Ryanair is an Irish airline founded on 28 November 1984, but only began operations on 8 July 1985. Ryanair was founded by the Ryan family, with a share capital of just £1, and a staff of twenty-five people. The first flights were on a 15-seater aircraft, operating daily from Waterford to London Gatwick. Ryanair was Europe's first low-cost airline. Their company slogans are “Low Rates Made Simple” and “Always Improving.” Over the course of a year, Ryanair managed to transport 5,000 people. The airline went public in 1997 and the money raised was used to expand the airline. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay In 2009 Ryanair bought 30% of the shares of Aer Lingus after a long takeover bid. It wanted to buy the whole of Aer Lingus, but the competition commissioner pointed out that the combined airline would have a near-monopoly in Dublin, with no competition on 22 of 35 routes. “Ryanair has given customers more competition and more choice, but now it cannot take away that choice.” Today, Ryanair, based at Dublin Airport, has grown from a small airline flying the short route from Waterford to London to become Europe's largest airline. Ryanair carries more than 130 million passengers from 200 destinations in 34 countries on a fleet of 400 Boeing 737s, with a further 260 Boeing 737s on order. Ryanair plans to lower fares and increase traffic to over 200 million. Ryanair has a team of over 13,000 employees and an industry-leading safety record. As at 31 March 2017, Ryanair recorded a turnover of 6.6 billion euros and profits of 1.5 billion euros. Ryanair initially followed a traditional business model, but soon started losing money. Michael O'Leary (now CEO of Ryanair) was sent to the United States to study Southwest Airlines' business model. The business model has been further developed by Ryanair to use receipts from on-board purchases, internet gaming, car rental (Hertz), calling cards, bus and train tickets (Stansted express) and reservations hotels to replace ticket revenue from airline seats. About 16% of their profits come from upselling. Savings have also been made by negotiating discounts with airports for reduced landing fees. Ryanair offers passengers low-cost, no-frills air travel to European destinations. The company has lower costs, and those lower costs are passed on to passengers in the form of low fares. Branded airlines like Emirates argue that passengers are willing to pay more for a better level of service. Ryanair has earned a reputation for being an airline that thrives on controversy. CEO Michael O'Leary knows the value of being controversial and knows that even if you are controversial this will give you free publicity which, in any business situation, has value. Some of his quotes are so controversial that she wrote a book about him, titled "Plane Speaking: The Wit and Wisdom of Michael O'Leary by Paul Kilduff and which was published by Aurum Press in 2010". Ryanair has been in the news in recent months regarding union recognition. Ryanair has reversed its long-standing policy of non-recognition of unions, as the airline faced the threat of widespread industrial action across Europe ahead of the busy Christmas period. The market structure of the low-cost airline industry The word “oligopoly”comes from the Greek words meaning “few sellers”. Oligopoly describes a market consisting of a relatively small number of large players when viewed from a global perspective. The products they produce are not exactly the same but similar enough to create competition within the market. There are several examples of markets that possess the characteristics of oligopolies, including the fast food industry where some large players compete for market shares such as Mc Donald's, Burger King and KFC or the music industry dominated by Sony, Universal and Warner. In the airline industry, Ryanair's main competitors (low-cost airlines) include Aer Lingus, Easy Jet, WOW and Norwegian Airlines. Another distinctive feature of an oligopoly is that the success of the enterprise often depends largely on the actions of its main competitors, i.e. Porter's five forces. Porter's work has had a greater influence on corporate strategy than any other theory in the last half of the century. 20th century. Porter's Five Forces framework classifies and analyzes the most important forces that influence the intensity of competition in an industry and its level of profitability. Porter's five forces are as follows (i) threat of substitutes, (ii) threat of new entrants, (iii) bargaining power of buyers, (iv) bargaining power of suppliers, (v) rivalry among existing competitors. Porter's five forces have influenced Ryanair's strategy as follows: - Threat of substitutes The threat of substitutes is low as there are numerous other systems in Europe such as trains, buses and cars that can be used to travel short-haul routes. However, train fares are not cheap. They also take much longer. Ryanair addresses this issue by providing a comparison of their fares to train fares on a range of routes on their website, encouraging people to use their services on non-air transport (Dubovskiy, 2012). This reflects a weak replacement threat for Ryanair. The threat of new entrants Although one of the primary functions of government is to preserve competition within the market so as to ensure economic health, they can also create, directly or indirectly, barriers to entry into the industry through laws, regulations, strict policies and policies. and procedures. These barriers may prove to be a deterrent for any new operators wishing to enter the market. The threat of new entrants is low in the aviation industry, as it is an expensive industry for new entrants to enter. The barriers to entry are high. Buying or even leasing planes is expensive. It is expensive for new airlines to get slots at desired airports and it is difficult, especially for new airlines, spare parts inventory is not cheap and so on. Enormous marketing costs would have to be incurred to generate awareness. The personnel required for an airline such as pilots, flight stewards are not cheap nor is it easy to find qualified personnel. Developing the low operating costs that airlines such as Ryanair have developed requires experience and economies of scale (Bagdanskas, 2016). Only then can low-cost flights be profitable. Therefore the threat of new operators is not high for Ryanair. Bargaining Power of Buyers This is high as the budget airline industry lacks customer loyalty or brand loyalty. Customers are only loyal to low rates. Whichever player offers the lowest rates wins the most customers. The switching cost for buyers is almost zero. If a player tries to raise rates, buyers will move, 2017)., 2016)