Flying Lessons: Learning from Ryanair's Cost Reduction Culture

Abstract

Through radically improving the value equation for airline customers, Ryanair has served to shake-up established norms and practices in European aviation. Underpinning its price leadership and market success is a vigorous and relentless cost reduction ethos and resultant low break-even load factor. Ryanair has lowered European airline cost structures considerably, shattering existing cost floors. Few competitors are able to follow, either because they do not know how or they are unable due to social settlement obligations or service commitments. At the same time, the company has maintained high average load factors on its flights. Taken in conjunction with its low break-even load factor, this results in consistently high overall profit margins. On this basis, Ryanair is likely to remain a significant competitor and increase its market presence and success across Europe.