Course Code:

Business Administration PRINCIPLES OF

MANAGEMENT MGT1
Department AND
National College of Business and Arts ORGANIZATION CASE STUDY

ALINE APRILLE C. MENDEZ, MBA

RYANAIR---- THE LITTLE AIRLINE THAT COULD

On May 23, 1986, Tony Ryans Fledgling airline, Ryanair, made its first from Dublin to
Londons Luton airport for a round trip price of 99, which was less than half the price of British
Airways and competing Irish airline Aer Lingus. Two years later, Ryaniar had lost 7 million and
was on tract to loose much more.

Twenty years later, Ryainair reported half-year profits of 408 million, up 24 percent on
the same period for the preceding year, based on increased passenger traffic of 20 percent to
26.6 million passenger trips. The keys to such amazing change to fortune? Detailed planning
every aspect of Ryanair business. Borrowing best practices from American low- cost carriers such
as Southwest and Jetblue, Ryanairs unwaivering focus on revenue management and cost control
has produced a business model that is far more robust that any of its competitors.

When Boeing stress-tested Ryainairs operations in 1998 as part of its due diligence
process for the sale of 25 new planes, Boeings auditors were unable to find any three month
period when Ryanair would not be profitable during the terms of the aircraft leases. Even when
forecasted demands drop, fuel price fluctuations, and currency exchange volatility, Ryanairs
operation were solid.

How Cost conscious is the airline? Consider the story of CEO Michael OLearys foray into
the World Wide Web. Persuade that web tickets would be free of travel agent commissions,
Oleary agreed that Ryanair would built a Web site. Quotes from conventional Web site
companies came in at about15,500. After the site was delivered on time as agreed, O Leary
attempted to negotiate the contract down to 12,000, even after the purchase order had been
issued.
 Course Code:
Business Administration PRINCIPLES OF
MANAGEMENT MGT1
Department AND
National College of Business and Arts ORGANIZATION CASE STUDY

ALINE APRILLE C. MENDEZ, MBA

OLearys ferocious attention to cost control and revenue growth seems to be destined to
propel Ryainair ever forward. In response to questions about the long-term viability of regional
airlines in the face of voliatile fuel prices, Finance Director neil Sorohan revealed that Ryanair had
plans to carry 87 to 100 million passengers in 2012, and 200 million in 2022, based on market
share taken away from Alitalia in Italy and Iberia in Spain. The long-term objectives? A
transatlantic operation based on 31 bases in Europe providing a feeder network-provider it can
get long-haul aircraft at the right price.

QUESTIONS:

1. Is there a secret to Ryanairs success? What is it?

2. Can any regional airline do this? Why or why not?
3. How much of Ryanairs cost consciousness is based on OLeary?
4. Do you think it will achieve its objectives? Why or why not?