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Ryanair and EasyJet Firms Strategies and Competition
The name of low-cost carriers (LCCs) implies the main factor in determining these companies strategies. However, the low prices for customers do not mean that these businesses cannot stand out. In the case of Ryanair and EasyJet, the two competitors are similar in many aspects but different in others. First, both LCCs have a fleet with a limited range of aircraft. Notably, Ryanair uses Boeing planes, and EasyJet has Airbuses, but this part of their strategy is the same as it results in low costs of maintenance and staff training (Ethiraj & Anders, 2015). Furthermore, the companies offer prices lower than those of full-service carriers. The flight routes are also similar in duration and the selection of destinations. This choice allows the businesses to compete in the low-cost segment of the market that attracts clients who want to book a cheap flight in advance.
However, EasyJet differentiates itself from Ryanair in several ways, which allows it to gain customer and shareholder recognition. Exhibit 5 of the case study shows that EasyJet offers flights to more popular destinations than Ryanair 45 to 41, respectively (Ethiraj & Anders, 2015, p. 7). Furthermore, EasyJet does not profit from ancillary sales one of the central revenue sources for Ryanair. In 2014, Ryanair gained $1,247 billion in this segment, while EasyJet made only $79 billion (Ethiraj & Anders, 2015, pp. 8-9). Such a difference is substantial, showing that EasyJets strategy does not rely on in-flight sales. According to consumer reviews, it is apparent that EasyJet is committed to customer service, crafting an image of a comfortable LCC. Therefore, it has a high potential of dominating Ryanair in segments with higher importance placed on comfort. In contrast, Ryanairs choice to use secondary airports and its cut costs on staff training limit the airline to customers who do not care about service.
To respond to the potential and growing threat of EasyJet, Ryanair needs to review its cost-cutting principles and analyze the current customer preferences. As noted in the case study, customers perceive EasyJet as both a cheaper and more comfortable brand than Ryanair (Ethiraj & Anders, 2015). Although Ryanair has cheaper tickets than its competitor, it is possible that clients perception is influenced by the large number of other products and services that Ryanair offers during the flight. As most of the described items do not increase comfort and customer service, they may lead to a negative experience. Second, customer care also has a major impact on peoples perception, which can affect their view of the ticket price. To overcome these problems, it is recommended that Ryanair reduce the segment of ancillary revenue sources and invest in customer service training for its personnel.
Furthermore, Ryanairs highly limited offers for customers further restrict its ability to appeal to other market segments. For instance, as the company does not allow assigning seats or choosing classes, it potentially loses clients who travel in groups or customers with specific needs. EasyJet caters to these segments, taking away a portion of the market and further improving its brand presentation. Therefore, Ryanair can add assigned seats as a separate service for a low price, which could increase the airlines revenue and attract new clients. Overall, Ryanairs brand image among past and potential customers and shareholders seems to be the main issue that could lead to decreased growth in the future. The airline needs to consider the changing demands and appeal to customers in segments requiring more comfort and care.
Reference
Ethiraj, S., & Anders, P. (2015). Ryanair vs. EasyJet in 2014. London Business School.
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