With this survey, we are going to find the profile of the people we interviewed. Respondents are mostly French students aged between 15 and 30. The gender seems to be equally distributed.

As both logos are essentially based by text, we decided to change the 2 brand names to “XXX”. The people we targeted easily identified both logos: 95% of them recognized Easyjet’s one, while 75% of them did for Ryanair.

In order to better analyse consumers’ perception to both brands, we decided to ask respondents which words they associated with each brand. Here’s the result.

According to this, we can easily conclude that potential travellers have a similar perception for both brands. They tend to use the same word association to describe them. However, Easyjet is probably considered in a more positive way than Ryanair.

To the question “If you planned to fly in Europe, which airline would you choose?” more than 50% of the people questioned indicated “Easyjet”. This data confirms that, even though customers have a similar vision of both brands, most of them would choose to fly with Easyjet over Ryanair. This can probably be explained by the fact that Easyjet has a better communication strategy, offers more destinations from Paris, enable passengers to fly from a national airport and offers a service better received.

We can see that consumers attribute more qualities to Easyjet. That probably explains why most of them will be more likely to travel with this airline.

Nevertheless, Ryanair surpasses Easyjet in price criteria. Even though the two companies offer low-cost prices to their consumers, Ryanair is the one to offer the best deals.

Market segmentation leads to an efficient distribution of services to the right customers. Thanks to it, theats are eliminated, opportunities are created. A competitive industry, like the airline industry, uses this concept in order to eliminate service homogeneity. Even though several segmentation types exist, the psychographic segment prevails in this industry.

Psychographic Segmentation

Global executives: frequent business travellers who enjoy their experience thanks of the high level of service.

Schedule optimizers: have to reach destination by a certain time and select their flights accordingly.

Corporate troopers: choose an airline and a class that has been selected for them by their firm.

Mile accumulators: Consider flights as a way of building up their air miles entitlement.

Reluctant travellers: do not enjoy travelling and seek services that will make their experience bearable, such as special privileges and frequent flyer programmes.

Tour takers: want everything to be arranged in advance for them.

Quality vacationers: See the travel as a part of the vacation experience and so fly with airlines that provide high-quality services.

Travel seekers: love travelling and are eager to have new experiences. They expect the travel to be comfortable.

Frugal flyers: seek out the cheapest airlines, but still expect their flight experience to be enjoyable.

Strengths

EasyJet has established a brand reputation for being the most economical airline in Europe. This is particularly shared among young travellers and several business travellers.

Easyjet offers a reliable, on-time travel service with value-added features. They can consist of e-tickets, online booking and travel services.

EasyJet has increased the amount of modern aircraft to its existing fleet in order to ensure security, reliability, and reduce its carbon emissions.

Easyjet’s website is user-friendly and simplifies ticket purchases.

They aim attention at developing consumer loyalty by sending through emails about online sale alerts.

They have developed a strong corporate social responsibility program with actions geared toward decreasing the firm’s environment.

Easyjet is popular for having a competent and friendly customer service despite being a no-frills airline.

They have added many routes and have expanded their routes throughout Europe to cover more consumers and offer more flight times.

Weakness

The low-priced airline industry is extremely competitive. It is composed of a great amount of airlines competing for the same consumer base. This resulted in price wars and other strategies that make it difficult for EasyJet to keep up due to concern over costs involved in attempting to slash prices further or offer any frills.

Rivalry is currently rising from traditional airlines, which have modified their business models and start to offer lower fares with frills for the same routes as EasyJet.

Easyjet does not offer a free food service on flights than more than two hours, which is seen as a weakness by Easyjet’s consumers.

The service format does not correspond to a large demographic. Indeed, lots of older travellers do not appreciate the ‘party’ environment that is present in EasyJet planes that are frequently taken by young, loud passengers traveling for school vacation or weekend party trips. This format disaffects lots of demographics that EasyJet could be targeting.

Opportunities

The carrier could possibly expand its route system into new regional markets all over Europe and focus on specific consumer segments.

They could offer travel tour packages that could attract some potential passengers who are seeking specific types of travel experiences.

Easyjet should consider improving its overall operating framework in order to offer some perks so that it became more competitive. Lately, the carrier has declared that it would add more frills, which is an important opportunity where they could further differentiate themselves.

The carrier should consider developing strategic partnerships with airports to help expand its route system and offer more travel options for its consumers.

Threats

One of the threats for the carrier are rising airport fees in terms of decreasing the margin that the airline can compete on as it is a cost that the firm cannot control or change unless it can negotiate with these airports and reach an agreement on lowering the airport fees. Otherwise, it may have to close down some routes, which could further threaten business sustainability.

Competitors are offering more frills, flights, and route options and maintaining low-priced fares, which can also menace the firm’s position in the market.

External market forces are a threat in terms of price pressures correlated with the rising cost of oil, environmental expectations, and economic slumps that decrease the number of flights ordered by travellers focused on leisure.

Internal factors are also a threat in terms of labor unions and employee strikes, requiring more money or benefits. This can also add to EasyJet’s cost structure and put more pressure on the carrier to possibly increase prices.

Legacy airlines are starting to become a higher competitive force in the airline industry as they attempt to sustain themselves with a focus on service and features, which puts more pressure on the carrier to raising its service focus without adding to its cost structure.

Strengths

Ryanair is the biggest European airline company. It thus benefits from scale over and above its rivals.

They use modern Boeing airplanes. This aircraft’s homogeneity leads to lower cuts maintenance costs.

Ryanair is a flexible company thanks its non-union work force. This flexibility can be noticed whenever changes and innovations occur in work practices. Other airlines tend to deal with entrenched unionized work practices. This obviously raises costs.

Ryanair has a quicker turnaround strategy, compared to its competitors. This raises the use of its assets making the company more profitable than its competitors. For instance, the seats are composed of leather, which is easier to clean and the cabin crew is asked to clean the aircraft as soon as it lands.

Ryanair is the leader in online booking and ticketless flights. Over the past years, Ryanair has progressively stopped to collaborate with travel agents and ground staff. The passengers are asked to book and print their own ticket. In addition to that, Ryanair’s website offers additional features that Ryanair benefits from which include car hire, hotel rooms and insurance. Ever since, other airline companies have copied this model to remain competitive.

Charging customers for extra baggage and additional weight is a source of additional income for Ryanair. The firm has affectively trained customers to arrive on time at the airport with their printed ticket and the right weight in terms of luggage. By accepting this, travellers know that they will have to pay additional costs if they do not adhere the company’s policy. This leads to a particular efficient experience in terms of boarding Ryanair flights.

The reputation is the firm is that it is a no frills low-priced airline providing on time service. The company has agreements in place with regional airports all over Europe, which guarantee it low airport charges and enable it to offer low cost fares to its consumers. The fact that it is positioned as the biggest European airline gives it a unique bargaining power whenever it needs to purchase new airplanes.

Its modern fleet and its specialized maintenance make Ryanair one of the safest airlines worldwide. This feature is no doubt a key part to the firm’s success.

Weakness

As potential passengers are very price sensitive, if the firm does not provide the cheapest fare, they will simply switch to a different airline.

When it comes to customer service, Ryanair has a terrible reputation in the media. Some of Ryanair’s crew is seen as rude and arrogant. This can be considered as a weakness. On the other hand, Ryanair’s competitors can see that as an opportunity to differentiate themselves by providing a better consumer service experience. However, it is undeniably hard to quantify how many passengers have been marginalized by the company over the passed years and refuse to use the airline again.

Ryanair’s regional airports tend to be seen as far distance from the city they are covering. One competitive advantage for their competitors is the fact that they serve more convenient locations.

Ryanair’s aircraft is only composed of Boeing airplanes. This is seen as an advantage for Ryanair. However, this causes the company to have few suppliers.

Switching costs from one supplier to the other is significantly high because all mechanics and pilots would have to be restrained.

The airline industry can lead to many threats. They can include terrorist activity, SARS, volcanic ashes, etc. Nevertheless, these threats apply for all airlines and Ryanair appear to be well placed to deal with them.

Opportunities

Ryanair could benefit from the Open Skies Agreement with the United States and start low-cost transatlantic flights.

Expanding beyond the European market into Asia and Russia would make them increase their passenger traffic

The addition of new countries from the European Union is an opportunity to expand airline services. People will take advantage of the low air services and may find jobs across European borders. Besides, the tourism industry could be increased providing huge opportunities for Ryanair.

Threats

Ryanair’s greatest threat is economic recovery. Ryanair is a leading brand for low-priced flights, which is ideal for this recessionary period. However if the economic situation recovers in Europe, people will be more likely to spend more money on flights and their demand will decrease for Ryanair.

New entrants is another huge threat for Ryanair as there is a significant chance new entrants will join the market after monitoring Ryanair’s success in the past few years.

Purchasing a flight ticket involves diverse criteria with variable levels of importance. Even though consumers don’t necessarily choose an airline according to all of them, they are significantly influenced by at least one. The perception of passengers towards air travel services may differ because of the passengers’ personal characteristics.

Here is a list of the principal criteria that can become essential when choosing an airline.

Safety

A 1988 study conducted in the US revealed that 82% of 1000 adults considered airline safety as a “serious problem”. Several people see airline travel as something threatening. For those people, boarding a plane is a life-and-death matter. Safety and security become thus critical. Airline safety precautions are ranked as 2 of the most significant attributes used in airline choice. September 11 2001 decreased traveller confidence regarding the safety of air travel.

A market research conducted by Simmons in 2001 assessed the immediate aftershocks for those respondents who had air travel plans during the next twelve months, 39% indicated that the bomb attacks of September 11 would have a large to very large consequence on their travel plans. In this context, airlines are urged to communicate on the security features of their airlines. However, safety stops to provide competitive advantage after some basic general threshold, which is usually reached by most airline companies.

Price

Obvious criteria, that’s crucial for almost any buying decision.

Assurance

Assurance is the most significant service quality dimension. Customers expect the managing team present during the flight to be devoted to consumer service and satisfaction.

Convenience

Travellers tend to expect airline company crew to be responsive and qualified to meet their requests. Most importantly, passengers expect the airline crew to respond to consumer needs in a constructive and considerate way.

In 1976, O’brien, Gennaro and Summers studied the dimensions of air travel service quality. They thus came to the conclusion that the ‘helpfulness’ dimension was the most significant service quality dimension in service quality in air travel.

Comfort

The passengers of any airline company consider in-flight comfort as essential issues and passengers have very high expectations of performance regarding these factors. In-flight comfort included having enough room for knees and legs and having a seat that is comfortable.

Meals

Even though meals are not the most essential dimension when it comes to evaluating a airline experience, they have an important effect on the general evaluation of customer satisfaction and their repurchasing intentions.

Timeliness

Delays have a lasting negative impact for passengers.

Passengers will buy their place tickets differently. By 2015, the web and mobile phone applications will be the top 2 sales channels. Airports and airlines will offer to consumers more personalized purchasing experiences.

Travelers will be more involved in the process. By 2015, 90% of airline firms will offer mobile check-in, compared to 50% today. Passengers will use 2D boarding passes or contactless technology such as Near Field Communications (NFC) on their mobile phones, at several moments in their journey, like at boarding gates, fast-track security zones and to access premium passenger lounges.

Customer services will become more mobile and social. By 2015, nine out of ten airline companies and airports will provide flight updates using smart phone applications. The industry is also exploring apps to improve the consumer experience. At Tokyo Narita airport, roaming service employees personalize the consumer experience using iPads to provide airport, flight and hotel information to passengers.

The passenger experience will improve due to better business intelligence. By 2015, more than 80% of airports and airlines will invest in business intelligence solutions. Most will focus on improving consumer service & satisfaction, often through personalized services. For instance, Vueling, a European low-cost airline company, researches consumers via social media in order to better understand them. It then integrates the information into their BI programs to improve loyalty.

Bargaining power of Buyers 

The airline industry is composed of 2 categories of buyers. First, there are single flyers. The reason why they purchase tickets is either personal or business related. This category is particularly diverse. They can proceed through the specific airline or through the 2nd category of buyers: travel agencies & online portals. This buyer group works as an intermediate between the airlines and the travelers. They work with several airline companies in order to give consumers the best flight possible. Between these 2 groups, there is a large amount of buyers compared to the number of companies.

There are low switching costs between companies because many persons choose the flight based on where they are going and the cost at the time. This is some loyalty to companies but not enough for high switching costs. Each consumer needs a lot of significant information. They need to know the exact details of what is provided during the flight. Buyers have to understand the timing of the flight and the security aspects of flying in general. The service provided is exclusive. Each airline has a niche. Some carriers focus on cost, while others focus on other aspects. Overall, the bargaining power of buyers has an extremely low threat in this industry.
Bargaining Power of Suppliers

The main suppliers are the aircraft manufacturers. Currently, the top 2 manufacturers in the world are Boeing & Airbus. In this industry, the inputs are significantly standardized. Airline firms only seem to differentiate with amenities. The planes are very similar. A few manufacturers are currently focusing on producing eco-friendly aircraft.

Aircraft companies are able to easily switch suppliers. A large number of companies have long-term contracts with their suppliers. Aircraft are such high capital products that companies make long-term loan arrangements & have more favorable credit terms when they don’t switch firms. It is hard to enter into the aircraft manufacturing industry due to the capital required to enter. The amount of money and expertise required to make even 1 aircraft is about 200 million dollars. For this reason, there are very few suppliers in the airline industry. Airline companies are the only source of origin for these manufacturers so their business is excessively important. Based on this, the bargaining power of suppliers has a low threat as well.
Threat of New Entrants

Threat of new entrants is also an important aspect of the 5 forces. This aspect has a low threat for the airline industry. However, there are 2 aspects that do raise the threat level. First of all, there are extremely low switching costs. Second of all, there are no proprietary products or services involved.

Even considering these 2 issues, the industry still has a very low threat overall. Existing companies have a large cost advantage. This industry requires a large amount of capital and a strong customer to make profit in the beginning years. Existing companies can use their high capital to retaliate against newer companies with whatever means necessary such as lowering prices and taking a loss.

In spite of the low switching costs between brands, customers tend to only choose popular airlines. As tickets are expensive, people prefer to use their money on brands they trust. An important security aspect is also involved and most consumers feel safer traveling with companies with long experience.

This industry requires aircraft and flying experience, which also lowers the threat of entry. Companies that enter the market need to become licensed. This procedure can last for about a year. After this period, diverse organizations such as the Federal Aviation Administration and the Department of Transportation constantly regulate them. The time and money spent to solely open an airline is enough to prevent most people from entering the industry.

Threat of Substitutes

The industry has a medium substitute risk level. There are several substitutes in the airline industry. Potential travelers can choose other means of transportation such as cars, buses, trains, or boats to go to their destination. However, there is a cost to switch. Sometimes, forms of transportation can happen to be more costly than a plane ticket. The major cost is time.

Aircraft are by far the quickest mean of transportation available in the market. Airlines outperform any other forms of transportation when it comes to cost, convenience & service. Customers sometimes do choose other methods for diverse reasons like cost if they are not traveling very far which raises the risk.

Rivalry among Existing Players

The rivalry in the airline industry is extremely intense for several reasons. The industry is currently very sluggish. It seems to be in the mature stage of the business cycle. The number of competitors remains the same in the long run and it doesn’t seem to be under or over capacitated. The fixed costs are particularly high in this industry. Leaving the industry is difficult due to the long-term loan agreements that make companies stay in business.

The competition is lessened by the brand identities of the companies. For instance, Easyjet is known for its low cost. The market share seemed to be equally distributed because each firm has its own part of the market and because switching costs are low none of the firms can really hold an important percentage of the market.

The competition between existing companies and the power of suppliers are the strongest forces in this industry. The competition of existing firms is high and will push out any company that doesn’t have enough capital. Suppliers are significant forces due the high cost of aircraft output. A potential change in credit terms would lead to severe loss for the company. Besides, the other forces involved seem to have a weak threat. It is expensive and time consuming to enter the market which lowers the risk of entry. Buyers have a weak force because of the low switching costs and substitutes are weak because they are usually too expensive.

Industry’s profit is significant because most people don’t choose to fly. It is not a trend which makes this industry profitable for the long term. Airline firms that generate more profit are in a better position because they usually have more aircraft and a larger variety of flights which provides further convenience for customers.

Some changes have been noticed lately. Several plane manufacturers have been making ecofriendly planes, which is a change in the bargaining power of suppliers. This would lead to a differentiation of the products, raising the threat of suppliers. Another recent change is the use of web portals such as lastminute.com to book flights. This positive change creates a brand new group of buyers and makes purchasing flights faster and easier. The rise in gas costs has also been a good change for the industry because it lessens the power of substitutes.

Ryanair was founded in 1985 in Dublin by Thomas Anthony Ryan, a wealthy Irish businessman of 49 years who gave his name to the company, in collaboration with Liam Lonergan, the owner of a tour operator called “Club Travel”. Legend has it that the starting capital was only an Irish pound. At the time, it was a small company operating exclusively from Dublin to London. But in 1986, a second destination was launched, making Ryanair a direct competitor of Aer Lingus – the Irish official national carrier – and British Airways. Initially, and in order to protect Aer Lingus, the Irish government refused its approval, but had to yield under the influence of the ultra liberal British government of Margaret Thatcher.

In the following years, the number of passengers using Ryanair continued to grow, however, profitability was not reached yet. The young and dynamic Michael O’Leary was asked to rectify the strategy and make the company generate profit. O’Leary’s strategy included a higher aircraft turnaround, the removal of Business class, the use of one aircraft model to facilitate maintenance and the removal of non-essential services such as the reservation of seats and the distribution of free drinks. He also advocated the use of secondary airports, which provided benefits to significantly lower costs. Under the direction of Michael O’Leary, Ryanair celebrated its 10th anniversary by announcing having transported 2.25 million people during its last fiscal year.

In the 1992-1999 period, Ryanair’s expansion was facilitated by the deregulation of European air traffic. The European Union allowed henceforth airlines to establish regular lines from the entire territory of the Union, regardless of the nationality of the company. Taking advantage of this opportunity, Ryanair developed its European presence in Stockholm, Paris and Belgium in Charleroi, which is only 49 km from Brussels.

In 2000, Ryanair launched its website that was initially expected to be an extra support. But soon, Ryanair realized that it could lead to lower costs. Within a year, Ryanair’s website represented three-quarters of the company reservations through the launch of a call center called « Direct Ryanair”. In 2002, Ryanair created a new « hub » in Frankfurt airport. The events of 11 September 2001 established fear among potential travelers and orders from aircraft manufacturers were stagnated. Boeing was particularly affected. Ryanair used this sluggish economy to buy at the best price 155 new aircraft.

In 2004, O’Leary stated that anarchy was now ruling the low-cost airline niche in Europe and that few would survive in acceptable conditions of profitability. Considering the age and Ryanair’s experience, he expected that his company would be among the 2 or 3 survivors of what he called the « bloodbath ». His predictions were accurate because Ryanair and EasyJet represent 70% of the total European low cost airline market now. That same year, a new opportunity arose: the enlargement of the European Union. This new perspective for Ryanair made it be lead to profitability after years of losses. At the same time, O’Leary announced that Ryanair’s accounts for 2003 showed a rising profit, a trend that hasn’t stopped since. In 2013, Ryanair reached 81 million customers, exploited 68 bases and over 1,600 routes and announced a full year net profit of 523 million euros.

Easyjet began in 1994 with the son of a Greek shipping magnate called Stelios Haji-Ioannou. Easyjet’s goal was to become a low cost airline company, that could compete with other European airlines like Lufhtansa or Brisith Airways. In only a few years, Easyjet has managed to be the most prosperous low-priced airlines in Europe. Easyjets’ target market includes people traveling by their own, people visiting their family, people starting their business alone but also young travelers making short trips.

In 1997, easyJet.com was introduced. It provided seat prices and booking information. Within four years of launch, their website sold their 10 millionth online seat. In 2004, easyJet became the first low-cost airline that exploited the newly formed European Union and launched flights to Slovenia and Hungary. By 2006, their strategy of speedy boarding was launched, enabling passengers to have better choices when it came to their seating arrangements. In 2009, they had 18 bases operating throughout Europe, 4 in France, 1 in Switzerland, 1 in Italy and 11 in the UK.

In 2010, easyJet was flying to 125 European, Turkish and North African airports in 29 countries. By the end of 2010, easyJet re-confirmed their strategy of turning Europe orange. Even though easyJet’s triumph could be placed entirely on Haji-Ioannou’s perception and adaptableness, what lead to the success of the airline were the market it operated in and the business model they had decided to follow.