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.