Introduction
The Covid-19 novel coronavirus pandemic has become of the most significant challenges faced by the contemporary business environment. The pandemic has entailed nationwide lockdown protocols, while global travel was virtually paralysed. In such a situation, airlines experienced serious financial problems caused by the decreased passenger flow and the overall uncertainty. As this crisis has reached an unprecedented level of impact, recovering after it will be a long, demanding process. Ryanair’s situation is not an exception, as the global turbulence has inevitably affected the world’s leading low-cost airline. However, the company’s competitive advantage in terms of pricing policy and affordability has the potential to remain relevant after the pandemic. Ryanair’s recovery strategy in the post-Covid environment will comprise two major steps, and this report provides insight into the short- and medium-term recovery option in the case of Ryanair.
Current Situation and Short-Term Plan
The Impact of Covid-19
The novel coronavirus pandemic has been a challenge of unseen magnitude for the entire planet. However, while its negative implications have been observed across industries, Covid-19 has introduced a particularly difficult environment for travel-related companies. As a concept, tourism became nearly non-existent amid the pandemic, as countries closed national borders and introduced severe travel restrictions. Accordingly, airlines have had to suspend their operations, leaving but a small portion of their activities. Albers and Rundschagen (2020) report an expected decrease of $314 billion in passenger airline revenues, amounting to a 55% drop in comparison to the previous year. Such numbers indicate a crisis of extraordinary scale in the industry, meaning that even the strongest airlines cannot rely on their traditional business models in this case. The focus of all companies’ activities has shifted toward balancing expenses and retaining valuable resource, including skilled workers. In this situation, companies have demonstrated varying behaviour, and most of them focused on preserving their capabilities on the market and trustworthy relations with customers to enable quick recovery (Amankwah-Amoah, 2020). However, a more innovation-focused approach may be required for Ryanair to overcome the challenges of the pandemic.
Short-Term Recovery Plan
First of all, the company’s management should take immediate measures, resisting the growing impact of travel bans and restrictions across the globe. Ryanair’s recovery is going to be more challenging for the low-fare market leader, as its business model has traditionally relied on individual travellers in Europe. As reported by Albers and Rundschagen (2020), the current situation has once gain provided airlines with an opportunity to obtain state financing. Governments across the world prepare considerable bailout packages, and Ryanair could benefit from it. According to Albers and Rundschagen (2020), European nations allocate billions of dollars to support their airlines, and the number for the United States exceeds $25 million. However, the exact degree of this support depends on the estimated revenue losses and impact on a country’s GDP (Abate et al., 2020). Being eligible for a similar bailout package from the Irish government will provide the necessary support for Ryanair, as it would contribute to the company’s financial stability in the short term.
Simultaneously, it is important to retain key resources in such a difficult situation, and the emphasis should be on human capital. Governmental financial support is to be used to provide employees with a stable income, prompting them to stay in the company after the pandemic. Human resources form the core of successful business operations today, and this aspect acquires additional importance in air travel. Siddiqui and Bisaria (2018) state that turnover is one of the most expensive challenges faced by the air travel industry. Furthermore, flight safety must be guaranteed at all times, which is why retaining qualified pilots should be a short-term priority. Overall, the company cannot afford to lose its valuable employees, as the process of recruiting and training new personnel is going to postpone Ryanair’s recovery in the post-Covid era. If the company manages to attract enough external financial support and utilise in an effective manner, retaining valuable human resources, it will be possible to survive the current Covid-related turbulence.
Medium Term Recovery Options
The financial aid is to going to help Ryanair recover in the following year or two, but the company cannot rely on external help over a longer period. Furthermore, the short-term plan should be complemented with more profound actions, as the effect of Covid is expect to resound in the industry for several upcoming. Ryanair is one of the leaders on the low-fare airline market segment, meaning that low-range travellers with limited financial capabilities form the core of the company’s customer base. Following the pandemic and lockdowns, this clientele may have to postpone any kind of international travel. Nevertheless, the low-cost competitive advantage of Ryanair is likely to remain in the post-Covid market. The company’s business model allows it to offer incredibly low fares, and, if the low-range segment travels less, it is still possible to attract higher tiers, such as the low-to-mid one.
It is useful to examine the approaches of the world’s major airlines in the fallout of the pandemic. Table 1 proposes a classification of current crisis management models implemented on the market. As it becomes evident, leading European airlines have varying strategies in terms of recovering after Covid-19. Ryanair currently appears to follow the Persevering model, remaining loyal to its policy. Simultaneously, its primary competitors (marked in bold) implement more active measures, either significantly reducing their fleet or completely withdrawing. Nevertheless, the feasibility of this strategy is yet to be confirmed, and the majority of European companies have opted for Persevering. In this difficult situation, Ryanair will benefit from utilising the innovation opportunities, which have emerged during the pandemic.
Table 1. Covid-19 Crisis Management Models of Major Airlines (Albers and Rundschagen, 2020).
Covid-19 and subsequent lockdowns have highlighted the vast potential of online technology, and Ryanair should increase its emphasis on Internet-based services. Online operations and communication allow for a more profound stakeholder engagement, and this principle has been confirmed as an important factor of quality digital innovation (Leonidou et al., 2020). As Ryanair steps into the post-Covid era, the company’s management should utilise the global opportunities of online communication, namely social media, to interact directly with its customers. Such engagement will positively affect the public image of the brand, enabling a better understanding of customers’ expectations. Airline passengers’ consumer behaviour has changed in the fallout of the pandemic, and it is vital to have a clear vision of their updated requirements Ryanair’s proposed mid-term strategy should include the development of automated, remote interaction mechanisms. While the implementation of advanced technology may be expensive and time-consuming, it appears to devise a new framework in three to five years, completely redesigning the image of the brand.
Reference List
Abate, M., Christidis, P., and Rundschagen, V. (2020) ‘Government support to airlines in the aftermath of the COVID-19 pandemic’, Journal of Air Transport Management, 89. Web.
Albers, S. and Rundschagen, V. (2020) ‘European airlines′ strategic responses to the COVID-19 pandemic (January-May, 2020)’, Journal of Air Transport Management, 87. Web.
Amankwah-Amoah, J. (2020) ‘Note: Mayday, Mayday, Mayday! Responding to environmental shocks: insights on global airlines’ responses to COVID-19’, Transportation Research Part E: Logistics and Transportation Review, 89. Web.
Leonidou, E. et al. (2020) ‘An integrative framework of stakeholder engagement for innovation management and entrepreneurship development’, Journal of Business Research, 119, pp. 245-258. Web.
Siddiqui, N. N. and Bisaria, G. (2018) ‘Innovative Techniques of Motivation for Employee Retention in Aviation Industry’, ANVESHAK – International Journal of Management, 7(1). Web.