Ryanair

Brief History

• If we look at the history of airlines industry; the Britain, French, German governments began to combine the first, small airlines into national flag carriers. The predecessors of British Airways, Air France, Lufthansa and others were owned by the governments. The route structures were set up regarding the colonial purposes.

• World War II brought advances in aviation considering pricing. Privately owned carriers of US took the lion’s share. IATA emerged to set international fares. In Europe, the pooling arrangements became common; i.e. if the route was between Italy and Germany, then it was given to Alitalia and Lufthansa.

• In late 1950’s European carriers refocused on routes across North Atlantic. By 1960, the main problem was that the world had too many airlines, most of them inefficient, undercapitalized and unprofitable.

• Customers were dissatisfied with the high fares. To bypass the regulations, charter airlines appeared and grew rapidly during 1960s; offering holiday makers cheap fares on non-scheduled flights and inclusive tours. This was popular among British and Irish vacationers.

British Airways (BA):

• CAA (British Aviation Regulator) encouraged the establishment of British Caledonian Airways as a second force to compete with BA. The cost structure of BA had been high. By 1977, they had 54,300 staff and Passenger/Staff around 300; the industry average was above 340. New chairman John King reduced BA’s staff to 38,000 by 1985; loss-making routes were surrendered to competitors. With new management team, BA focused on business customers. In 1986, BA operated one of the world’s most extensive network, serving 145 destinations in 68 countries. International journeys accounted around 2/3 of the seats and 9/10 of its revenue. Nearly 80% of passengers passed through Heathrow. BA had 163 aircrafts varying from 44-seat turboprops to Boeing 747s.

• BA had sold its tickets via phone, retail shops and agents. 83% of its revenue came from...