Running Head: RYANAIR PESTLE ANALYSIS

RYANAIR PESTLE ANALYSIS

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 Pestle Analysis 1

RYANAIR PESTLE ANALYSIS

Part A.

Political Factors.

The political scenario and international relations with the world has great effect on the airline

industry. Ryanair is a small and low-cost model airline with limited destinations and political

Instability can have a great impact on the profitability of the airline. Due to the political

instability this airline will have to abide by newer political policies of the country. The activity of

trade union has increased the pressure on the airline which has negatively affect the operations of

Ryanair. Only one rules regarding dude if you serious can increase the cost and therefore the

costs will be transferred to the passenger in form of higher travel fares (Düsseldorf, 2016). On

the positive side, the expansion of various countries into the European Union continue to

increase which has led to newer travel destinations of this airline. However the increase in

terrorist attacks all over the world higher level of security is now required for airports which

increases the cost for airlines.

Part B.

Economic Factors.

Economic stability affects any airline industry greatly. Low-cost airlines are less affected by the

economic changes as compared to other larger airlines. When there is an economic downturn, the

overall business activity reduces which ultimately results in less passengers for the airline which
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causes loss. Economic crisis can have a major negative impact on profitability of low-cost model

based Ryanair. Economic downfall reduces the disposable income of individuals and families,

therefore airlines observe a shortfall in the revenues when the economy is in distress. In addition

to this, the rising fuel costs are a major concern for all airlines because higher prices of oil and

petrol can lower the profitability of the airline. There depreciation and appreciation of the

currency can also have impact on revenue and profitability of Ryanair (Barbot, 2006). Changes

in taxes and interest rates impact the company’s borrowing cost as well as operational cost of the

airline. In addition to this, higher speed trains have presented a suitable alternative to passengers

which reduces profitability of Ryanair.

Part C.

Social and Technological Factors.

Travelling has now become a social norm especially travelling for leisure. This rising trend of

travel in everyday lifestyle has led to an increase in the sales revenue of the domestic airlines like

Ryanair. Increase in business ventures has opened up opportunities for business travelling for the

airline. However, the negative impact of terrorist attacks has led to creation of fear among

passengers who avoid air travel and prefer other safer alternatives (Müller, 2011). Furthermore,

due to economic recession and crisis less people have spare money to spend on holidays through

air travel. In case of health threats like swine flu that can be passed on through air travel with

international people, the trust of the passengers in the airline can be shattered. Passengers may

avoid air travel for the fear of catching any diseases and this can result in a negative effect on the

revenue and profitability of this airline.

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The attitude and hospitality of the airline staff has a major impact on returning passengers. If the

staff does not build friendly relations with the passengers, there is a high probability that

passengers will not return for a repeat travel. Increase in the travel fares can also lead to reduce

in passengers who choose Ryanair for its low costs. (Barrett , 2004) Technological changes and

innovations have created avenues for changes in the airline industry airlines are now focusing on

using technology to provide better experience to the passengers using audio songs and movies

during the flights. Airlines are also integrating technology in booking systems so that passengers

do not have to visit middlemen for booking their flights. Using such initiatives that airline is able

to reduce its cost more.

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References

Barrett, S.D., 2004. The sustainability of the Ryanair model. International journal of transport

management, 2(2), pp.89-98.

Barbot, C., 2006. Low-cost airlines, secondary airports, and state aid: An economic assessment

of the Ryanair–Charleroi Airport agreement. Journal of Air Transport

Management, 12(4), pp.197-203.

Düsseldorf, I., 2016. Ryanair. PESTLE Analysis of the Leading Low Fare Airline.

Müller, C., 2011. Case study and comparative strategic analysis of Toyota and Ryanair.