In almost anything a consumer does, whether she or he is an institutional buyer, industrial buyer or plain individuals, they will always tend to compare substitutes to find the best deals. This is especially true in hard times where customers demand for premium service as more passengers seek less expensive travel alternatives. Ryanair has a superb cost management, free seats when the company is feeling generous, no frills in flight, and with its aggressive advertisement campaigns which take on its rivals: the overpriced airlines (when they attempt to impede Ryanair’s route) and airport management or the EU Commission (when they would perform moves that would push Ryanair to charge more).
Low-cost airlines rely on a simple business design: one kind of aircraft, one class of passenger, and more seats crammed into the airplane–as well as no airport lounges, no choice of seats, no newspapers, no food, no frequent-flyer programs, no connecting flights, no refunds, and no possibility of rebooking to other airlines. Also, there are no travel agents and expensive computer reservation systems; about 90 percent of Ryanair tickets are booked over the Internet.
By keeping the logistics simple, no-frills airlines cut turnaround times on the ground and maximize revenue-generating air time by minimizing landing and ground-handling fees (Binggeli and Pompeo 2002).
Lower costs and higher seat-load factors permit no-frills carriers to offer fares 50 to 70 percent lower than those of the incumbents. This approach attracts price-sensitive and flexible travelers, even those who don’t find the lack of convenience and flexibility the slightest bit appealing. Another strength is the CEO’s brash, no compromise attitude that truly drives the company because a low-cost and low-fare airline would really need a leader who will be daring enough to pedal the company towards profitability despite the circumstances. By his outrageous and oftentimes risky moves, he is able to attract attention and promotion to its favor. Customers cannot resist Ryanair despite the lack of convenience because the seats are sometimes virtually free (or totally free) with the airline making money of the premium services such as food and drinks aboard. It gives customers what they want in a fee that will only pay for the travel which is what airlines are supposed to do primarily. The lowest cost airfare is always sure to win the competition even in the direst, most intense circumstances.
Credit:ivythesis.typepad.com
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