WebBCP Business & Management EMFRM 2022 Volume 38 (2023) 2360 Fig. Ryanair has had no air accidents with casualties till date. This clearly establishes that EasyJets funds management vis-a-vis trade, credit and cash cycle is far superior to Ryanairs. Such passengers prefer to choose airlines with minimum traveling expenses or may opt for not traveling at all. Ryanair is projecting a strong summer; it has capacity on sale at 114% of With the help of this analysis companies design strategies to reduce risks attached to development and expansions beyond the borders of the country of origin. Although revenues have picked up, profits continue to lag behind as a result of elevated fuel and labour costs. February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. Focusing on market strength is also another tenet of the airlines competitive strategies. EasyJet's orange-and-gray cabin is slightly less intense, but not by much. With rising employment, the purchasing power of people also improves. (2016, Oct 07). Furthermore, since the airline uses paperless booking, customers can easily buy their tickets and walk to the security gate without enduring any other sign-in rules. In line with its low-cost strategy, the company also adopted a no-frill strategy, like Ryanair, by eliminating in-flight meals and reducing the number of aircraft attendants. Stated differently, both airlines use the direct sales strategy to market their services. It also engages in the sale of holiday packages; aircraft trading and leasing; development of building projects; financing and insurance business; and tour operator activities. 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. & Stredwick, J. Since the launching of single currency in Europe, the nation has become more integrated and this has increased flight demands in EasyJet (Mayer, 2007, p. 16). Analysis: the Ryanair-Wizz showdown in depth - Aviacionline.com WebDiscover how Lions Financial provides expert analysis and risk management for Ryanair investments. The highest 12-month target stood at 900p while the lowest was 460p per share. 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. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). They create user-friendly websites which encourages people to book tickets online thereby eliminating the need of travel agents. 8 billion in 2010 to Euro 2. -7). In this case, both EasyJet and Ryanair have a witnessed a declining trend in the ratio from 2010 to 2012. Easy entry of new airlines and restriction of monopolization of airports can pose stiff competition for EasyJet and Ryanair. easyJet It chose to lower its costs by eliminating these expenses. Employees are not engaged in any one particular activity, they do various jobs thus reducing the need of multiple personnel. 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. 59% for years 2010, 2011 and 2012. The fuel, administrative and engine maintenance costs are declined. (2023) 'Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)'. Over the last four quarters, easyJet's revenue has decreased by 48.8%. You are free to use it for research and reference purposes in order to write your own paper; however, you February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. This will be a stimulating factor for the shareholders in profitable years even as the company continues to enjoy market share (EasyJet: Annual reports & accounts 2011, pp. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost April 1, 2022. 1, pp. 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. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. EasyJet uses reward policies to motivate its employees by giving an annual performance-driven bonus and grants of performance shares to eligible employees. 53 to 21. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/, IvyPanda. 14 over the three years and where as in case of Ryanair, this ratio has improved from 0. 45% and 15. To do so, the company uses a simplified airline network. Both airlines also have similar performance indicators in the aviation sector. However in the measure of Return on Assets, EasyJet consistently outperforms Ryanair over the study period of three years (2010, 2011 and 2012). easyJet Vs. Ryanair: The Curious Case Of Ryanair Bargaining power of buyers Usually a number of aircrafts from various airlines fly on the same air route thus increasing the bargaining power of buyers because of availability of alternatives. EASYJET PLC : Forcasts, revenue, earnings, analysts expectations, ratios for EASYJET PLC Stock | EZJ | GB00B7KR2P84 . Political. Higher the gearing, higher is the risk to investor. Pharapreising and interpretation due to major educational standards released by a particular educational institution as well as tailored to your educational institution if different; The report contains an introduction to the business models of the airlines, their business strategies, SWOT analysis, analysis of porters five forces, financial analysis easyJet The database is updated daily, so anyone can easily find a relevant essay example. If this happens then demand will fall which will add to the cost. Moreover, these are cheaper modes of travel than air travel. EASYJET Irish ultra low-cost carrier founded in 1984. The diagram below shows the current market shares of Ryanair and Easyjet in the European low-cost market. In the instance of EasyJet, while the non-current assets have registered a net increase of 19% in two years (2012) over 2010 levels as base, the current assets have seen at net fall of 12% during the same period. Then there are also problems of cancellations for delayed flights, for which compensations and reimbursements can become a major expense for Ryanair. WebAn Analysis and Assessment of easyJets Strategy and Options 45 3.5.3 Leasing Costs Leasing costs are an important profitability driver for airlines 128.Over the review period, easyJet decreased its leasing costs from 3.4% of total revenues in 2010 to 2.7% in 2016. This makes EasyJet second best low fare airline in Europe after Ryanair. For example, Easyjet has managed to do so by using the companys profits to increase its fleet size and expand into new routes (Mennen 2005). Dobruszkes, F. 2006, An analysis of European low-cost airlines and their networks, Journal of Transport Geography, vol. They have earned more incomes and have flown more people than ever before. The return on shareholders funds also is seen closely identical ranging between 0. This also reflected in the Interest Cover ratio. Choose skilled expert on your subject and get original paper with free plagiarism Low fare airlines also face the problems of overbooking and cancellations which add to their compensation expenses. Their no frills strategy has been a core tenet of their low-cost strategy because both airlines do not accommodate passenger meals, pre-arranged sitting arrangements, or paper-based ticketing services (Malighetti et al. 22%, 10. This essay was written by a fellow student. The top 10 competitors average 11.6B. Its long thrived on an unambitious reputation for being better than Ryanair, but it came close to losing even that shabby crown in the travel chaos of spring 2022. Financial Decision Making, Easyjet in comparison with Low fare can be an advantage for EasyJet but airline customers often emphasize more on comfort and services to cost factors both of which are strong elements in high fare airlines. Stringent laws regarding safety and air traffic rights put financial pressure on low-fare airlines like EasyJet. In case of potential new entrant in the low fare segment, the strategy adopted by EasyJet and Ryanair thwarts competitions and renders entry of new companies financially unviable. But it's not worth paying a load more than Ryanair for in my opinion. The total assets have increased by 19% (non-current assets 14% and current assets 27%) over the two year period between 2010 and 2012. Since EasyJets mission is to provide air services at low costs, high fuel price can adversely affect the economic viability and structure of the company. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. According to Dobruszkes (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. Of importance, the company lacked a service advantage that would back up its cost advantage (Thompson 2005). EasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. This can end up with the new entrant leaving the industry. Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. 13 to 0. This is because the strategy of these airlines to keep their cost low suffers and this affects the demand patterns since they are forced to raise fares to meet rising expenses. professional specifically for you? Legal In the EU, due to deregulation policy, there are less restrictions regarding entry of new airline ventures which means governments strict control over airlines have been modified to provide new opportunities for new airlines leading to free competition. easyJet (1995) is a low-cost airline carrier operating only in Europe. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of Graduateway.com is owned and operated by MAGMA EUROPA S. z O.O. Financial Analysis EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. The average easyJet stock price forecast from analysts was set at 734.5p per share resulting in a potential 34% gain from its last closing price of 546.20 (as of 1 March) if that target is hit. The first operating aircraft was a 15-seater Bandeirante that carried 5000 passengers in its first year of operations. Both airlines create value for the shareholders in the following ways. easyJet & Ryanair: squaring up to each other as head to head 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. While EasyJets net worth has consistently witnessed growth, albeit as a percentage of total assets, the net worth of Ryanair has in fact shrunk percentage wise from year 2010 to year 2012. Its high seat density arrangements on board allow optimum use of aircrafts. However, the company changed this strategy after realising it needed a differentiation strategy that would set it apart from its competitors. In this regard, it transformed its value chain for the better. However, EasyJet pays high fees to use the services of primary airports thus not achieving low costs in all its activities. Very typically, these companies also tend to suffer when economies are in a high employment phase. By managing and controlling competition in the sector, both Ryanair and Easyjet have generated superior values for their investors. On the 28th of last month, it said that it could realistically raise this sum money through the sale of its aircraft. EasyJet Ryanair 9 billion during 2011 and to Euro 3. EasyJets Net Current Assets to Sales i. e. , Working Capital to Sales ratio suggests that the company manages its debtors and creditors very efficiently. Threat of substitutes This force is not much applicable to aviation industry especially if the airline is a low fare one like EasyJet. Ryanair and Easyjet have always strived to support their market dominance by increasing passenger traffic through cost containment (Mayer 2008). PESTEL analysis provides different reports depending on whether the analysis is done in domestic or international arenas. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." Ryanairs reliance on secondary and regional airports is a huge cost cutting strategy on their part, but it also has the added situational disadvantage since most regional airports are situated far away from passenger destinations. However, EasyJet has a policy of serving free refreshments to customers for long haul flights but this service is not available in Ryanair. In relation to each airline generating ancillary revenue, Easyjet activities have diversified into various market segments and achieved higher revenue returns beyond that of Ryanair, as detailed within each airlines Income Statement. The overall management of both these airlines has been good and so much so that these have emerged to be the two top low fare airlines in the European market in spite of all competitions, adverse economic conditions and environmental adversities. In terms of on-time performance, easyJet performs in line with some of Europes top airlines, such as Ryanair (>92%), Aeroflot (>92%), or KLM (>90%). Ryanairs net income after tax has been growing at a healthy rate and is almost twice the yearly percentage growth of EasyJet. Ryanair also focuses on faster pre-flight preparation; this minimizes the grounded time of aircraft (Hoffman, 2007, p. 6). 1. https://www.easyjet.com. 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. Financial Summary Headline loss before tax of 1,136 million (2020: 835 million loss) ahead of consensus. After realising these strategic weaknesses, the company decided to introduce an outside perspective on its business model by creating superior value for its customers. Comparatively, customers who fly with major airlines have to contend with these inconveniences, thereby making them less efficient and punctual compared to short-haul flight carriers. Mayer, S. 2008, Ryanair and Its Low Cost Flights in Europe, Books on Demand, New York. Companys headquarter was moved to Geneva which became the first base outside UK. The following table shows this fact. Whereas for Ryanair, this ratio has improved from just 5. In doing so, a company tends to improve its earnings per share (EPS). easyJet vs Ryan air This is because people tend to lose confidence over low fare airlines regarding their security system. This restructuring affirmed the views of Mennen (2005) who said a corporate strategy should have more value as a holistic entity as opposed to the sum of its parts. By conducting a spend analysis the controller can consolidate purchases in order to increase buying volume with a smaller number of preferred suppliers. WebRyanair in comparison charges 115 if its done online, and a whopping 160 if you only Ryanair 53-54,58). 2005, Strategic Management: Awareness and Change, Cengage Learning EMEA, London. Its strength lies in reducing cost of activities on board. Since fuel prices can become very high, people often prefer air travel to automobiles for distance more than 400 km (Sorenson, 2005, pp. to help you write a unique paper. This target can be fulfilled with constant developments and widening of its low-fare services, without ignoring efficient operational services. This makes EasyJet the second best low fare airline in Europe, second to Ryanair. Therefore, a key part of their strategy is meeting the minimum contractual obligations required by airlines to their customers. For instance, in 2004, Ryanair put aviation industrys first paperless pilot training program into practice (Muller, 2011, p. 39). In this measure, EasyJet is less geared as compared to Ryanair. IvyPanda. 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. student. This compare & contrast essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) was written and submitted by your fellow Ryanair by virtue of its scale of operations, fleet size and leverage consistently earns operating revenues at a margin of more than 10% of total revenues while in case of EasyJet it has been always below 10% for the last three years. Ryanairs fuel expenses are 45% of its total operational expenses, and so any rise in fuel price will affect Ryanairs decision regarding no-fuel surcharge policy to earn profit (Muller, 2011, p. 38). In the year 2010 EasyJet faced a number of major problems that posed a threat to its efficient service. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of a business. 3.10 Peer 76%. These destinations spread across 29 different countries in the region. Edward Russell. Price-Earnings ratio Price-Earnings ratio is an important analysis for investors because it shows how much investors are willing to pay for each unit of profit of the company. The profit was declared after making all tax payments in 2010 financial year that amounted to Euro 305. This way, it became profitable in an overcrowded industry. Therefore, both airlines strive to minimise their operating costs by cutting expenses such as salaries and fuel costs. is an Irish airline company. This is because new airlines emerge with more market demand, and lower operational and labor costs by 30-40% as they start their business with inexpensive second-hand aircrafts (Sorenson, 2005, p. 37). WebAn Analysis and Assessment of easyJets Strategy and Options 60 despite of its efficient operations rather low EBIT and EBITDA margins, returns on equity and on invested capital as compared to its peers. However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. easyJet Ryanair Corporate Strategy Vs. easyJet: Competitive Ryanair, EasyJet Make Progress on Pandemic Recovery Expansion
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