Differentiation, Cost Leadership, and Integration

Case Study: Ryanair (Aireline Company)

In this chapter, we will focus on one part: Cost-Leadership Strategy and the case study is about Ryanair which is an Irish low-cost airline. Its headquarters is located on the grounds of Dublin Airport. Ryanair operates over 300 Boeing 737–800 aircraft. The airline has been characterized by rapid expansion, and the success of its low-cost business model.

Ryanair is the company which imitates and also improves the business model of Southwest Airline in United States and it became a leader of air travel market in the European. The CEO of Ryanair Michael saw the specific strategies from Southwest Airline developed to cut costs and he used the same ideas to Ryanair as the lowest-cost, lowest-price in Europe airline. The average cost of a Ryanair ticket in European area is $48. Comparing with others, British Airway which dominated long period of time in the European air travel market has to spend $330 for the average cost of a ticket in European area and Lufthansa which dominated long period of time in the European air travel market has to spend $330 for the average cost of a ticket in European area. Because of the cheapest price, Ryanair got more passengers inside Britain than British Airline.

The CEO of Ryanair imitated on Southwest Airline’s low-cost business model, such as using the same kind of airplane version, the 373, to reduce maintenance cost, selling tickets to customers directly and cancelling the flight food. In order to reducing cleaned cost, they didn’t provide the seat-back pockets which often contain garbage from passengers, blankets, pillows. The vision of Ryanair is “You get what you pay for”. To achieve the cost-leadership strategy, CEO and all employees are expected to find any ways to reduce cost even though the small costs. Through all these strategies, Ryanair has lowered is cost structure so far and there are not any European airline can sale its low-cost tickets and earn high profit.

The other...