Factors like growing terrorist threats and air accidents affect these airlines most because people tend to lose confidence over their security measures due to their low cost strategy. must. Since EasyJet and Ryanair both are low fare airlines they focus more on cost saving strategies thereby compromising on comfort levels during flights and other customer services. The company chose this strategy because it did not believe that these services contributed to customer satisfaction (Kew & Stredwick 2005). Comparing the 5 elements of Balance sheet of both the airlines, it can be observed that asset management has been good in both the companies. Automobiles, bus services and railways can act as substitutes but where time saving is important, there can be no substitute to airlines. Environment Airline services can be drastically disrupted by natural calamities, for instance the 2010 Eyjafjalla volcanic eruption in Iceland disrupted European air space for several days. Contact us: [emailprotected]. Therefore, the risk of overcapacity in the industry is real. There are some infrequent environmental issues that can disrupt services of airlines like volcanic eruptions, pandemics ike swine flu and government regulations like reduction of carbon emissions. Lastly, in Europe, too much competition in the low-cost airline sector offers minimal profit margins for existing players in the industry. Every effort has to be paid in order to keep the costs of operations at the bare minimum albeit without compromising on safety and security of passengers. However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. Secondly, there still exist problems like unwillingness to use credit cards over phone or via internet among the French and German customers which cause problems in online booking facilities. 14 over the three years and where as in case of Ryanair, this ratio has improved from 0. EasyJet and Ryanair Financial Analysis | SpeedyPaper.com However, EasyJet pays high fees to use the services of primary airports thus not achieving low costs in all its activities. Thirdly, there is a growing threat of terrorist attacks across Europe. On the liabilities side, the non-current liabilities have fallen by 14% over 2010 levels and where as the current liabilities have registered a growth of 19% during the similar period. There also exists internal rivalry between low fare airlines like Ryanair and EasyJet. In this case, both EasyJet and Ryanair have a witnessed a declining trend in the ratio from 2010 to 2012. In later sections of the study, this paper shows the operational areas where the organisational strategies of both organisations converge and diverge. In the first part, PESTEL analysis has been done along with comparisons of both the airlines. Low fare airlines primarily focus on keeping the costs down by cutting down on costs of customer service and airport facilities. Ryanair has put the increase in overall assets and liabilities to good use, it has managed to almost double the growth in net profits from Euro 305 million to Euro 560 million translating to an increase of 84% over 2010 levels. 59-60). EasyJet has done it exceptionally well in comparison to Ryanair. For example, in the quest to increase the seating density, the count of washrooms are kept at bare minimum. In doing so, a company tends to improve its earnings per share (EPS). resulting in high fees for airports. Ryanairs operating profit as percentage of total revenue for years 2010, 2011 and 2012 have been 13. 59% for years 2010, 2011 and 2012. Data demonstrates 10,000 invested in EasyJet in 2000 now amounts to 62,510, which is a far larger figure than 33,742 in the case of Ryanair. In the instance of EasyJet, while the non-current assets have registered a net increase of 19% in two years (2012) over 2010 levels as base, the current assets have seen at net fall of 12% during the same period. Since the factors cannot be influenced by a business enterprise, so it is upon the business to adapt itself to the factors. Mennen (2005) says it is important for low-cost airlines to adopt a low-cost structure if they want to create value for their shareholders. 1%, 7. 249264. The sustained economic recession with the European Union with no signs of it abating in the near future induces business travelers to reduce their travel expenses. The company conveys these advantages to its customers by operating in secondary airports where long queues and complicated security rules rarely inconvenience customers (OConnell & Williams 2012). The trend remains same in the given years for both the airlines in the Net Income ratio. B. Pastine International Airport, which is far away from the main business district. Your privacy is extremely important to us. (2023, February 18). EasyJet being a British airline company is performing within the political framework of Europe. assume youre on board with our, Financial Analysis on Galaxy Entertainment Group, https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/. Although Ryanair was not immune from an industry downturn following the financial crisis in 2008-2009, the company rebounded to solid profitability in fiscal 2010. 1, pp. WebThe seats don't recline and have a width of 17 inches and a pitch of 30 inches. Supplemental understanding of the topic including revealing main issues described in the particular theme; For a long time, Easyjet has branded itself as a committed airline that strives to optimise customer experience, always. Both airlines create value for the shareholders in the following ways. Ryanair can either lower air fare to level with that of the new entrant or else can lower further which will make the new entrant struggle to survive because of its low capital base. For instance, in 2004, Ryanair put aviation industrys first paperless pilot training program into practice (Muller, 2011, p. 39). One principal weakness of EasyJet is that it strives to keep fares low as well as focus on consumer satisfaction, and keeping balance between the two becomes difficult. Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay). (Appendix, Table 5 and Table 9).
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