RyanAir: The ' Southwest' of European Airlines

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Case Details:

Case Code : BSTR059
Case Length : 14 Pages
Period : 1985 - 2003
Organization : Ryanair
Pub Date : 2003
Teaching Note : Available
Countries : Europe
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Everyone always says, "What's your secret?" It's very simple. We're like Wal-Mart in the U.S. -- we pile it high and sell it cheap."

- Michael O'Leary, CEO of Ryanair.¹

"Ryanair is the best imitation of Southwest Airlines that I have seen."

- Herbert D. Kelleher, founder of Southwest Airlines.²

"He (O'Leary) is almost certainly one of the most successful leaders in the industry, with a unique business model, discipline and an extraordinary level of confidence."

- Sir Michael Bishop, chairman, BMI British Midland.³

"Ryanair has the financial and operational capacity to maintain its position as the dominant player in the low fares, no frills market, and indeed become one of Europe's largest airlines."

- Stephen Furlong, airline analyst, Davy Stockbrokers.⁴

Ryanair Challenges Easyjet

In the summer of 2003, Michael O'Leary (O'Leary), the CEO of Ryanair, one of the oldest and most successful low-cost airlines of Europe, outfitted himself in combat gear and led a small army of Ryanair's employees to Luton airport, the base of rival easyJet.⁵

An old World War II battle tank was also roped in to complete the effect. This was Ryanair's way of 'attacking' the fares of easyJet, which it claimed, were very high for a low-cost airline. O'Leary said he wanted to 'liberate' the public from the high fares of easyJet.'

Through this unconventional publicity stunt, O'Leary was able to get his message across successfully and create positive media attention for his airline. Ryanair was one of the first independent airlines in Ireland. Until Ryanair was set up in 1985, the Irish air services were almost exclusively under the control of Aer Lingus, the national carrier.

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Some other airlines, notably Avair, had been set up in Ireland before Ryanair, but most of them collapsed due to their inability to compete with the more powerful national carrier.

The setting up of Ryanair was an important landmark in Irish airline history.

Ryanair went through a few turbulent years of operation, but soon it managed to refocus itself successfully as a low-cost no-frills carrier, capturing a large share of the market for air services between England and Ireland.

By the late 1990s, it was the largest low-cost airline in Europe. However, it was overtaken by yJet when the latter took over Go, the low-cost subsidiary of British Airways (BA), to gain a larger market and a bigger combined fleet. (Refer Exhibit-I for note on low-cost airlines in Europe).

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1] Kerry Capell, Carlos Tromben, William Echikson, Wendy Zellner, "Renegade Ryanair", Business Week, May 14, 2001.

2] Kerry Capell, Carlos Tromben, William Echikson, Wendy Zellner, "Renegade Ryanair", Business Week, May 14, 2001.

3] 'The Life of Ryan', www.easyprotest2.com.

4] www.ryanair.com.

5] EasyJet is a low cost airline based in London. It was set up Stelios Haji-Ioannou, a Greek shipping magnate.