A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. Prices. WebRyanair in comparison to Easyjet has increased its turnover to 2,171 million (2008) 1, 90-135 d, Poland Ryanair is not much affected by buyers bargaining power since airline customers are scattered throughout Europe and no single customer makes bulk purchase of airline tickets. Thus EasyJet cannot achieve low cost in all activities and so has ended up being the second best low fare airline in Europe after Ryanair (Sorenson, 2005, pp. Through this strategy, Ryanair became less concerned about existing competition because it was operating in a unique market segment that other airlines had not used before (Ryans 2009). O. P. of Ryanair has increased by 70% between the same period 2010 to 2012, and N. P. has increased by 84%. Ryanairs working capital needs as a percentage of total assets has been consistently around the 15% mark whereas for EasyJet it has been 5. While Ryanair was better hedged its fuel expenses raised 560% versus 2006). All these along with various functional problems presented immense challenge to the performance level of EasyJet. In case of Ryanair, the assets and liabilities have both registered positive growth. 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. Correct writing styles (it is advised to use correct citations) Furthermore, like Ryanair, Easyjet also bases its corporate strategy on Southwests business model. Raccomandazioni degli analisti su EASYJET PLC: 27/04: easyJet plc: JPMorgan cambia rotta e passa a un giudizio Neutral Chief Financial Officer & Director: Stephen Alan Michael Hester 4 601: SINGAPORE AIRLINES LIMITED: 5.06%: 28 092: AIR CHINA LIMITED: 0.86%: 21 445: DELTA AIR LINES, INC.-0.33%: 21 317: RYANAIR student. Short distance routes are also limited to low-cost airlines because European Union (EU) policies favour train services as opposed to airline services (Air France 2011). Environment Airline services can be drastically disrupted by natural calamities, for instance the 2010 Eyjafjalla volcanic eruption in Iceland disrupted European air space for several days. This affirmation aligns with the goal of Ryanair, which is to firmly set up itself as Europes leading low-fare scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service (Freire 2014, p. 4). Then there is also a growing interest in multiple product features, product quality and service which may cause people to try other airlines merely to get a different kind of experience (Muller, 2011, p. 39). In their 2021 fiscal year, EasyJet's revenue continued to decline, Experts say Southwest Airlines was among the first aviation companies to exploit the opportunities that existed in the low-cost airline market segment (Dobruszkes 2006; Kew & Stredwick 2005). Liquidity and Current ratio Under this ratio, we measure the companys ability to meet it short term expenses. The company brands itself as Europes only ultra low-cost airliner because it is the regions largest low-cost airline company (Mayer 2008). Today, the airline still reaps the benefit of being among the first airline companies, in Europe, to adopt the low-cost airline strategy. By managing and controlling competition in the sector, both Ryanair and Easyjet have generated superior values for their investors. OConnell, J. Ryanair can either lower air fare to level with that of the new entrant or else can lower further which will make the new entrant struggle to survive because of its low capital base. Furthermore, a comparison between Ryanair and other major low-cost model airlines such as easy Jet revealed better corporate reputation and perception of easy Jet, which impacts negatively on Ryanairs competitiveness. At first Ryanair plans schedules for aircrafts in the manner that they stay in air for longer periods thus avoiding loss incurred from grounded aircrafts. This compare & contrast essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) was written and submitted by your fellow 17, no. Evidence of this fact emerges in Paris as a common destination for both airlines. This is because globalization has enhanced alliance between nations for trade, technology, labor etc. https://www.easyjet.com. Also, primary airports prefer to do business with high fare airlines since low fare airlines like EasyJet are not favorably poised to pay for many of the sophisticated landings, baggage and check-in services. The sustained economic recession with the European Union with no signs of it abating in the near future induces business travelers to reduce their travel expenses. is an Irish airline company. This paper analyses the corporate and competitive strategies of Ryanair and Easyjet. Alternative modes of transport do not form a threat to low fare airlines like EasyJet and Ryanair for distance more than 400 km. 53-54,58). In doing so, a company tends to improve its earnings per share (EPS). Web. EasyJets aircrafts have distinctive features that make them distinguishable from aircrafts of rival airlines. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. Economic The price of oil primarily affects any airline companys viability. Political Since Ryanair has its base in both European Union (EU) and Ireland, it is regulated by authorities both in the Ireland and the EU e. . They have earned more incomes and have flown more people than ever before. Equity ratio for EasyJet has marginally increased in 2012 compared to the previous year and similarly for Ryanair in 2013. 26 between the same period. This puts pressure on the low cost strategies adopted by Ryanair and EasyJet. 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. With rising employment, the purchasing power of people also improves. Efficiency ratio has increased in 2012 for both EasyJet and Ryanair which means they can make all payments because of greater profitability and higher sales volumes. Its high seat density arrangements on board allow optimum use of aircrafts. 59% for years 2010, 2011 and 2012. Today EasyJet has in its service 175 aircrafts over 400 routes in 27 countries. One common economic factor that affects a low fare airline like Ryanair is overbooking by customers and their compensation later on. Its strength lies in reducing cost of activities on board. Ryanair has had no air accidents with casualties till date. 17 in 2012 for Ryanair. Supplemental understanding of the topic including revealing main issues described in the particular theme; Nonetheless, Ryanair commands a stronger market share than Easyjet does. Other segments of its working model appear below. Both the airlines use frequent-flyer program which is an added advantage over any new entrants. Furthermore, the no-frill strategy works by eliminating in-flight services to lower operating costs. Differentiating services for airlines is not viable for many primary airports. British multinational low-cost airline group headquartered at London Luton Airport. 76%. Malighetti, P., Paleari, S. & Redondi, R. 2006, Pricing strategies of low-cost airlines: The Ryanair case study, Journal of Transport Geography, vol. The database is updated daily, so anyone can easily find a relevant essay example. Ryanair has a higher gross margin than EasyJet. This kind of differentiation has created an advantage over competitors. Technological innovations like videoconferencing is actually another form of substitute since it enables business people to do meetings online thereby flights become unnecessary for face-to-face meetings. 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. 1, pp. 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. Ryanair's operating profit grew by 40% to EUR1,460 million, and revenue increased by 16% to EUR6,536 million. Comparative analysis based on PESTEL Ryanair and EasyJet both being the top European low fare airlines face some common advantages and disadvantages. 58 to 6. The total assets have increased by 19% (non-current assets 14% and current assets 27%) over the two year period between 2010 and 2012. 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. Both these airlines ever since they have come into existence in 1984 (Ryanair) and 1995 (EasyJet) have proliferated all over Europe mainly due to conducive economic conditions and environment, made possible owing to the formation of European Union which allowed airlines from member states to operate within the union without hindrance. More than 20 airlines have collapsed after adopting the low-cost strategy (Air France 2011). The companies have also strived to support their leadership positions and create value for their shareholders by maintaining operation efficiencies. 59% of the total revenues as operating profits for the same three years. The company chose this strategy because it did not believe that these services contributed to customer satisfaction (Kew & Stredwick 2005). However in the measure of Return on Assets, EasyJet consistently outperforms Ryanair over the study period of three years (2010, 2011 and 2012). IvyPanda. The commitment and dedication towards work that stimulates the employees of EasyJet kept its workforce going and provide uninterrupted world class service. 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. 07%, 5. Since EasyJet and Ryanair both are low fare airlines they focus more on cost saving strategies thereby compromising on comfort levels during flights and other customer services. We utilize security vendors that protect and 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. This can end up with the new entrant leaving the industry. This also reflected in the Interest Cover ratio. The company conveys these advantages to its customers by operating in secondary airports where long queues and complicated security rules rarely inconvenience customers (OConnell & Williams 2012). WebThe gross margin of EasyJet is 8.00%, and 7.80%, while that of Ryanair is 11.16%, and 11.52%, for years 2017 and 2018 respectively. Bargaining power of suppliers EasyJet being a low fare airline may have disadvantages regarding the availability of the best air routes which will be taken by larger airlines. Then there are also problems of cancellations for delayed flights, for which compensations and reimbursements can become a major expense for Ryanair. 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. On the other hand, EasyJet has been earning at a modest rate of 5. 14 over the three years and where as in case of Ryanair, this ratio has improved from 0. Ryanair also severely lacks in customer service since one cannot contact the airline through phone or e-mail except for booking purposes. However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction Low fare airlines also face the problems of overbooking and cancellations which add to their compensation expenses. To achieve these results, Ryanair has used three levers: Labor Utilization: A large majority of Ryanairs pilots are actually not salaried employees but third party contractors [5]. 11 in 2010 to 0. More employment also means economic growth which can influence low fare airlines, because with more spending power people tend to emphasize more on quality and comfort during flight than price. Ryanairs net income after tax has been growing at a healthy rate and is almost twice the yearly percentage growth of EasyJet. Just talk to our smart assistant Amy and she'll connect you with the best EasyJets Net Current Assets to Sales i. e. , Working Capital to Sales ratio suggests that the company manages its debtors and creditors very efficiently. 14, no. Ever since, these two airlines have survived all odds and thrived to grow, changing the way people travelled. Analysis. (2023) 'Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)'. easyJet plc operates as a low-cost airline carrier in Europe. Get original paper in 3 hours and nail the task. This factor is more applicable on EasyJet since it is a low fare airline and availability of other low fare airlines on same route can be a threat to EasyJet. Low fare airlines have the problem of working with primary airports because of the expensive aerobridges and elaborate check-in-services of these airports. 500 Ryanair is alert to any technological development and strives to embrace new processes to enhance service efficiency. This is IvyPanda's free database of academic paper samples. Dobruszkes, F. 2006, An analysis of European low-cost airlines and their networks, Journal of Transport Geography, vol. Incidents like growing terrorist threats and air accidents even if they happen to other airlines tend to affect the demand patterns of EasyJet and Ryanair because of their low cost strategies. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost However, EasyJet has a policy of serving free refreshments to customers for long haul flights but this service is not available in Ryanair. There are some infrequent environmental issues that can disrupt services of airlines like volcanic eruptions, pandemics ike swine flu and government regulations like reduction of carbon emissions. For instance, there are two major aircraft manufacturers namely Airbus and Boeing. WebFar more of you flew with easyJet than any other carrier. Thus, it is apparent EasyJet generates more value for the shareholders. Vertical analysis measures all the items in terms of total revenue in the income statement and total assets in the financial position statement. The report contains an introduction to the business models of the airlines, their business strategies, SWOT analysis, analysis of porters five forces, financial analysis The success of these two airlines is primarily owing to innovative approach to business as against the age old practices and conventions of their older full fare rivals.
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