Friday, July 13, 2012

Reflections About Low-cost Airlines During My Trips

As an industrial and system engineer, I am always interested in the airline system. Since I travelled to Barcelona, Paris and Rome during the summer program, I had good chances to analyze the low-cost airlines with both observations and personal experiences.

The low-cost airlines such as Ryanair offer surprisingly cheap tickets. The tickets I bought for my Barcelona trip were only 50 euros, which is 20% cheaper than the bus ticket. In addition, the airplane only took less than two hours to fly from Madrid to Barcelona while the bus from Madrid to Barcelona took more than six hours. The fare of the Ryanair is so low that I hardly believe that Ryanair can make any money. Despite my worries, Ryanair still gained 4.3 billion of revenue in the first half of 2012. Therefore, I became even more interested in the Ryanair’s lost-cost business model.  

There are several keys in the Ryanair’s low-cost business model. The first one is online booking system. Although using Ryanair’s website is a painful experience, I have to admit that Ryanair heavily relies on its website to sell tickets, and the Ryanair’s website system helps to save costs and gain benefits for the company. First, the Ryanair’s website is not fancy, even ugly-looking, but it provides enough basic features. This will save a lot of design fee of the website. The website also provides more than 20 languages thus satisfy many foreigners demands.  During the booking process, Ryanair website would alert you about the expensive charges for oversize luggage and take any possible chances to sell the company’s luggage and other items. The website also prompted information about car rental and hotel booking. While affecting the quality of online booking experience for the passengers, the Ryanair online system did a good job in the online shopping promotion and selling of add-on services.

The second key of the Ryanair’s business model is to provide no-frill services during the flight. Ryanair eliminate all non-essential services such as entertainment systems, free drinks and complimentary food. In addition, Ryanair even charge a big amount of money for using airport check-in desks.  Therefore, Ryanair could reduce the costs of services significantly and decrease the numbers of the crew. I remember there were less than 4 flight attendants in my flight from Madrid to Barcelone. And one passenger was charged 4 euros for just one bottle of water. In order to promote the customers to use its website, Ryanair charges customers who use the airport check-in desks. They even charge heavy for the checked bags. A poor guy in Barcelona airport was charged one hundred euro by Ryanair in my flight because his luggage was overweight. In addition, there were no seats assigned on the boarding passes, so passengers usually have to form a queue before boarding to get desirable seats.

The third key is the location of the airport. Ryanair usually flies from more remote airports. For example, the flight from Madrid to Barcelone actually landed in a remote airport in Ginova. And there was one and a half hour driving distance from Ginova to Barcelona. That airport was only occupied by Ryanair and the airport was small and outdated. This can save the company a large amount of money in investment of airports because the cost of the land in this area is much cheaper.

Although I did not have a pleasant experience with the low-cost airline during my flight from Madrid to Barcelona, Ryanair’s low-cost business model is successful and attracts many customers to choose this company every day, because the company provides a really affordable options for passengers. Ryanair’s system is meaningful for me, an industrial and system engineering student to analyze.