Starting out as a full-service conventional airline in 1985, Ryanair changed its strategic direction in the 1990s to become Europe’s first low-fares, no-frills carrier. The company has taken advantage of price-sensitive customers and gained wide acceptance and recognition because of this strategy. Ryanair battled head-on with other traditional carriers and paved the way in the establishment of a new segment in the European industry. The early success of the budget airline, however, is threatened by the new challenges presented by its rapidly changing business environment. Thus, the main concern of Ryanair is how to sustain and maintain its position in the industry amidst these threats and challenges.
In line with this, this paper will examine the current trends in the European airline industry and its implication for the budget airline sector specifically on Ryanair. This paper will primarily draw information from the case study prepared by Eleanor O’ Higgins. In order to draw an adequate and accurate assessment of the situation of the industry, it will utilize various strategic management tools like PEST analysis and Porter’s Five Forces Model. Another objective of this paper is an internal examination of Ryanair by identifying its strengths and weaknesses. Lastly, this paper will give an assessment of whether the business organization is meeting the expectation of the customers relative to its competitors.
PEST analysis stands for Political, Economic, Social, Technological, Legal, and Environmental. This strategic management tool is noted for its ability to capture almost all the variables in the environment where the business operates (Thomson 2002). The following section applies the PESTLE analysis of the European airline industry.
The operation of the European airline industry is strongly affected by specific policies instituted by the government. Perhaps the most significant political transformation in the market where Ryanair operates is the governments’ effort in integrating their economies through the creation of free trade unions that led to the establishment of the European Union. Through the European Union, budget airlines are given access to the numerous markets which increases their patrons together with the revenue that they generate. However, this integration also has adverse effects on the operation of budget airlines. It should be noted that the abolition of duty-free sales and the subsequent increase in the airport’s landing charges squeezed the margins of the players. Another policy which impacts the operation of Ryanair is the EU regulation which requires the refitting of used aircraft,&nbsp.huskitting, and rudder installation. All of these increase the company’s capital expenditures and costs of operations since installations require higher fuel consumption.

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