Comparison of Operations Management of Ryanair and British Airways

Comparison of Operations heed of Ryanair and British Air flairsThis evidence give seek to examine, comp atomic number 18 and contrast the trading exploits of Ryanair and British Airways, dickens major all if strategically differing skyways. In several(prenominal)ize to fully explore the nature of twain organisations and to critically analyse factors such as the impact of trading operations on military operation imperatives and the ability to slip by ideas persuasively regarding key operations issues. The essay allow for begin by providing a brief background to both organisations and their operations watchfulness transmutation processes. The essay lead, for separately organisation, contend the grocery store in terms of performance object lenss and lead focus on key transformation processes used in their operations. Underpinning and interwoven in the analysis will be concepts and theories of operations precaution which will win a rigorous conceptual framewor k from which close analysis of both of these organisations will be practical. This will serve to modify a clear and distinguishing conclusion that clearly notes the key differences surrounded by each skyway military controls organisational anxiety approach. I allow chosen to focus this essay upon the air passage manufacturing, a large, growing and spiritedly competitive industry in which sugar margins atomic number 18 often tight with external factors, such as the impairment of oil often having a large influence. The air hose industry is an central modern comp unmatchednt of globalisation, facilitating significant increases in sparing growth, global trade, and foreign tourism. Deregulation of the airline industry in the US in 1978 and in Europe in 1997 dissolving agented in a more(prenominal) competitive market and the inception of low constitute budget airlines such as Ryanair to engagement with the more proliferate domestic flag carriers such as British A irways.AnalysisIn order to analyse and discuss the organisational management and transformative processes employ by the diametric airlines, it is first necessary to provide a brief background to each in order to contextualise their respective positions deep down the airline industry. The decision to analyse Ryanair and British Airways was taken in order to discuss two very different airlines. There argon similarities and differences between the two airlines. Both are privately owned and operated airlines, one Irish, one British, both are committed to safe and reli able-bodied air travel, and both experience also had to deal with their share of contr oversy and adverse media attention Ryanair over its reliance upon ancillary revenue, its approach to client portion, and its provocative advertising British Airways over the intense rivalry with Virgin Atlantic and subsequent high profile lawsuit, and more late(a)ly the long running industrial transaction dispute with its cabin crew. However, both organisations take a very different organisational approach to their operations and management, as we shall explore.A brief background to Ryanair and British AirwaysRyanair is an Irish low cost airline, with its head office based in Dublin Airport and with a UK base at London Stansted Airport. In 1985 Ryanair was created by the Ryan family and began inauspiciously with one plane flying once a day carrying passengers between Waterford in the south east of Ireland to Gatwick airport in London (Ryanair, 2010). However Ryanair has rapidly expanded since the European deregulation of the airline industry in 1997 and the last decade has been characterised by rapid elaborateness to meet the massive increase in passenger numbers the airline carries, to the extent that now Ryanair is one of the largest and most victorious airlines in the world, and is the preeminent low cost airline in Europe carrying over cardinal six million passengers in 2009 (Ryanair, 2010). Th is analysis will explore how Ryanair has managed such a dramatic and advantageful transformation of its operations.British Airways has if perhaps a less spectacular recent history, a more illustrious (the control for pillow slip) and proven record of longevity, with trumpeter company Aircraft Transport and Travel extra reaching back to 25 August 1919 and the worlds first international free-and-easy air travel between London and Paris (British Airways, 2010). In 1974, forerunner companies such as Cambrian Airways, Caledonian Airways, and North West Airlines were merged to fashion British Airways, however owing to rising fuel expenditures and economic time out British Airways was operating at a loss in the eighties and under the Conservative government of the time was eventually privatised in 1987 suitable a plc in a bid to return it to profitability (British Airways, 2010). British Airways has since the mid 1990s operated fairly successfully gaining a high of bonnie ove r forty million passengers in 2002, and the company making substantive yearly profits until 2008 and has suffered significant losings in 2008 and 2009, owing to several factors such as the Icelandic volcanic ash cloud and the industrial dispute which resulted in strikes and impacted upon operative capacity (BBC, 2010. This essay will seek to examine how British Airways has been seeking to turn around its recent fortunes and return to the profitability of the past in the face of stiff argument from low cost rivals such as Ryanair.Operations ManagementIn the ultra-competitive airline industry, it is imperative that organisations understand their market, their operational world and their strategy. Operations management and business strategy are key to business success, and incorporate a holistic approach to management strategy and decisions which drives an organisation towards a goal. Ryanair for example has an operations strategy to provide air travel at the cheapest cost, whilst maximising its revenue and profit margin, whilst British Airways aims to provide an upgraded good to everyone who chooses to fly with us (British Airways, 2010), whilst improving efficiency in its operations. In order to achieve these ambitions, successful operations management is crucial, as it screw reduce the cost of producing products and serve and creation efficientCan increase revenue by change magnitude client satisfaction through and through good quality and serviceCan reduce the amount of investment that is necessary to produce the required character reference and quantity of products and serve by increasing the effective capacity of the operation and by being innovative in how it uses its physical resourcesCan provide the basis for approaching innovation by building a consentaneous base of operations skills and knowledge within the business.(Slack et al, 200722).Operations management hence will have a significant impact upon a companys get around and long term profitability. Key to successful operations management and to this essay is operations strategy as it informs and instructs the fortunes of an organisation by charting the direction that they will follow.Operations Strategy and the Target MarketFor years up until the deregulation of the European airline industry in 1997, the European airline industry was dominated by national flag carriers, often subsidized by national governments, that offered full service flights but in the main with high fares, of which British Airways is a good example. British Airways operational and management past is more complicated than Ryanairs due to several factors but largely because of its history and military position as a flag bearing airliner. British Airways has had to overcome obstacles to success in its history privatisation was successfully navigated through programmes such as position People First and A Day in the Life which emphasised staff development, employee engagement and a collabor ative approach to industrial dealings (Upchurch, 20103). British Airways in the early 1990s was a profit making organisation based upon customer related innovations, however other airlines cursorily copied the operational strategy, resulting in declining revenue and resulting in major business enterprise losses (British Airways, 2010) owing to greater competition. British Airways thus had to evolve its strategy and ambitions, and picture that the strategic objective was aligned with the operations management of the companyBritish Airways strategic objectives focused on engaging in mergers with other airlines, hiring and educate a good crew and maintaining its financial and social status. The strategic objective of British Airways are in line with the operations management dodging of the company. The operations objectives make sure that British Airways would continuously provide the surmount service to clients. The operations objectives make sure that the organizational object ives are met. The operations objectives guide the firm so that the organizational objectives will be met by British Airways.(Operations Management, 2010).Deregulation of the industry increased competition not further from within pre deregulation competitors but also with newly created airlines, and paved the way for what was essentially a revolution in air travel that has seen the concept of a multitude of low cost airlines offering cheap fares but with reduced serve. Ryanair is the principal and most successful of these airlines and it achieved this success through innovating and redirecting its attentions in the market. Rather than try and compete with existing airlines in attracting the usual business travellers, Ryanair a different target market by seeking to attract large numbers of leisure travellers instead (Chesbrough, 2007).However, Ryanair was not initially a profitable organisation, unable to compete with the more established airlines. Realising this, Ryanair crucia lly and essentially over hauled its operational strategy in 1991We patterned Ryanair after south-west Airlines, the most consistently profitable airline in the US says Michael OLeary, Ryanairs of import Executive. Southwest founder Herb Kelleher created a formula for success that works by flying only one lineament of airplane the 737 development smaller airports, providing no frills service on board, selling tickets directly to customers and offering passengers the lowest fares in the market. We have adapted this model for our market draw a bead on and are now setting the low fare standard for Europe.(OLeary in Slack et al, 200762).Essentially then, this change in strategy by Ryanair highlights how beta operational strategy is to an organisation. Perhaps the biggest challenge for British Airways has been the ongoing struggle against the low cost airlines which points to a strategic choice for British Airways between continuing to operate a full service and customer service focused high quality liner, or to adopt the low cost model. British Airways has refused to go down the low cost route, preferring instead to furcate its customer base, focusing on premium, high-yielding passengers (in First and Business Class) (Upchurch, 20103), whilst rationalising some routes, press cutting loss making routes and attempting to increase efficiency and savings through job cuts.Through changing their strategy significantly to copy a successful model, Ryanair fundamentally altered its operations but importantly enabled it to grow to induce the leading European low cost airline. It was the strategic decisions that were taken that have been key and these include stream lining the operations wherever assertable and aggressively optimizing production costs. By using only one aircraft type the 737, Ryanair were able to save a significant amount of money through standardization of parts, maintenance and servicing (Slack et al, 200762), whilst saving pilot tr aining costs as the average training time for flight crews on the Boeing 737 is two weeks compared to an average of seven on other aircraft (Roseingrave, 2000). Ryanair maximised the aircraft seating capacity, whilst implementing a policy of charging for the seat only and increasing revenue through ancillary services such as charging for luggage, for online check in, for priority boarding and for on board food and drink (Box, 2007). Ryanair have also diversified the range of services that they offer, a cursory glance at their website highlights the range of services soon promoted in addition to their low cost flight seats, such as car hire, travel insurance, discounted hotels, airport transfer, credit cards, gift vouchers, hostels and bed breakfasts, canvass holidays, cheap mobile roaming, villas and apartments and campsite holidays (Ryanair, 2010). However, this is not unusual for an airline company, British Airways offers similar but more aims for a more up-market target. P erhaps one of the most important strategic decision that has been taken by Ryanair management is the decision to use low cost secondary airportsFlying in and out of low-cost uncongested secondary airports has become the trademark of Ryanair. Selected airports are generally close to large population centres. Secondary airports work well for Ryanair because they are less expensive, generally because they are the only airline flying there. In some cases these airports actually pay Ryanair to provide services. As Ryanair has a rigid negotiating hand, if airports raise costs Ryanair can move capacity to lower-cost airports. Since secondary airports are uncongested, Ryanair is able to do 25-minute turnarounds, which enhance aircraft utilization and on-time performance.(Roseingrave, 200049 50).This combination of strategies aimed at keeping operating costs as low as possible have proved to be successful. However their success is can only be measured if customers are satisfied with the s ervice provided. Ryanair is not storied for its customer service indeed OLeary, the Ryanair CEO, clearly states the companys policy on customer service We guarantee to give you the lowest air fare. You get a safe flight. You get a normally on time flight. Thats the package. We dont and usage give you anything more. Are we going to say sorry for our lack of customer service? Absolutely not. If a plane is cancelled, will we put you up in a hotel overnight? Absolutely not. If a plane is delayed, will we give you a voucher for a restaurant? Absolutely not. (OLeary in Slack et al, 2007 62).Essentially, this is exactly what defines Ryanairs service concept, a tripartite concept outlined by Johnston and Clark (2008 42). Firstly, the organising idea, or the essence of the service bought or used by the customer (Johnston and Clark, 2008 42) is the guarantee to be given the lowest air fare, a safe flight and usually an on time flight. For British Airways, customers are the focus, which m eans that their employees will strive to ensure customer satisfaction and they will provide a more costly and full service. Secondly, the service experience, or the customers direct experience of the service process which concerns the way the service provider deals with the customer (Johnston and Clark, 2008 42) is displayed in the simplicity of the deal they are up motion and honest about the fact that the customer, even a customer in a service industry, should not have high expectations of customer service or customer care in the event of things going wrong. British Airways has long portrayed itself as the Worlds Favourite Airline owing to its trueness to a high quality service and standard of care, including compensation where appropriate. once more this is a far more costly model than Ryanairs but is aimed at a different if smaller market. Thirdly, the service outcome or the result for the customer of the service (in particular, the benefits provided, the resulting emotions and assessment of value for money) (Johnston and Clark, 2008 42) is proven in the price guarantee, and the fact that Ryanair has increased its share of the passenger market dramatically within the last decade going from carrying around seven million passengers in 2000, to an estimated seventy million in 2010 (Ryanair, 2010).ConclusionSo was it just the success of Ryanair that allowed OLeary to predict that Ryanair would flood out British Airways by carrying 3.5 million passengers a month in 2005. He went on to say, The very fact that a rice paddy Mouse Irish airline can start in a field in Waterford 20 years ago, and in 20 years, overtake the worlds self styled, self proclaimed favourite airline is testament to the engage for low-airfare travel around Europe (Box, 2007 65). Or was British Airways in operational decline. It would appear that the low-cost model of airline has been more successful in recent times and it is fair to say that with the recent and ongoing world-wide e conomic uncertainties that it is likely to continue to be the dominant force in air travel. Whilst British Airways has had a track record of being able to successfully adapt its operational strategy, it has in recent years been in decline and has so far failed to convincingly react to the growing scourge to it from low-cost airlines. It has had to deal with additional problems such as the industrial dispute, whereas Ryanair being a airline that operates without an employees union, has avoided having to deal with complicated wrangles. The recent merger with the Spanish Airline Iberia has provided stability. But is British Airways merely delaying the inevitable? Is it attempting to become an airline that is too big to fail? As we saw in the economic crash, banks that purported to be too big to fail can and did, needing state intercession to prevent economic disaster. Time will tell, but currently the future of air travel would appear to have found hegemony in the low-cost, no frills airlines.