Why Did Ryanair’s Initial Launch Strategy Fail and Bring the Company to the Brink of Bankruptcy?

1. Why did Ryanair’s initial launch strategy fail and bring the company to the brink of bankruptcy?

Rayanair’s launching strategy was to be cost leaders. They were trying to achieve this through cutting costs severely. They eliminated loss making routes, eliminated any services offered on the plane, coffee, snacks, no meals, emphasized on duty free items, and employees were charged based on their productivity. The well fare of the company was worsening, for instance, employees sometimes did not find pens to write with. Rayanair was very careful with their spending, they were copying Southwest Airlines. But they copied them stupidly and poorly. The company was going to be bankrupt and they were very cautious where they spend their money.

 However, the low cost-low fares strategy was not profitable after all and the strategy suffered from some problems. They did not consider that they are copying competitors; they even did not consider that the competitors will react; they did not have strategy that will retaliate to the competitors. They attracted consumers based on low price of fares only; they neglected the service and anything else. This is a major factor why consumers might not choose them later on.  

1. How did Ryanair move from the brink of bankruptcy to being one of the most profitable airlines in the world?

Ryanair became profitable is through sticking to their old strategy but they made some modifications to it. They kept following the low cost strategy and simultaneously eliminating frills, started serving secondary airports, negotiated with airports for low landing costs and low turnaround costs. they did not pay any fees at the secondary airports. This attracted several airports to start dealing with Rayanair to serve their locales. Consequently, the Ryanair effect took place and the total passenger traffic on a route increased. In addition, unlike most of the rivals Rayanair did not use air bridges because managers perceived the metal stairs to be cost efficient and serving them well. They were trying to reduce their costs as much as they can.

Rayanair started to pay more attention to the consumers and find different ways to satisfy them. They started implementing the online booking on their websites. This allowed consumers better access and control, besides this it enabled Rayanair to reduce the commissions that are given to the travel agents. In addition, to this there was no need for a big number of employees for booking tickets and so they reduced their employees. Moreover, the enhanced the check in procedure, unlike other competitors Rayanair provided passengers who are taking connecting flights with more convenience, they did not have to check their baggage all over again.