Cost Leadership Strategy
Ryanair is pursuing a strategy of cost leadership (cost containment) to fight its competitors. This strategy straightly applied in all the operations of the company on priority basis, in order to achive the set objectives: to minimize the overall expenses (Wright and MacMahan 1992, p. 298). To keep this competitive advantage, it must control costs but also direct manufacturing costs design, marketing, distribution and administrative costs and financial not to mention operating costs (reduced by the use of internet). These savings the costs are then reflected in the prices. What compels to make a lot of sales to increase its activity.
A heavy use of aircraft is a feature directly related to airport secondary and organization of the company avoiding the “hub”. The carrier serves only small regional airports, less expensive (air taxes and fees low reduced airport) and less congested, which not only ensure punctuality, but also to increase the rotation of the planes. The company also offers a greater bargaining power against small airports because Ryanair is able to generate large volumes of passenger traffic, these airports are less busy and delays less frequent (which limits the number of claims and disgruntled passengers). The Engineering Ryanair is considering airports as profit centers rather than as elements of cost. The precedence towards using the inferior airports is therefore a significant source of savings (Simon and Akhton 2003, p. 513).