STRATEGY

Ryanair’s objective has been to establish itself as Europe’s leading low-fares scheduled passenger airline through continued improvements and expanding offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic. A continuous focus on costcontainment and operating efficiencies is a vital part of the Ryanair way of doing things. Here are the key elements which make up Ryanair’s strategy:



• Low fares: These are used to stimulate demand, they target fare conscious leisure or business travellers who might otherwise not travelled at all or use other methods of transport such as car, coach or trains. Ryanair sells it seats on a one-way basis unlike most traditional carriers this change came into effect in November 2001. Ryanair sets its fares
on the basis of the demand for particular flights and by reference to the period remaining to the scheduled date of departure. 70% of seats on a flight are sold at the minimum available fare assigned for the route, once these are filled the price per seat rises6. Ryanair’s Dublin to London (Stansted) is its most popular route in terms of passenger volume; with fares ranging from €19.99 to €169.99 (can be lower during special promotions). In September 2003, Ryanair launched a fare promotion offering a total of two million seats on certain routes for “free” (excluding government taxes and passenger service charges) for travel during the period between September 2003 and December 17, 2003. These campaigns are very useful to bolster Ryanair’s low fare image.

• 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. The average flight time has been 1.1 hours with an average route length of 746 kilometres in 2003. Ryanair’s flew an average of approximately 1.94 round trips daily per route. The choice of only flying short-haul routes allows Ryanair to offer frequent service, while eliminating the necessity to provide "frill" services otherwise expected by customers on longer flights. Point-to-point flying (as opposed to hub-and-spoke service used by the traditional carriers) allows Ryanair to avoid
the costs of providing through service for connecting passengers, including baggage transfer and transit passenger assistance costs. This is one of the key differences between Ryanair and traditional carriers.

• Choice of routes: Ryanair favours secondary airports with convenient access to major population centers (e.g. London Stansted Airport) and regional airports (e.g. Brussels- South Charleroi airport). Firstly these have more competitive access and handling costs but also provide a higher rate of on-time departures, fewer terminal delays and faster turnaround times (it is much quicker to land, unload and reload passengers and luggage and take off again at smaller less congested airports then at a major airport such as Zaventem or Heathrow which have to accommodate many planes at the same time). The
fast turnaround is a key element in Ryanair’s efforts to maximize aircraft utilization. Ryanair’s average turnaround time for the fiscal year ended March 31, 2003 was approximately 25 minutes. This has allowed the possibility to fit in two extra flights a day that would not be possible with a 60 minute turnaround time7. This allows Ryanair to not only save on costs but also adds tremendously to revenues. The 25 minute vs. 60 minute turnaround time in effect adds €4.4million in incremental revenue per aircraft per year.

• Low Operating Costs. Management believes that Ryanair's operating costs are among the lowest of any European scheduled passenger airline. There are four main expenses which Ryanair is able to control and/or reduce and therefore works hard to do so: (i) aircraft equipment costs; (ii) personnel expenses; (iii) customer service costs; and (iv) airport access and handling costs: