. Airport systems planning and design. Air Transport Management: An International Perspective, p.61.
- Heracleous, L., & Wirtz, J., 2012. Strategy and Organization at Singapore Airlines: Achieving Sustainable Advantage Through Dual Strategy. Energy, Transport, & the Environment, 479–493. http://doi.org/10.1007/978-1-4471-2717-8_26
- Kaplan, R.S. and Norton, D.P., 2005. The balanced scorecard: measures that drive performance. Harvard Business School Publishing.
- Sauaia, A.C.A., 2014. Evaluation of performance in business games: financial and non-financial approaches. Developments in Business Simulation and Experiential Learning, 28.
- Zaino, L., 2017. I flew on Ryanair and EasyJet to see which low-cost airline was better – here’s the verdict. Retrieved December 6, 2017, from http://www.businessinsider.com/budget-airline-comparison-ryanair-vs-easyjet-2017-9?IR=T