File: Airline and Ryanair Fares Essay

Submitted By msmano
Words: 915
Pages: 4

PESTEL ANALYSIS:

PESTEL is classified as Political, Economic, Social, Technological, Environmental and legal. It is also described as a PEST or PESTLE analysis. According to Pestle Analysis (2012) PESTEL can be stated as follows: Understanding the political stability and history of the country is important in terms of political analysis. Economic analysis focuses on understanding the risks and opportunities available within the region is essential. Social aspects needs understanding the social dynamics of the region which allows you to communicate more efficiently with the natives, access target markets, build a labor force and successfully manage teams. The levels of advancement in the technological aspect in a region can positively or negatively affect the opportunities available for a business. Environmental analysis involves collecting information and analysing weather patterns and climate cycles and this aspect plays a major role as it is directly linked to environmental issues like global warming. There are several kinds of laws and one should ensure that all those rules are strictly followed when doing business.
Use of PESTEL in Ryanair:
Political & legal analysis:
The terrorist attack on Twin towers (US) in 2001 and in London in June 2005 caused extremely serious problem in the aviation industry. The increased numbers people have begun to pay more attention on the aircraft safety. The research show that the capacity of the low cost airlines declined by 6% from 2000 to 2004 (Mintel 2005, cited Maolei Song 2012).
In order to provide security to people and to guarantee the security of the airline industry, the UK authorities implemented severe security measures at all airports across the country. As a result of this act Ryanair forced to cancel 279 flights and refunded 2.7 million euro in tickets to about 40,000 passengers and tends to lose 1.9 million euro as result of declined bookings (O’Higgins 2008 cited Maolei Song 2012). In addition to this, additional time per passenger is required to carry out the cumbersome security process which will decrease the efficiency for sure.
Economic analysis:
Many major airlines have been hit hard by Europe's struggling economy and high fuel costs. But, Ryanair has done better than most and that outcome is only because of focus on low costs and low prices. Ryanair fares rose 6 per cent in the last six months ended September, and there is also increase in the passenger number which surged 7 per cent. Ryanair’s forecast profit report says (for the year ending March 2013), it has increased to 490-520 million euros from its previous guidance of 400-440 million euros. According to Ryanair in terms of fuel savings, first-half net profit rose to 596 million euros from 544 million a year ago and above analyst expectations at 564 million. Revenue jumped 15 per cent to 3.1 billion euros (Thomson Reuters 2012).
Social aspects:
In recent years, there has been a high profile migration to UK mainly from Polish and also from other parts (after the EU expansion in 2004). And this has helped low cost air travel provisions like Ryanair to rise. Although other modes of transport, such as coach and car travel, are still there people chooses Ryanair as their main carrier which has been testified in the statistics provided by The UK Civil Aviation Authority and the Civil Aviation Office of the Republic of Poland. This shows that Ryanair plays a vital role in defining this new migration (Kathy Burrell 2011).

Technological Environment:
In terms of technology, according to (Poulsen & Fowler 2012) Ryanair uses the strategy named “The technology of discount businesses which is based on self-service, value-position, and suitability. Ryanair stands out from other airlines in their…