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Challenges Faced by Ryanair Holdings Due to COVID-19

Background

The COVID-19 pandemic has significantly influenced not only individual companies but also entire industries. Among them, one of the most affected is the airline industry. In 2020, the International Civil Aviation Organization estimated that the pandemic could result in a reduction of about 1.5 billion passengers and 71% of seat capacity around the world by the end of that year (Amankwah-Amoah, Khan and Wood, 2020). Such a decrease would inevitably lead to substantial financial losses because the airline industry makes a great contribution to countries’ economies. For example, the size of the UK airline market is 47,000 passengers per day, and it brings an annual revenue of US$10,4 billion (Nhamo, Dube and Chikodzi, 2020). Globally, the aviation sector contributes about US$2.7 trillion to the world’s GDP (Agrawal, 2021). As a result, a decline in air traffic significantly affects the revenues of both the airline business and companies providing support services to airlines.

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Air traffic is generally vulnerable to various external factors. Throughout history, it has been subject to multiple adversities, such as natural disasters, oil crises, disease outbreaks, economic recessions, terrorist attacks, and armed conflicts (Suau-Sanchez, Voltes-Dorta and Cugueró-Escofet, 2020). Yet, the COVID-19 pandemic has gone beyond any previous catastrophes, which means that air carriers are currently faced with unprecedented challenges (Suau-Sanchez, Voltes-Dorta and Cugueró-Escofet, 2020). For example, because of lockdowns and border closures imposed by governments across the world, airline companies have faced a sharp decline in flight numbers. This challenge affected international air traffic much more than domestic one (Suau-Sanchez, Voltes-Dorta and Cugueró-Escofet, 2020; Sun et al., 2021). As a result of a decrease in flights, airline companies are also faced with the challenge of employment reduction. Due to COVID-19, about 7-13% of the airline workforce will lose their jobs, and this impact is greater in larger companies than in smaller ones (Belhadi et al., 2021; Sobieralski, 2020).

Financial challenges have also become prevalent among airline companies as a result of the pandemic. In particular, there was a significant decline in airline share prices, which reached their lowest point between February and April of 2020 (Dube, Nhamo and Chikodzi, 2021). By May, airlines lost around 49% of their share value on average; in America, the decrease was 55%, while in the Asia Pacific region, it reached 37% (Dube, Nhamo and Chikodzi, 2021). Another challenge, which can be classified as both financial and operational, is concerned with new mandates imposed by governments. Such requirements as screening, distancing, wearing masks or personal protective equipment, and, in some airports, on-site COVID-19 tests appear to be costly and negatively affect user experience and waiting times (Akbar and Kisilowski, 2020; Sun et al., 2021). Since airlines are profit-driven, many of them have to search for trade-offs between safety mandates and economic productivity.

Research also reveals that sustainability has been an issue in the airline industry since the advent of the pandemic. Although environmental concerns are generally one of the main priorities of airline companies, they have been deprioritized in these difficult times; instead, businesses focus on focus on survival and taking care of their employees (Amankwah-Amoah, 2020; Barreiro-Gen, Lozano and Zafar, 2020). Finally, in terms of the business model, it has been found that low-cost carriers (LCCs) appeared to be more affected by pandemic-related challenges than full-service carriers (FSCs) (Kökény, Kenesei and Neszveda, 2021). It can be related to the fact that LCCs are mostly smaller companies; therefore, they are more subject to the negative effects of adversities.

Airline companies have devised various responses to cope with the consequences of COVID-19. General recommendations for long-term recovery include resizing the infrastructure to meet the new demand, providing governmental support, diversifying revenue streams, automating and digitalizing processes, optimizing and reducing costs, and outsourcing non-core activities (Serrano and Kazda, 2020). Overall, airline companies will have to review their business strategies to ensure they can survive and thrive in the post-COVID world.

This paper aims to propose a research project intended to identify specific challenges faced by an Irish-based air carrier Ryanair Holdings, and its future possibilities. The Ryanair company was incorporated in 1996; it operates low-cost, short-haul, scheduled-passenger airlines that serve mainly the routes within Europe. The firm has five airlines: Ryanair DAC, Ryanair UK, Malta Air, Lauda, and Buzz (Ryanair Group, 2021). By the end of June 2021, the company’s principal fleet consisted of 29 Airbus A320 aircraft and 422 Boeing 737 aircraft (Ryanair Group, 2021). As of July 2021, Ryanair completed around 2,100 short-distance flights per day and served more than 210 airports in Europe (Ryanair Group, 2021). Overall, Ryanair’s market share in Europe was 8.5% in 2019 (Budd, Ison and Adrienne, 2020). Its competitors are Lufthansa, British Airways, Iberia, and Air France, among others.

Ryanair’s business model is LCC, and its business strategy is based on reducing operating costs and charging low fares. The company’s mission is to be a leader in the traveling sector, and its core values are punctuality and safety (Rodríguez-García, Orero-Blat and Palacios-Marqués, 2020). In the fiscal year 2020, the company’s revenue was €8,495m; however, in 2021, it decreased by 81% to a total of €1,636m (Ryanair Group, 2021). Such a drastic decline was related to disruptions and uncertainty caused by COVID-19 since both passengers and the company’s employees suffered from often changing government requirements and restrictions and travel bans.

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The Aim of the Research

It has been identified that the airline industry has been subject to significant challenges due to the pandemic. These issues are related to the companies’ financial situation, sustainability, operations, compliance with governmental regulations, and passenger experience. Since Ryanair is an important European air carrier, it has also been considerably affected by this crisis. Therefore, the aim of this research project is to identify specific challenges faced by Ryanair as a result of COVID-19 and how the company attempted to cope with them.

The Objectives of the Research

The research project will aim to fulfill three specific objectives. The first objective is to identify the challenges faced by Ryanair due to COVID-19. The second objective is to understand the government’s role in aggravating or alleviating the challenges experienced by Ryanair. Finally, the third objective is to explore the measures Ryanair has taken to cope with the pandemic-related challenges and, based on this, make recommendations to airline companies and policymakers.

The Research Problem

Operating in one of the most affected industries, Ryanair could not escape the consequences that airline companies have experienced due to COVID-19. First of all, Ryanair saw a significant decrease in flights after the imposition of lockdowns and travel bans. Its air traffic fell from 149m to 27.5m almost overnight, causing a significant reduction in revenues (Ryanair Group, 2021). Yet, despite a considerable decline in traffic, Ryanair was the company with the highest number of flights in 2020, operating about 1,157 flights per day (Cifuentes-Faura and Faura-Martínez, 2021). In comparison, EasyJet operated 601 flights, and Turkish Airlines completed 578 flights during the same period (Cifuentes-Faura and Faura-Martínez, 2021). Currently, the company is experiencing difficult times because it is uncertain when lockdowns and travel bans will be lifted (Ryanair, 2021). Despite these challenges, Ryanair plans to transport 26-30 million passengers over the next year, which is less than a quarter of its pre-pandemic volume (Makortoff and Topham, 2021). Thus, although the company has faced significant challenges, it remains optimistic about its future.

The government regulations appear to have an important impact on Ryanair’s business. The company obtained about €660m from the UK coronavirus emergency funds (Albers and Rundshagen, 2020). Yet, despite the government support, Ryanair and other companies, such as British Airways and Airbus, announced thousands of staff redundancies by June 2020 (Adrienne, Budd and Ison, 2020). Overall, Ryanair has been distinguished recently by its overt opposition to airline bailouts. Ryanair challenged the European Commission’s decisions three times, arguing that the provision of financial aid to other airline companies is disproportionate and undermines the principle of fair competition (Waelbroeck, 2021). Yet, Ryanair failed to show how this aid would discourage it from providing its services, and the General Court dismissed all three challenges (Pantazi, 2021). Given Ryanair’s challenges, one may conclude that the role of governmental regulations on airline companies is complicated and has to be explored.

Research Questions

The research project aims to investigate the following research questions:

  1. What challenges is Ryanair faced with due to COVID-19?
  2. How do the government regulations alleviate or aggravate the challenges faced by Ryanair?
  3. What measures has Ryanair taken to address the identified challenges?
  4. What recommendations can be given to help airline companies cope with pandemic-related challenges?

Research Methodology

The research project will apply a case study method to investigate the challenges faced by Ryanair due to COVID-19. A case study is a qualitative research methodology that allows for exploring a particular phenomenon in a real-life context and gaining in-depth insights into the multiple aspects of the studied phenomenon (Rashid et al., 2019). This approach is suitable for the proposed project because it will allow for getting a deep understanding of the challenges faced by the sample airline company and investigating how a real-life company copes with these challenges.

The research will use qualitative methods of data collection, which will include semi-structured interviews with the company’s management staff and a content analysis of relevant documents. Interviews are appropriate for this study because they allow the researcher to obtain historical information and control the line of questioning (Creswell and Creswell, 2018). The interviews will be recorded and transcribed; afterward, the transcripts will be subject to thematic content analysis to identify the emerging challenges and recovery strategies. The documents to be included in secondary data will comprise the company’s annual reports, industry statistics, and other relevant resources.

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Timeline of the Project

Table 1 demonstrates the proposed timeline for the completion of the research project.

Table 1. Proposed timeline for the project

Jan Feb Mar Apr May Jun Jul Aug Sep Nov Dec
Literature searching x x x x
Draft introduction x x
Planning interviews x x x
Draft literature review x x
Conducting interviews x x
Transcribing interviews x x x
Draft research methodology x x
Data analysis x x x
Draft results and discussion x
Draft conclusions and recommendations x
Revise as needed x

Reference List

Adrienne, N., Budd, L. and Ison, S. (2020) ‘Grounded aircraft: an airfield operations perspective of the challenges of resuming flights post COVID’, Journal of Air Transport Management, 89, p. 101921.

Agrawal, A. (2021) ‘Sustainability of airlines in India with Covid-19: challenges ahead and possible way-outs’, Journal of Revenue and Pricing Management, 20, pp. 457-472.

Akbar, Y.H. and Kisilowski, M. (2020) ‘To bargain or not to bargain: airlines, legitimacy and nonmarket strategy in a COVID-19 world’, Journal of Air Transport Management, 88, p. 101867.

Albers, S. and Rundshagen, V. (2020) ‘European airlines’ strategic responses to the COVID-19 pandemic (January-May, 2020)’, Journal of Air Transport Management, 87, p. 101863.

Amankwah-Amoah, J. (2020). ‘Stepping up and stepping out of COVID-19: new challenges for environmental sustainability policies in the global airline industry’, Journal of Cleaner Production, 271, p. 123000.

Amankwah-Amoah, J., Khan, Z. and Wood, G. (2020) ‘COVID-19 and business failures: the paradoxes of experience, scale, and scope for theory and practice’, European Management Journal, 39(2), pp. 179-184.

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Barreiro-Gen, M., Lozano, R. and Zafar, A. (2020) ‘Changes in sustainability priorities in organisations due to the COVID-19 outbreak: averting environmental rebound effects on society’, Sustainability, 12(12), p. 5031.

Belhadi, A. et al. (2021) ‘Manufacturing and service supply chain resilience to the COVID-19 outbreak: lessons learned from the automobile and airline industries, Technological Forecasting and Social Change, 163, p. 120447.

Budd, L., Ison, S. and Adrienne, N. (2020). ‘European airline response to the COVID-19 pandemic – contraction, consolidation and future considerations for airline business and management’, Research in Transportation Business & Management, 37, p. 100578.

Cifuentes-Faura, J. and Faura-Martínez, U. (2021) ‘Situation of European airlines caused by COVID-19: restrictions, government subsidies and future prospects’, Aviation, 25(4), pp. 232-240.

Creswell, J.W. and Creswell, J.D. (2018) Research design: qualitative, quantitative, and mixed methods approaches. 5th edn. Los Angeles, CA: SAGE Publications.

Dube, K., Nhamo, G. and Chikodzi, D. (2021) ‘COVID-19 pandemic and prospects for recovery of the global aviation industry, Journal of Air Transport Management, 92, p. 102022.

Kökény, L., Kenesei, Z. and Neszveda, G. (2021) ‘Impact of COVID-19 on different business models of European airlines’, Current Issues in Tourism, pp. 1-17.

Makortoff, K. and Topham, G. (2021) ‘Ryanair warns it could lose nearly €1bn amid Covid-19 lockdown’, The Guardian, Web.

Nhamo, G., Dube, K. and Chikodzi, D. (2020) ‘COVID-19 and implications for the aviation sector: a global perspective’, in Nhamo, G., Dube, K. and Chikodzi, D., Counting the cost of COVID-19 on the global tourism industry. Cham: Springer, pp. 89-107.

Pantazi, T. (2021) ‘State aid to airlines in the context of Covid-19: damages, disturbances, and equal treatment’, Journal of European Competition Law & Practice, lpab071.

Rashid, Y. et al. (2019) ‘Case study method: a step-by-step guide for business researchers’, International Journal of Qualitative Methods, 18, p.1609406919862424.

Rodríguez-García, M., Orero-Blat, M. and Palacios-Marqués, D. (2020) ‘Challenges in the business model of low-cost airlines: Ryanair case study’, International Journal of Enterprise Information Systems, 16(3), pp. 64-77.

Ryanair (2021) Ryanair reports full year loss of €815m as traffic falls 81% due to Covid-19 travel restrictions. Web.

Ryanair Group. Annual report 2021. Web.

Serrano, F. and Kazda, A. (2020) ‘The future of airport post-COVID-19’, Journal of Air Transport Management, 89, p. 101900.

Sobieralski, J.B. (2020) ‘COVID-19 and airline employment: insights from historical uncertainty shocks to the industry’, Transportation Research Interdisciplinary Perspectives, 5, p. 100123.

Suau-Sanchez, P., Voltes-Dorta, A. and Cugueró-Escofet, N. (2020) ‘An early assessment of the impact of COVID-19 on air transport: just another crisis or the end of aviation as we know it?’, Journal of Transport Geography, 86, p. 102749.

Sun, X. et al. (2021) ‘COVID-19 pandemic and air transportation: successfully navigating the paper hurricane’, Journal of Air Transport Management, 94, p.102062.

Waelbroeck, D. (2021) ‘The EU General Court dismisses three challenges against decisions of the commission approving individual aid measures granted by Finland, Denmark and Sweden in the Covid-19 crisis (Ryanair)’, Concurrences: Antitrust Publications & Events, Web.

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