Operation Management
“Critically review Ryanair process technology and make recommendations on how improvements/investment can add value to increasing the efficiency and effectiveness of the operation.”
Executive summary
The attractiveness of airline industry has driven several companies to re-positioning their business strategy to cope with the challenge that the industry faces including the undulating oil price. This situation also happens at Ryanair, a well-known Irish low-cost carrier ((LCC).
In its annual reports, website pages and other publications, the company clearly displays their strategic management philosophies. There is also an elaboration of how that strategy guides the lower level strategy and their implementation. The strategic philosophy of the company is revealed in its mission statement, which is to be the largest airline in all Europe. The company plans to achieve this goal by deploying a constant corporate strategy of providing customers with excellent services at the lowest fares possible (being an LCC). This corporate strategy is then interpreted into a business strategy of delivering frequent low-fare and short-haul flight services to the most demanded destinations in Europe.
Introduction
Corporate objective of Ryanair is to establish itself as Europe’s leading LCC through continuous improvements and expanded offerings of its low-fares service. While maintaining continuous focus on cost-containment and operating efficiencies, the company aims to offer low fares that generate increased passenger traffic. Below is the element of Ryanair’s strategy:
Although the airline seeks to maintain its fleet in a cost-effective manner, management does seek to extend Ryanair’s low cost operating strategy to areas of safety, maintenance, training or quality assurance. In order to comply with this strategy, the company implements process technology in their operation.
Process Technology at Ryanair
Ryanair, an Irish low cost carrier (LCC) and also becomes the Europe’s largest LCC, which operate over 200 low-fare routes that serve more than 90 destinations across 17 European countries. This number still increase as the company has been characterized by rapid and continuing expansion.
To serve the vast flight, Ryanair use a large number of aircraft that consists of 7 Boeing 737-200, 1 Boeing 737-400 and 76 Boeing 737-800 as of April 2005. However, the company has made an order that will enhance the number of Boeing 737-800 in its fleet by 230 aircraft by 2010. Competition comes from other famous LCCs in Europe like Easyjet, Air Berlin, Germanwings and Transavia. The largest competition by far is coming from Easyjet as it announced routes to Ireland in 2004, which marked a direct competition between the airlines (Ryanair, 2006).
The process technology at Ryanair is based on their commitment to serve customer better. It is part of Ryanair’s strategy to deliver the bets customer service performance in its industry. Ryanair focuses strongly on the execution of customer services and on operations of uncongested airports. Until today, in comparison to others in the same industry, Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations.
In addition, Ryanair also offers frequent point-to-point service on short haul routes to secondary and regional airports around major population centers and travel destinations. These short-haul rotes allow Ryanair to offer frequent service while eliminating the necessity to provide frills as other airlines might offer. Point-to-point flying allows the airline to offer direct, non-stop routes and avoid the costs of providing through service for connecting passengers, including baggage transfer and transit passenger assistance cost.
In addition, Ryanair strives to reduce operation cost through three posts, aircraft equipment costs, personnel productivity, customer service costs and airport access and handling costs. In aircraft equipment, the company has a uniform fleet that reduces maintenance costs, furthermore, ordering in a large amount of aircrafts granted the firm additional price cuts from the original price. In terms of personnel productivity, the company strives to control its labor cost by improving the productivity of its already productive work-force.
Within the internet era, Ryanair also develops e-commerce strategy. The airline offers customers with online booking services and information centers. Since the launch of its new Skylights system, Ryanair has heavily promoted its website through newspaper, radio and television advertising. Since then internet bookings have grown rapidly, accounting for in excess of 96% of all reservations on daily basis as of September 2004.
The process technology at Ryanair website also drives the company to maintain the updated information and provide links to contact information and a page for customer feedback. The company also provides comprehensive information regarding its background and history and where the company is in its current position within the industry.
Conclusion and Recommendations
The business strategy of providing frequent low cost services falls down into operational strategies of maintaining low operational costs by offering no frills, maintaining a low maintenance costs by having a uniform fleet, using internet services to provide customers with online booking services, which has a considerably lower costs than a manual booking services, etc.
Bibliography
Barney, Jay B and Edward J Zajac. (1994), ‘Competitive Organizational Behavior: Toward an Organizationally-Based Theory of Competitive Advantage’, Strategic Management Journal. 15: 5-9
Bennet, N. Ketchen, DJ & Schultz, EB. (1998), ‘An Examination of Factors Associated with the Integration of Human Resource management and Strategic Decision making’, Human Resource Management 37 (1).
Ryanair. (2006), ‘Annual Report 2005’; Available at: URL:http://www.Ryanair.com/ [Accessed 10th August 2009]
Rupp, N. (2004), ‘Airline Schedule recovery after Airport Closures: Empirical Evidence since September 11th’, Working Paper at east Caroline University