Article In Business – Assignment Example

Ryanair warns fares will rise This article published in The Guardian discusses about Ryanair’s warning to shoot its fare up in the near future. Thisrise in fare would have to be made to meet the company’s targets. All such measures are been taken by the company to increase its profits in the upcoming years. This sudden move to increase the fares and profit is because the company posted an approximate loss of €11 million in the third quarter of 2010. Although the company has been a successful airline service provider recognized as one of the best in the world, it has recently been criticized by some critics along with some of its customers. The basic reason for Ryanair’s success was their ability to cope with their costs which they offered to their customers in the form of low fares, such fares were really low when compared to other airline service providers. Ryanair’s great tendency to innovate always led them to reduce their costs and increase the quality of their service. Innovation had always been a main factor that led Ryanair to open new dimensions in the airline industry. The strategy followed by Ryanair to reduce their costs was to have low emission aircrafts such as Boeing 737; these aircrafts were also fuel efficient hence they helped Ryanair to have better control over their fuel costs even in the era when fuel costs increased drastically. Such better quality and low cost led Ryanair to be pronounced as the most profitable airline in the world by an Air Transport World Magazine.
The article discussed that the company had good prospect as one of its competitors, Germany’s Blue Wings, had left the market and had created a greater scope for Ryanair to capture a much larger market share in the upcoming future. Although according to the company’s Chief Financial Officer, the company might increase its fares in the future, Michael O’Leary, the chief executive of Ryanair was of the view that the company would heavily focus on cutting its costs much more. Besides this statement, he also pointed towards the better and productive performance of the company and increased gain in the market share of the company in area such as Spain, Scandinavia, etc. Because of this news, there was a sudden rise of 5 % in the company’s share in the Dublin market.
This article lead to an increase in the share price for Ryanair but this can also signal alarms for its customers as there may be some rise in the fares charged by the company. The positive thing derived from this article would be to favor the shareholders of the company, who would enjoy better profits in the following years to come.
References
Ryanair warns fares will rise, Katie Allen, guardian.co.uk, 2010
http://www.guardian.co.uk/business/2010/feb/01/ryanair-fares-rise