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charged by the travel agents for booking done through CRS and a fee imposed for every ticket sold. Besides enabling a save in the costs by eliminating travel agents’ commissions of 7.5%, the website was also used to sell travel insurance, accommodation and car hire.
BUSINESS MANAGEMENT Page 9 of 23 ThreatsRyanair has been continuously facing fierce operating challenges. This is because the company operates in a highly competitive marketplace. The competitors has commenced their own ‘no frills’ charter services and have reacted by introducing fare cuts on short routes, flying larger aircraft with one passenger class, reducing in-flight service, internet bookings and weekend offers. Mainstream airlines also intend to follow the budget airline model to be executed on international routes. (O’ Higgins 2004). Technological advancement had a reversed implication to Ryanair. Internet and credit card usage was still at an infancy stage especially in Eastern Europe. (Economist 2004c:69).The rapid development in telecommunication may result in lesser need a business travel. Meetings can be held via video or teleconferencing, thus eliminating the need for physical presence in a location. Terrorist attacks were an unpredicted threat to Ryanair. This was evidenced in the case of the terrorist attacks on United States and London. This caused a drop in the air travel as the consumers were apprehensive about security and a raise in the insurance coverage due to a third party liability from “acts of war” or terrorism. This resulted in Ryanair seeking other options such as government or self insurance, which relatively resulted to cost increase and revenue drop. (Ryanair.com) Threat also came in the form of a drop in the fuel price. Ryanair’s strategy of fuel hedging provides extensive protection against unpredicted fluctuations of fuel prices. However, the current drop in the fuel price, resulted in them dipping onto its cash balance to finance the differences, thus affecting its margin (Oxfordbridgewriters.com). The change in government policies such as an increase in the air passenger taxes results to a higher air travel cost. This may lead passengers to seek for alternative mode of transport such as high-speed trains and buses for their travel needs, therefore causing a drop in air travel demand.
BUSINESS MANAGEMENT Page 10 of 23 4. RECOMMENDATIONS TO OVERCOME THE WEAKNESSES AND THREATS OF RYANAIRPeople relation is an important aspect to determine Ryanair’s success. Internally, it leads to improve the morale of their staff especially taking care of their basic needs and welfare, listening to their positive and negative feedbacks as well as getting them involved in making recommendations and decisions. This leads to greater sense of belonging and whole hearted participation in Ryanair’ business. Externally, Ryanair need to be more customers focused. This is through meeting the basic expectations of an air traveler. Being too cost focus will lead to negative perceptions over Ryanair’s commitment towards its travelers. Creative pricing to bundle in some of the individual items charged separately such as oxygen mask and wheelchair will help eliminate undue critics.