新西兰代写assignment|Ryanair Price Competitive

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Ryanair: It's Environment, Competition and Share Price

Introduction – Ryanair’s Share Price

Ryanair’s share price has dropped sharply over the last twelve months and, in particular, during the period from November 2007 to May 2008.

This paper explores the causes behind the drop in Ryanair’s value by examining areas which have impacted on Ryanair: its external environment (section A), the competitive environment (section B) and factors specific to Ryanair (section C).

Section A: Analysis of External Factors influencing the Low Cost Carrier (LCC) Sector

Three sets of factors have facilitated the development of Ryanair and the low cost carrier (LCC) sector in general.

Legal Issues

First, the legal conditions necessary for being able to fly between any two airports in the EU, irrespective of the airline’s nationality, came into force in 1993. At the time, this “third package”, as it was known, affected 15 EU Member States.

The size of the EU itself is a critical influencing factor. In 2004, ten further countries, mainly in eastern Europe, joined the EU on the same day and two further countries joined in 2007. By 2008, the air package covered not just all 27 EU member states but also Switzerland, Iceland and Norway. From a demographic standpoint, the enlargement permitted citizens of EU countries to travel to and work in other member states.

The UK in particular placed no restrictions on the ten countries which joined in 2004; the consequence has an explosion in passenger numbers. In 2003, for example, total passenger volumes between the UK and Poland was 512,000 passengers. In 2007, 4.4 million passenger movements between the two countries were recorded, with flights available from several cities in both countries.

Although a STEP and competitive analysis are often undertaken in isolation, we have here a classic example of bidirectional influence: although the freedom of movement of several hundred million people within the EU has undoubtedly contributed to the development of the LCC sector, the low fares and the increase in volume and geographically of available flights provided by Ryanair and its competitors has also caused the volume of passengers to increase. Thus, the two sets of factors can be seen as mutually re-enforcing.

Economic Factors

Another area influencing demand is the Euro. The bulk of Member States have either adopted the Euro or else the national currency is locked into the Euro with a fixed exchange rate (the Danish krone, for example). From a consumer’s viewpoint, one of the risks of foreign travel has been removed, namely incurring losses through adverse exchange rate movements and price transparency, in that a German holidaymaker to Greece sees the prices in the holidaymaker’s own currency.

Source: Platts

Fuel accounts now for up to 40% of airline costs and the increases have fed through to higher fares via fuel supplements. Of the £36 costs incurred by easyJet, for example, £10 (i.e. 28%) is accounted for by fuel costs; for Ryanair, in the 12 months to March 2008, fuel costs were 37% of total operating costs.

The reason for the difference is due to fuel hedging policy. easyJet has 40% of its fuel hedged at $75 per barrel until September 2008, the end of its financial year. By contrast, Ryanair took a risk - and lost - on the price of fuel as, until recently, it had no hedging on its fuel at all. However, it has fixed the price of its fuel at around $125 for the rest of the year; in other words, at a significantly higher level than its largest rival.


Ryanair and other LCCs distribute their sales either mainly or entirely through the internet. Usage of the internet in countries which the LCCs serve is therefore a critical success factor. We can see from the Eurostat table below that, in three years, the proportion of households having broadband internet access has increased considerably in eastern European countries.
















Source: Eurostat

The three “new EU” countries sampled can be seen to be only a year or two behind the UK in developing mass access to high speed internet services.

Social Factors

A key social factor that has influenced demand for air travel is a trend away from having one large holiday and indulging in more city breaks. Once again, however, it is difficult to isolate whether this changing social behaviour is influencing the industry or whether it is competitive behaviour in the LCC sector which is driving the trend for short breaks.

Section B: Ryanair and its competitors

Market Definition

Ryanair’s market is best defined as travellers within Europe and the Mediterranean area. The airline has bases in several European countries and is by no means totally dependent on the UK for traffic volume. Thus, Ryanair’s actual market is the intra-European air travel market, whilst its potential market also includes trips made by other modes.

Ryanair and the Competition

The degree of competition is on three levels. First, within the LCC market, Ryanair is the market leader in terms of passengers carried and profitability. The next two largest players are easyJet and Air Berlin. There are several other players in this market including Wizzair and Sky Europe (based in central Europe), BMIBaby and Thomsonfly (UK), Air One (Italy) and so on.

The table below indicates the relative size of Ryanair and its two largest competitors previously and for the latest full year available.

Passengers carried





54.2 (Year to July 2008)



42.0 (Year to July 2008)

Air Berlin


27.9 (2007)

Source: various airline annual reports and traffic figures

Minimum growth has been at easyJet, which still managed an annual average growth of almost 19% per annum, which is more than triple GDP growth.

It should be remembered that the low cost sector is part of the wider commercial aviation sector and, indeed, easyJet believes that its biggest competitor is in fact British Airways rather than Ryanair. However, the total share of European travel covered by LCCs has been growing. Whilst LCC activity more than doubled between 2003 and 2007, overall European growth in air passengers was 31% over the same period (see appendix).

For trips not involving the UK, Ryanair has further competition from other modes (having to use Eurotunnel is relatively complex and expensive compared to jumping into a car). Europe’s high speed railway network is being developed in Spain, Italy, France, Germany and the Benelux countries and, as these railways continue linking across borders, competition from railways will intensify (for example, airlines have given up flying between Brussels and Paris, thanks to rail competition).

Last, and by no means least, is competition from the private car. Car has two major advantages over Ryanair: there is no need to book and the cost of the trip does not increase with the number of passengers.

Customer markets

Ryanair has traditionally targeted markets which are different to other LCCs. An examination of the route networks of easyJet and Ryanair reveals that whilst easyJet has a major part of its network devoted to holiday traffic between the UK and the Mediterranean, Ryanair has been more focussed on other markets such as workers travelling abroad and the VFR (Visiting Friends and Relatives) market. For example, the extensive route network Ryanair now has between western and eastern Europe targets principally east Europeans working and living outside their home country.

Pricing Strategy of Ryanair

Ryanair has a two part pricing strategy. First, it aims to offer the lowest fares of any of its competitors and, thanks to its lower cost base, it is able to achieve this objective. Moreover, Ryanair runs very frequent price promotions: it is currently offering 2 million seats for sale in October, with prices starting from £10 return (including fees and taxes).

However, this fare covers just the core flight and excludes handling fees of £4 per person per flight for credit/debit card payments, checking in a suitcase (£8 one way) and airport check-in (£4 per person per flight). Ryanair would also hope to gain income through optional ancillary revenue streams such as in flight food and drink or car rentals booked via its site through Hertz.

The importance of the ancillary revenue stream to Ryanair can be seen by comparing the annual reports of 2003 and 2008. In 2003, ancillary revenue accounted for 13% of Ryanair’s total revenue stream. Thanks to the new charges for baggage and airport check-in, the proportion had climbed to 18% five years later. With increases in baggage handling costs and booking fees having increased in 2008, the 2009 proportion should climb to over 20% of the total.




Ancillary / Total









Section C: Historical Performance

Ryanair has historically had two sustainable competitive advantages: it ordered most of its new fleet at a time when aircraft prices were severely depressed and, according to IATA (International Air Transport Association), it enjoys an operating cost advantage through very high utilisation of its aircraft and the use of secondary airports which attract lower costs.

For example, Ryanair flies to several cities in Poland from the UK, but not Warsaw. Also, Ryanair uses Weeze airport (one hour away from Dusseldorf) rather than the closer but more expensive Dusseldorf airport.

However, Ryanair’s share price signals its reliance on the UK economy above all, with 70 of its 159 aircraft based in the UK (Ryanair does not provide a breakdown of passengers by route or country). Therefore, the combined market of UK citizens travelling abroad and foreigners visiting the UK either for work or leisure purposes is by far the company’s largest market. With the exception of foreign leisure travellers, these markets are influenced by the state of the UK economy.

A quick way to examine an airline’s health is to check the company’s load factor (the proportion of seats sold on its aircraft). In the twelve months to July 2008, Ryanair’s load factor stood at 81%. By contrast, in the 12 months to July 2005, the load factor was 84%. Therefore, demand for Ryanair’s flights is not keeping up with the increases in capacity provided, as signalled by the drops in GDP during 2008.

Although a three percentage point drop may seem like a marginal difference, it means that on every Ryanair flight, there were an average of 5.7 seats empty which would have been filled in 2005 (Ryanair’s aircraft have 189 seats). As the cost structure of Ryanair and other airlines includes a high proportion of fixed costs, the marginal revenue from these empty seats would have delivered a significant improvement to the company’s bottom line. With over 1,000 flights per day, say 350,000 per annum and assuming an average revenue per customer of €40, the loss incurred by Ryanair due to the lower load factor is 350,000 * 5.7 * €40 = €80 million.

The drop in load factor is not a phenomenon specific to Ryanair. According to the European Low Fares Association, which covers 12 LCCs but not Air Berlin, load factors has been gradually dropping from 83% in 2006 to 81% in the twelve months to June 2008.

Not only has the UK been hit harder by the credit squeeze than most other European countries (for example, mortgage approvals have dropped for 14 months in succession and are now at their lowest ever level) but the combination of the crunch and the deteriorating economic situation has affected consumers’ willingness to undertake expenditure. Consumer confidence, as measured by Nationwide Building Society’s index, has fallen every month since September 2007

However, although there are specific factors driving the reduction in Ryanair’s share price – in particular, the price it is paying for its fuel in 2008 remains unhedged – the main factor is the downturn of the economy, the strength of the € against the £ (the exchange rate has weakened from €1.50 to €1.26 or so within a year, which makes Euro countries more expensive for UK visitors), the credit crunch as well as the price of oil. So, we can see that easyJet and TUI Travel, the UK’s largest tour operator, have also suffered slides in their share prices (see appendix).


There are three generic factors which can effect a company’s share price:

  • external factors, over which the company has little or no control;
  • competitive factors within the industry; and
  • company-specific issues.

In this paper, I have given examples of all three factors in play, namely the oil price and the level of economic activity in the marketplace, overcapacity in the industry (as witnessed by declining load factors) and Ryanair management’s decision on fuel hedging.


Share Price of Other Major Players In The UK Travel Industry


TUI Travel (Thomson)

Air Passenger Volumes by Member State, 2003-2007

Source: Eurostat


5-year low for air passenger growth “ Seen at [accessed on August 20th 2008]

Air Berlin Company Profile”, seen at [accessed on August 20th 2008]

CAA Airport Statistics, seen at [accessed on August 20th 2008]

Centre for Asia Pacific Aviation, “Ryanair's bludgeon now favourite to beat competitors scalpels”

[accessed on August 21st, 2008]

ELFAA, Statistics, June 2008 [accessed on August 21st, 2008]

Eurostat, “Households having access to the Internet, by type of connection - (as % of all households)”, see at [accessed on August 20th 2008]

IATA, Economics Briefing no. 5, “Airline Cost Performance”, 2006, [accessed on August 20th 2008]

Mortishead C., “Low-cost airlines hit by recession and fuel price escalation”, April 2nd 2008, seen at [accessed on August 20th 2008]

Nationwide Building Society, “Nationwide Consumer Confidence Index”, August 2008, seen at “ [accessed on August 22nd 2008]

Osborne H., “Mortgage approvals hit record low”, July 29 2008, seen at [accessed on August 20th 2008]

Ryanair, “Annual Report 2008” seen at [accessed on August 21st 2008]

Ryanair, “Roadshow Presentation: Full Year Results -31 March 2008” seen at [accessed on August 20th 2008]


简介 - 瑞安航空的股价
在过去十二个月, Ryanair的股价已经大幅下跌,特别是从2007年11月至2008年5月期间。
本文探讨了Ryanair的研究领域,对瑞安的影响值下降背后的原因:它的外部环境(A节) ,竞争环境(B节)和瑞安( C部分)的具体因素。
A节:低成本航空公司( LCC )行业的外部因素影响分析
三套因素促进发展的Ryanair和低成本航空公司( LCC )界普遍。
首先,法律能够在欧盟任意两个机场之间飞行,不论航空公司的国籍的必要条件,于1993年生效。当时,它被称为“第三包” ,受影响的15个欧盟成员国。
特别是在英国上放置任何限制的10个国家于2004年加入的后果有一个爆炸的乘客人数。例如在2003年,英国和波兰之间,总客运量为512,000人次。在2007年, 4.4万人次两国之间的变动记录,可在这两个国家的几个城市的航班。
影响需求的另一个领域是欧元。大部分的会员国已采用欧元或其他国家的货币被锁定在固定汇率欧元(丹麦克朗,例如) 。从消费者的角度来看,一个国外旅游的风险已除去,即招致损失的不利的汇率变动和价格的透明度,在一个德国度假者希腊的看到度假者的本国货币的价格。
现在燃油占航空公司成本的40 % ,增加送入更高的票价通过补充燃料。英镑36 easyJet的成本,例如, 10英镑(即28%)占燃料成本;瑞安航空,在12个月至2008年3月,燃料成本总经营成本的37% 。
差异的原因是由于燃油对冲政策。 easyJet的40 %的燃料对冲在每桶75美元,直到2008年9月,其财政年度结束。相比之下,瑞安航空燃油价格的风险 - 失去 - 因为,直到最近,它没有燃料对冲。然而,它有固定的燃料价格在125美元左右,在今年余下时间,换句话说,在一个更高的水平比其最大的竞争对手。
B节: Ryanair和其竞争对手
是在三个层面上的竞争程度。首先,在LCC市场,瑞安航空载客量和盈利能力方面的市场领导者。接下来的两个最大的球员是easyJet和柏林航空。还有其他一些球员在这个市场中,包括欧洲天空Wizzair (根据欧洲中部) , BMIBaby THOMSONFLY (英国),空气(意大利)等。
27.9( 2007 )
easyJet的,仍然每年年均增长近19 % ,这是超过三倍的GDP增长一直处于最低增长。
低成本部门应该记住的是更广泛的商业航空部门的一部分,事实上,easyJet的认为,其最大的竞争对手其实英航而非瑞安。然而,欧洲旅行所涵盖的低成本航空公司的总份额一直在增长。虽然LCC活动在2003年和2007年间增加了一倍以上,在空气中乘客的整体欧洲经济增长较上年同期的31% (见附录) 。
对于不涉及英国的行程,瑞安有进一步的竞争,从其他模式(使用英法海底隧道跳进一辆汽车相比,是比较复杂和昂贵的) 。欧洲的高速铁路网络正在开发在西班牙,意大利,法国,德国和比荷卢三国,因为这些铁路继续跨越国界连接,来自铁路的竞争将加剧(例如,航空公司飞布鲁塞尔和巴黎,感谢之间铁路竞争) 。
瑞安有两部分定价策略。首先,它的目标是任何竞争对手提供最低票价,得益于其较低的成本基础,它是能够实现这个目标。此外,瑞安运行非常频繁的价格促销:它是目前提供2万个座位, 10月发售,价格从$ 10回报(包括费用和税金) 。
然而,这种票价只是涵盖的核心飞行,并排除4英镑的手续费,信用卡/借记卡支付,在一个手提箱检查(单程)机场办理登机手续( 4每人飞行每人每次飞行) 。瑞安航空也希望通过可选的辅助收入来源,如飞行中的食品,饮料或汽车租赁服务,通过其网站,通过赫兹预订获得收入。
通过比较2003年和2008年的年度报告中可以看出,瑞安航空公司的辅助收入来源的重要性。在2003年,副业收入占13 %的Ryanair的总的收入流。多亏了新的收费标准和机场检查行李,比例已经攀升至18% ,五年后。随着行李处理成本和增加收预订费在2008年,2009年的比例攀升至超过20 %的总。
瑞安历史上有两个可持续的竞争优势:它最责令其新车队的时候,飞机的价格被严重压抑,根据IATA (国际航空运输协会) ,享有其飞机利用率非常高的经营成本优势,通过和使用二级机场吸引降低成本。
例如,瑞安苍蝇到来自英国几个城市在波兰,但不华沙。此外,瑞安使用一个小时的路程,从杜塞尔多夫韦策机场( ),而不是接近,但更昂贵的杜塞尔多夫机场。
然而,瑞安航空的股价表明其对英国经济的依赖高于一切,其总部设在英国(瑞安航空不提供乘客的细分路线或国家)的159架飞机70 。因此,结合市场的英国公民出国旅游和外国人来访的英国工作或休闲的目的之一是迄今为止该公司最大的市场。随着国外休闲旅客例外,这些市场受英国经济的状态。
检查航空公司的健康的一种快速方法是检查公司的客座率(其飞机上出售的席位比例) 。在十二个月至2008年7月,瑞安航空的客座率为81% 。相反,在12个月至2005年7月,客座率为84% 。因此,瑞安航空的航班需求没有跟上与提供能力增加,标志着在2008年的国内生产总值下降。
虽然3个百分点下降,可能看起来像一个边际差异,这意味着每瑞安航空飞行上,有一个平均的5.7个席位空2005( Ryanair的飞机有189个座位)将已经充满。 Ryanair和其他航空公司的成本结构,包括高比例的固定成本,这些空座位的边际收益将已经发表了显着改善公司的底线。每天拥有超过1,000个航班,说每年350,000和40欧元的假设每用户平均收入,由瑞安招致的损失,由于较低的客座率为350,000 * 5.7 * 40 = 80万元。
客座率的下降是不是一个特有的现象,瑞安。根据欧洲低票价协会,其中包括12个低成本航空公司,但不是柏林航空,负载因素已逐渐从2006年的83%下降到81 %,在12个月至2008年6月。
不仅在英国被击中更难比大多数其他欧洲国家的信贷紧缩(例如,抵押贷款批准已连续14个月下降,现在正处于有史以来的最低水平) ,但紧缩和经济形势恶化的结合影响消费者愿意承接开支。 2007年9月以来逐月下降,全国建筑商协会指数,消费者信心指数,作为衡量
然而,虽然有特定的因素推动减少Ryanair的股价 - 尤其是,它的价格支付其燃料在2008年仍然未对冲 - 在低迷的经济,兑英镑€强度的主要因素(汇率欧元从1.50欧元到1.26或一年内有所减弱,这使得欧元区国家,英国游客更昂贵) ,信贷紧缩以及石油价格。因此,我们可以看到, easyJet和英国最大的旅游运营商TUI旅游,也遭受了其股价的幻灯片(见附录) 。
“ 5年来的新低,航空客运的增长”看到在 [访问于2008年8月20日]
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[ 2008年8月21日]
ELFAA , 2008年6月统计 [ 2008年8月21日访问]
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空运协会,经济简报没有。 5,“航空公司成本绩效” , 2006年, [ 2008年8月20日]
8月20日,“ Mortishead C.撞了经济衰退和燃料价格上涨的低成本航空公司”, 2008年4月2日,在看到[访问2008]
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奥斯本H. , “按揭审批创下历史新低” 2008年7月29日,看到 [访问于2008年8月20日]
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