Ryanair 2011 Annual Report Download - page 56

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STRATEGY
Ryanair’s objective is to firmly establish itself as Europe’s biggest scheduled passenger airline, through
continued improvements and expanded offerings of its low-fares service. In the highly challenging current
operating environment, Ryanair seeks to offer low fares that generate increased passenger traffic while
maintaining a continuous focus on cost-containment and operating efficiencies. The key elements of Ryanair’s
long-term strategy are:
Low Fares. Ryanair’s low fares are designed to stimulate demand, particularly from fare-conscious
leisure and business travellers who might otherwise use alternative forms of transportation or choose not to
travel at all. Ryanair sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel
on Ryanair scheduled services. Ryanair sets fares on the basis of the demand for particular flights and by
reference to the period remaining to the date of departure of the flight, with higher fares charged on flights with
higher levels of demand and for bookings made nearer to the date of departure. Ryanair also periodically runs
special promotional fare campaigns. See “—Route System, Scheduling and Fares—Low and Widely Available
Fares” below.
Customer Service. Ryanair’s strategy is to deliver the best customer service performance in its peer
group. According to the data available from the Association of European Airlines (“AEA”) and airlines’ own
published statistics, Ryanair has achieved better punctuality, fewer lost bags, and fewer cancellations than its
peer group in Europe. Ryanair achieves this by focusing strongly on the execution of these services and by
primarily operating from un-congested airports. Ryanair conducts a daily conference call with Ryanair and
airport personnel at each of its base airports, during which the reasons for each “first wave” flight delay and
baggage short-shipment are discussed in detail and logged to ensure that the root cause is identified and
rectified. Subsequent (consequential) delays and short shipments are investigated by Ryanair ground operations
personnel. Customer satisfaction is also measured by regular online, mystery-passenger and by passenger
surveys.
Frequent Point-to-Point Flights on Short-Haul Routes. Ryanair provides frequent point-to-point
service on short-haul routes to secondary and regional airports in and around major population centers and travel
destinations. In the 2011 fiscal year, Ryanair flew an average route length of 727 miles and an average flight
duration of approximately 1.69 hours. Short-haul routes allow Ryanair to offer its low fares and frequent
service, while eliminating the need to provide unnecessary “frills,” like in-flight meals and movies, otherwise
expected by customers on longer flights. Point-to-point flying (as opposed to hub-and-spoke service) allows
Ryanair to offer direct, non-stop routes and avoid the costs of providing “through service,” for connecting
passengers, including baggage transfer and transit passenger assistance.
In choosing its routes, Ryanair favors secondary airports with convenient transportation to major
population centers and regional airports. Secondary and regional airports are generally less congested than major
airports and, as a result, can be expected to provide higher rates of on-time departures, faster turnaround times
(the time an aircraft spends at a gate loading and unloading passengers), fewer terminal delays, more
competitive airport access, and lower handling costs. Ryanair’s “on time” performance record (arrivals within
15 minutes of schedule) for the 2011 fiscal year was 85%. According to the last available comparative data
published by the AEA (which relates to the 2008-2009 winter season), Ryanair’s “on time” performance record
exceeded that of its principal competitors that make such data available, including: Air France (approximately
83%); British Airways (approximately 83%); Iberia (approximately 70%) and Lufthansa (approximately 85%).
Aer Lingus and easyJet do not regularly publish punctuality statistics. Easyjet only recently published its
statistics for the period January to March 2011, which highlighted that their “on time” performance (arrivals
within 15 minutes of schedule) was 81%. Ryanair’s “on time” performance was 92% for the equivalent period.
Faster turnaround times are a key element in Ryanair’s efforts to maximize aircraft utilization. Ryanair’s
average scheduled turnaround time for the 2011 fiscal year was approximately 25 minutes. Secondary and
regional airports also generally do not maintain slot requirements or other operating restrictions that can increase
operating expenses and limit the number of allowed take-offs and landings.
Low Operating Costs. Management believes that Ryanair’s operating costs are among the lowest of any
European scheduled-passenger airline. Ryanair strives to reduce or control four of the primary expenses
involved in running a major scheduled airline: (i) aircraft equipment costs; (ii) personnel costs; (iii) customer
service costs; and (iv) airport access and handling costs: