Abstract
In 2006-2007, Ryanair has become the world's most profitable airline on the basis of its operating and net profit margins and on a per-airplane and per-passenger basis. Indeed, the profits expected for the first half of fiscal 2007 were 329 million euros, which is a record for the Irish budget airline company. In addition to that, the air traffic grew by 23 percent to 22.1 million passengers, and yields increased by 9 percent and the total revenues have been improved by 33 percent to 1.256 billion euros. Companies can use five different generic competitive strategies. The one that best matches the competitive strategy that Ryanair is employing is a "Low-cost provider strategy". Ryanair strives to be the industry's overall low-cost provider, which is a powerful competitive approach in markets, such as the airline market, which has many price-sensitive buyers. Ryanair is the low cost provider because it is the company that provides the lowest cost on the European airline industry and not one of the companies that provide the lowest cost. This strategy is very difficult to copy for rivals which have high operating costs. Even other European budget airlines do not try to copy the Ryanair strategy. Moreover the brand image of big national carriers will be damaged if they choose to adopt a low cost strategy. Ryanair's success in matching this strategy is possible the firm is doing a better job, than rivals, of managing value chain activities cost-effectively and finding innovative ways to bypass high operating costs. This strategy works well because in the airline industry there are not many ways to offer high value to consumers.
