Facts above confirm that the safety of customers has been less important to Ryanair than company profit. Ryanir’s reputation has not only been damaged because of their lack of responsibility regarding the safety of their customers, their fee charges have been another disappointment for customers. Ryanair has promised to deliver the lowest price as stated on their website,
“Ryanair will continuously offer the lowest available prices to all our passengers, on all routes on which we operate, regardless of which other airlines compete with us on those routes” (online, Ryanair, Passanger Charter, 2010)
but passengers were angry when they found during their ticket booking process that luggage fees, check-in fees and charges for payment by debit/credit card were not included in the price of the ticket advertised. The baggage fee has been one of the main issues for customers who travelled with Ryanair. In September 2009 the company increased their fees from £10 to £15 for check-in of a bag online, and £30 instead of £20 for check-in of a bag at the airport. A spokesperson of the company said “These baggage fees are all avoidable by all passengers who choose to travel with carry-on luggage only. Over 70 per cent of Ryanair passengers will be totally unaffected by these changes as they already travel with just one carry-on bag, which is free of charge” (online, Airline Post, 10th September, 2009)
This was another example of how the company did not think too much about their customer, especially families. It would be hard to imagine a family with children/teenagers going on holiday with carry-on luggage only to avoid the extra payment for baggage as stated in the statement above. The unethical face and ridiculous company rules with regards to baggage is clearly shown on a video () on the website “I hate Ryanair” which has been in operation since October 2008 with a related Twitter feed, which stated
“Many people have been badly treated by Ryanair and shafted for hidden fees etc. We have too. This is why we decided to set up this website as means of expressing our general disgust” (online, I Hate Ryanair, About blog, 1st January, 2011)
The video showed a group of young ladies unpacking as much of their luggage as possible and dressing themselves with as many layers of clothing from their luggage just so their bags would fit in the carry-on luggage “sizing” contraption. This incident demonstrated how Ryanair publicly humiliates passengers and how much they mean to the company. Some customers have not been so lucky and they had to pay the fees for their oversized carry-on luggage.
“I was flying on Ryanair last week and they made me pay an extra € 35 because the wheels of my carrier bag wouldn’t fit in that yellow form that your bag is supposed to fit in.”(online, I hate Ryanair, Paula, 12th November, 2009)
A charge of £1 for the use of on-board toilets has been explored and it could be the most outrageous fee by the company. (Ryanair fees Appendix 1)
In October 2009 Ryanair removed all of its airport check-in desks and customers had to check-in online on Ryanair’s website 15 days prior to their scheduled flight or at least 4 hours before the trip. According to a Ryanair spokesperson; “This new rule has been applied in an effort to improve passengers’ experience at the airport, thus reducing queues, and to continue to offer low prices on their tickets” (online, Airline Post, 29th September, 2009)
This statement was misleading, as by removing their check in desks from airport might of reduced queues but it added to the extra expense of travel fees for customers therefore increased company profit. (Year results Appendix 1) These actions saved the airline money and left customers to pay nearly all their expenses.
The company continued to make their statements sound as if they cared for their customers.
“For our customers, Ryanair is committed to fulfilling their needs in an honest and fair manner. The Company is committed to generating sales through price, quality and the ability to fulfil commitment”. (online, Ryaniar, Investor Day, 29th September, 2009)
The words “fair manner” as stated in the statement above was deceptive because otherwise they would not have charged more for their drinks as according to the survey by Nofly Ryanair charged as much as 50% more for a bottle of w
ine, 35% more for a cup of coffee or tea and 30% more for its sandwiches than rival airlines (Bmi, Flybe, Monarch Airlines, Easyjet). (online, Airline Post, 23th September, 2009) Passengers were not the only ones that had been treated badly by the company, their employees had also been victims of the company’s arrogance and carelessness. Transport Workers' Federation has set up a website to offer the staff of the strong anti-union airline the freedom to discuss their work, conditions and any problems they may have. According to the federation they have received a lot of comments from cabin crews and pilots on how they have been treated by their employers. Some of the comments from their website showed how much the company cared about their employees;
"Ryanair does not care about its cabin crew and just takes the most they possibly can squeeze out of us. After a twelve hour day without a break, I don’t have the energy to be nice to passengers or check that my nail polish is still on. Come on Ryanair start valuing what we do because without us you could not fly". (online, Ryan-be-fair, Cabin Crew, UK, 2010)
"I really hope for Ryanair and all my cabin crew colleagues that everything will become good for us. I really want to leave the company to go for a longhaul company which has better contracts and a safe system that includes insurance, pension, etc. Ryanair is abusing us the same way they abuse their passengers. I feel so guilty to be forced to be one of the executors that are ripping off the passengers' money every day! Please help us!" (online, Ryan-be-fair, employee, Germany,2010)
Ryanair boss Michael O’Leray described the site as “generally just fiction” while the company's director of personnel, Eddie Wilson, described it as “an irrelevance to Ryanair” and "nothing but an empty vessel making more noise". (online, management issues, 2005)
The statement above showed the clear arrogance of Ryanair and their appreciation of their employees when the personal director described the comments and views of their employees as “irrelevant” to the company.
In a survey according to Geneva-based Covalence which has released a ranking of 581 companies based on ethical issues like corporate social responsibility, environmental performance and information provided to customers Ryanair ranked as the 575th on the list (list of the best and worst Appendix 3) which was a severe blow to the company’s reputation. (online, Airline Post, 3rd February, 2010)
Company PEST has been analysed in short view in Appendix 4.
- Micro Environmental Analysis
Ryanair’s main goal has always been to reduce all their company’s costs. Based on Porter’s five forces which were - customers, competitors, suppliers, substitutes, new entrants (short analyse Appendix 5) company realised the potential of their product and took full advantage of it. “…is to find a position in the industry where the company can best defend itself against these competitive forces or can influence them in its favour.”(Competitive Advantage, Michael Porter, 2004)
According to a study of Social Travel Report, by leading independent media agency Total Media it was found that almost 70% of consumers use the internet to book their holidays, compared to 23% by phone and just 8% in-store within travel agents. Consumers aged 35-44 were found to be most likely (74%) to book online. Price (80%) was cited as the main reason for using the internet along with information (53%) and convenience (50%). This study confirmed that Ryanair made the right decision to make all their booking online and keep prices as low as possible. The grey market has been the driving force behind the social media travel revolution. A study by Total Media showed that 50% of travellers over 45 are using websites to recommend or warn fellow travellers by posting a review of their travel experiences online. Even though customers have left many negative feedbacks about company on various website (e.g. I Hate Ryanair etc) customers were always looking for cheap transport alternatives and Ryanair’s services have proven irresistible because of the cheap airfare. Ryanair did not focus on quality but they promised to deliver which had attracted customers and made their business so successful.
- Conclusion
This assignment analysed the social and ethical issues of Ryanair in more detail than the customer’s behaviour because the customer’s satisfaction and safety should be the No.1 priority for companies and not their profit. Ryanair’s strategy has been to focus on providing a basic flight service for a cheap price but they have forgotten their customer’s safety and their comfortable travel experience from the booking to the flight. As their profit figures have continuously risen it showed that their price strategy has worked as the customer’s kept coming back as they have voted with their wallets even though Ryanair has had a negative customer satisfaction reviews.
- Recommendations
The airline industry is a very competitive industry especially in today’s economic climate.
The price-driven strategy has worked for Ryanair up to now as customers do not have as much money to spend because of the economic situation, but as the economy improves and customers may have more money to spend the appeal of low fares will be not as important as a pleasurable flight experience. Customers may go back to the airlines (e.g. British Airways, Virgin Airlines etc) that could provide the better quality of service at a higher price.
In order for Ryanair to continue to grow in its success it has to have a loyal following of customers. The company should focus more on customer’s satisfaction and listen to their complaints and needs to keep their customers loyalty. They could reward loyal customers by offering them Air miles as other competitors do. They should identify new routes in Europe and expand to new areas outside of Europe.
- Bibliography
Jobber D (2004), Principles and practice of Marketing 4th edition, McGraw-Hill Education Limited, Somerset, Great Britain, Butler and Tanner Ltd.
Jobber D, and Fahy J (2002), Foundation of Marketing 2nd edition, McGraw-Hill Education Limited, Somerset, Great Britain, Butler and Tanner Ltd.
Needham D, Coles M, Dransfield R and Harris R (1995), Business for Higher Awards, Reed Educational & Profeessional Publishing, Oxford, England, Heinemann Educational Publishers
Brassington F and Pettitt S (2006), Principles of Marketing 4th edition, Pearson Education Limited, Madrid, Spain, Mateu Cromo Artes Graficas
Sloman J (2005), Economic Environment of Business, Pearson Education Limited, Gosport, England, Ashford Colour Press Ltd.
Porter ME (2004), Competitive Advantage, Free Press, London, England, Collier Macmillan
Internet Sources
Access to European Union law, , Home, 01/01/2010
Air transport world, , Home, 01/01/2010
Airline Post, , Home, 01/01/2011
Aviation security, , Home, 01/01/2010
Flight global, , Home, 01/01/2010
I Hate Ryanair, online, , Home, 01/01/2011
Irish Times, online, , Home, 01/01/2011
Management issues, online, , Home, 01/01/2011
Ryanair, online, , Home, 01/01/2010
The European Low Fares Airline Association, , Home, 01/01/2010
Universul Padurii, online, , Home, 01/01/2011
Appendix 1
Ryanair’s fees:
- Fee for changing the date of your flight: £35 per flight
- Fee for changing the name on your ticket: £100 per passenger
- Online check-in (print own ticket at home): £5
- Fee for printing boarding pass: £3 per flight
- Fees for infants (under-2s): £20 per flight
-
1st piece of hold baggage (max 15kg), checked in at airport - £35 per flight, booked on - £15
-
1st piece of hold baggage (max 20kg), checked in at airport - £45 per flight, booked on - £25
-
2nd piece of hold baggage (max 15kg), checked in at airport - £70 per flight, booked on - £35
- Airport Boarding Card Re-issue Penalty: £40
- “Payment handling fee”, per passenger, per one-way flight: £5
- Excess baggage fee, per kilo: £20
- A charge of £1 for the use of on-board toilets is being explored
- Fees for heavier passengers was dropped
- Children’s travel/car seat: £10
-
Sports equipment, musical instrument, checked in at airport - £50 per flight, booked on - £40
-
Priority Boarding Fee, checked in at airport - £5per flight, booked on - £4
(online, Ryanair, Table of fees, 2010)
Profit after tax (m)
March 2009 €105
March 2010 €319
(online, Ryanair, Full Year Results, 31st March, 2010)
Appendix 2
Ethical companies: best and worst for 2009
TOP 10
1 International Business Machines Corp Technology
2 Intel Corporation Technology
3 HSBC Holdings Banks
4 Marks & Spencer Retail
5 Unilever NV Food Beverages
6 Xerox Technology
7 General Electric Co Industrial Goods Services
8 Cisco Systems Technology
9 Dell Technology
10 Procter & Gamble Personal & Household Goods
BOTTOM 10
572 Total SA Oil & Gas
573 Grupo Mexico SA de CV Basic Resources
574 Syngenta AG Chemicals
575 Ryanair Travel & Leisure
576 Occidental Petroleum Oil & Gas
577 Philip Morris International Personal & Household Goods
578 Freeport-McMoRan Copper & Gold Basic Resources
579 Chevron Oil & Gas
580 Halliburton Company Oil & Gas
581 Monsanto Food & Beverages
(online, Irish Times, 1st February, 2010)
Appendix 3
PEST of Ryanair
Political and Legal Factors
Government actions (taxes, controlling where airlines can fly, product promotion and pricing policy)
- EU regulations (new rules for airlines – propose regulation of emission trade, regulation on passengers compensation)
- War in the Middle East (safety of passengers, oil prices)
- Risk related to company (terrorist attack in London and other destinations)
- Advertising (charge of misleading)
Economic Factors
- Fuel prices (threats of increasing oil prices)
- Taxes and Interest rates
- Global recession (customers more careful with their expenses)
- Single currency (low-fares more affordable for new countries)
- Airports charges
Social Factors
- Public expectations (hidden cost on flight tickets, noise level around airports)
- People’s worries about flying (terrorist attack, ash cloud)
- Increasing grey market (people want to explore, relax and be active in new destinations and places)
- Safety solutions (global warming)
Technological Factors
- Internet sales (increased online competition)
- Trains (Eurostar)
- Online check in (e-tickets)
- New aircraft (offer travellers to lie down during the flight)
Appendix 4
Micro environmental factors:
Customers
- Price (customers are highly motivated by price because of the recession, possibility of losing their job and affecting their lifestyle)
- No loyalty (switching airline companies is simple because all are online)
- Customers knowledge about price (online comparing websites where customers can see all airlines prices)
Competitors
- Increased competitors (EasyJet, Virgin Express, Aer Lingus – cost advantage can be copied)
- Growing of tour operators (Thomas Cook, TUI – selling seas at reduced prices)
- Traditional airlines (British Airways, Virgin Airlines - targeting different market sector so taking potential customers)
Suppliers
- Fuel price (directly related to the cost of oil and Ryanair cannot control it)
- Airports (charges for rent because of demographic position and competitors can use opportunities)
- Planes suppliers (only Boeing and Airbus. Boeing is the main Ryanair supplier and changing supplier would be costly – retrain staff, information about planes)
Substitutes
- No brand loyalty (customers can very quickly change airlines depending on price)
- Other transports ( if customers find better and cheaper ways to travel they will choose it without hesitation - Eurostar, Eurolines, Ferries, Car)
New Entrants
- High capital investment (possibility of debt)
- Need for low cost base
- Flight and routes authorisation (hard to find free routes)
- Airports (difficult to find suitable airports)
by
nigases (student)
