Ryanair is an Irish lost cost airline which was found in 1984. The airline has its headquarters in Dublin and has its primary operations based in Europe. The company is one of the largest airlines which has flown a high number of passengers and carried more international passengers than any other competitor airline (Ryanair.com. 2018). The airline has more than 8—airctaft and many of these are kept aside for pilot training and other related activities.
As the European Ryanair company was free from any regulations present, the company has experienced various expansion opportunities and plans and has incorporated a low cost budget since some time.
Ryanair follows a systematized business strategy whereby the company follows a productivity based business strategy and incentive system in order to control the costs which relates to its personnel. The incentives are based on the on board sales and associated commissions (Thomas 2015). Even the pilots are paid on the number of hours they work and the sectors their flights have been through. However, the maximum number of hours which the different pilots can work up to is determined by the Irish Aviation authority and they cannot work for more than 100 flight hours in a month, more than 300 in a month and 900 in a year. In order to manage their working hours, a systematized balance in their flexibility hours has been introduced so as to manage the productivity based incentive system (Vogel and Güttel 2013).
The primary strategy of RyanAir is to focus on the low cost fares and for this reason the pilots have been provided extensive training to engage in flights by using the least fuel consumption. This aspect ensures that the company is an innovative and adaptive one which ensures that the company is easily able to adjust to the changing needs of the business environment.
The employees in the various departments are assured with various career development programs and activities as well (Barrett 2016). The industry of airlines especially those related to the European nations o not have stability with respect to the airlines, however this is not the case for RyanAir. Ryanair has a stabilized business opportunity with a majority of its employees staying over a long time (Ryanair.com. 2018). Although the employees who are employed belong to different unions who look after the rights of the various members working in the organization, the employees at Ryanair are recruited by the management at Ryanair and they are given equal opportunity to prosper in their career.
Known for its regular service and on time flights, Ryanair has been going against its brand offerings and has been recently cancelling a large number of its flights. With it, many experts have started assuming that its low budget working system has been backstabbing and the airline has been suffering from staffing and financial issues. However, recent insights into the functioning of the airline suggest that the company has been facing problems with respect to the human resource management at the organization (Wheelen et al. 2017). News suggests that the company has been messed up with the incentive based scheme and holiday system which is followed by its pilots. The main reasons why the airline has been facing these problems is the annual holiday system and the Flight Time Restrictions that are generally placed by the government with respect to the number of flights that a pilot can fly annually.
The problem peaks during the holiday season where the demands between the Easter and the period in the beginning of September are considered to be the highest and this is the time when the airline makes a major share of its profits.
Due to this reason, the human resource team at RyanAir ensures that a majority of its pilots take the leave which they are entitled to during the period of the lean season which is the long block between September and March. The rest of the leaves which they are permitted to take can be taken as and when the crew is able to make suitable adjustments for it. According to Gudiksen, Poulsen and Buur (2014), the holiday allocation of the pilots are always considered to be a tricky business issue because the peak season is between Septembers to Easter and hence, they need to adjust their leaves in the remaining part of the year, with additional adjustments being made because of the Flight Restrictions.
The pilots are allowed to work 1000 hours in a 12 month period and the crew managers along with the Human resource department are asked to manage the roster of the employees (Zott and Amit 2013). The main problem area lies with the fact that the calendar year has been changed and this has caused a confusion and mismanagement amongst the different departments in the organization.
This started when the Irish Aviation Authority ordered the airline company to adjust its year calculation based on the calculation which is generally adopted by the European regulators. This came as a huge blow as the pilot’s schedules has always followed an April to match calendar. The change in the calendar year with respect to the Pilot leaves has caused immense complications.
To provide a solution for the given scenario, the airline company decided to organize its overall crew ratio and decided to send some of the plots to holidays during the peak season in July and August as it are believed that there was a surplus of pilots during the season. To resolve the issue, the Chief Operations officer took out a solution and decided to ask the pilots to sell their annual leaves (Ryanair.com. 2018). This was suggested as in this manner, they would not be required to take any leave, which would have a two way advantage in the sense that the airline will not face any possible shortages and secondly the pilots can earn some income and combat any shortages, However, this move was not welcomed by the employees because according to the Flight Regulation Authority some of the employees were not permitted to fly more than 1000 years quota. Secondly, the pilots did not like the way the change was implemented.
A mixture of the above stated problems has caused havoc on the bay and the pilots are clearly not willing to take a bow, furthermore, if the company does not want to break the flight regulations as well, they simply do not have pilots to schedule the 2200 flights schedules per day.
Hence, the strategic operational problem has become a huge barrier with respect to the airlines success.
Question 1
What could be a possible solution for the above problem?
Question 2
Provide recommendations for the Ryanair to avoid such problems in the future
Question 1- Suggestive Answer
The first possible answer to Question 1
The possible solution for Ryanair Airlines in the given scenario would be to adopt a retrenchment strategy. A retrenchment strategy can be defined as a strategy whereby the organization decides to retrench or make the size of its operations smaller. The given suggestion is being made because; the company has been facing immense problems. These problems range from the downfall of its low budget strategy to the pilot shortage problems. The airline had decided to operate on a low budget strategy whereby the pilots were provided with various incentive schemes and other career development plans (Eden and Ackermann 2013). However, with the limit of the Flight authority and the orders from the Irish Aviation authority to change the calendar year being currently adopted by the Ryanair it is advised that instead of causing a bad name to the reputation and cancelling the flights, the airline company needs to slow down and reduce its operations size to an extent that it is easily able to manage the existing flight schedules.
The company by cancelling the flights due to the shortage of pilots is acting as a pinch to the low budget strategy as the airlines is required to pay a certain percentage of the ticket price to the customers which are a further loss to its pocket (Jarzabkowski and Kaplan 2015). Hence, a retrenchment strategy is advised.
The second possible answer to Question 1
As Ryanair has been a significant part of the development of Europe and it has been one of the largest airlines operating in the country with the most covered routes and is a critical contributor to the economy (Johnson 2016). The Airlines goes against the existing norms and creates employment plans for various potential candidates, which is a positive activity on the side of the Airline Company.
The airline can request the Irish Authorities and the government as well to allot the company a buffer time of one year to adjust with the new system (Wright, Paroutis and Blettner 2013). A buffer time of one year would provide the company with ample time to adjust its operations and ensure that it is successfully able to implement the new colander along with the management of the flight hours which are permissible to the different pilots along with the holiday leaves which are allowed. Following a systematic manner for the implementation of the pilot schedule and incorporate their leaves with the maximum number of flight hours as well.
Trying to manage the transition in the limited time period which is presently with the airline company is increasingly difficult and thus, to manage the varying operations the company would require some time to alter the stated schedule and incorporate the new policies.
The first possible answer to Question 2
For future the company needs to realize that it needs to evaluate and scan the external environment carefully before making any policies and decisions which it will incorporate or work upon within the organization (Frynas and Mellahi 2015). The given problem with respect to the shortage of the Pilots came into the picture when the organization was unable to plan and prepare for the future. The policy of the various organizations adapting to the normal calendar year as prescribed by the Irish government should have been viewed as an indication that in future even Ryanair would have been asked to do the same (Hubbard, Rice and Galvin 2014). The preparation for the change should have been adopted much earlier. Therefore it is suggested that the firm uses an external environmental analysis method like the PESTEL Analysis or the Michael Porter`s Five Forces in order to predict the future and understand the main criteria of what is required in the given industry and what can the company do to avoid the blockades.
The importance of using strategic analysis tools in the given industry cannot be undermined (Hill, Jones and Schilling 2014). Use of a strategic tool shall go a long way in identification of potential threats and opportunities for the firm.
The Airline Company Ryanair needs to engage in the following to ensure that it is able to improve the strategic position of the firm in the given industry:
References
Barrett, S.D., 2016. Ryanair and the Low-cost Revolution. In Air Transport in the 21st Century (pp. 163-178). Routledge.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Gudiksen, S., Poulsen, S.B. and Buur, J., 2014. Making business models. CoDesign, 10(1), pp.15-30.
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for sustainability and corporate social responsibility. Business Strategy and the Environment, 22(7), pp.442-455.
Harrison, J.S. and John, C.H.S., 2013. Foundations in strategic management. Cengage Learning.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Ryanair.com. ,2018. Official Ryanair website | Book direct for the lowest fares | Ryanair.com. [online] Available at: https://www.ryanair.com/gb/en/ [Accessed 29 Apr. 2018].
Thomas, M., 2015. Ryanair: success before love. Strategic Direction, 31(8), pp.1-3.
Vogel, R. and Güttel, W.H., 2013. The dynamic capability view in strategic management: A bibliometric review. International Journal of Management Reviews, 15(4), pp.426-446.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
Wright, R.P., Paroutis, S.E. and Blettner, D.P., 2013. How useful are the strategic tools we teach in business schools?. Journal of Management Studies, 50(1), pp.92-125.
Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), pp.403-411.
Ryanair is an Irish lost cost airline which was found in 1984. The airline has its headquarters in Dublin and has its primary operations based in Europe. The company is one of the largest airlines which has flown a high number of passengers and carried more international passengers than any other competitor airline (Ryanair.com. 2018). The airline has more than 8—airctaft and many of these are kept aside for pilot training and other related activities.
As the European Ryanair company was free from any regulations present, the company has experienced various expansion opportunities and plans and has incorporated a low cost budget since some time.
Ryanair follows a systematized business strategy whereby the company follows a productivity based business strategy and incentive system in order to control the costs which relates to its personnel. The incentives are based on the on board sales and associated commissions (Thomas 2015). Even the pilots are paid on the number of hours they work and the sectors their flights have been through. However, the maximum number of hours which the different pilots can work up to is determined by the Irish Aviation authority and they cannot work for more than 100 flight hours in a month, more than 300 in a month and 900 in a year. In order to manage their working hours, a systematized balance in their flexibility hours has been introduced so as to manage the productivity based incentive system (Vogel and Güttel 2013).
The primary strategy of RyanAir is to focus on the low cost fares and for this reason the pilots have been provided extensive training to engage in flights by using the least fuel consumption. This aspect ensures that the company is an innovative and adaptive one which ensures that the company is easily able to adjust to the changing needs of the business environment.
The employees in the various departments are assured with various career development programs and activities as well (Barrett 2016). The industry of airlines especially those related to the European nations o not have stability with respect to the airlines, however this is not the case for RyanAir. Ryanair has a stabilized business opportunity with a majority of its employees staying over a long time (Ryanair.com. 2018). Although the employees who are employed belong to different unions who look after the rights of the various members working in the organization, the employees at Ryanair are recruited by the management at Ryanair and they are given equal opportunity to prosper in their career.
Known for its regular service and on time flights, Ryanair has been going against its brand offerings and has been recently cancelling a large number of its flights. With it, many experts have started assuming that its low budget working system has been backstabbing and the airline has been suffering from staffing and financial issues. However, recent insights into the functioning of the airline suggest that the company has been facing problems with respect to the human resource management at the organization (Wheelen et al. 2017). News suggests that the company has been messed up with the incentive based scheme and holiday system which is followed by its pilots. The main reasons why the airline has been facing these problems is the annual holiday system and the Flight Time Restrictions that are generally placed by the government with respect to the number of flights that a pilot can fly annually.
The problem peaks during the holiday season where the demands between the Easter and the period in the beginning of September are considered to be the highest and this is the time when the airline makes a major share of its profits.
Due to this reason, the human resource team at RyanAir ensures that a majority of its pilots take the leave which they are entitled to during the period of the lean season which is the long block between September and March. The rest of the leaves which they are permitted to take can be taken as and when the crew is able to make suitable adjustments for it. According to Gudiksen, Poulsen and Buur (2014), the holiday allocation of the pilots are always considered to be a tricky business issue because the peak season is between Septembers to Easter and hence, they need to adjust their leaves in the remaining part of the year, with additional adjustments being made because of the Flight Restrictions.
The pilots are allowed to work 1000 hours in a 12 month period and the crew managers along with the Human resource department are asked to manage the roster of the employees (Zott and Amit 2013). The main problem area lies with the fact that the calendar year has been changed and this has caused a confusion and mismanagement amongst the different departments in the organization.
This started when the Irish Aviation Authority ordered the airline company to adjust its year calculation based on the calculation which is generally adopted by the European regulators. This came as a huge blow as the pilot’s schedules has always followed an April to match calendar. The change in the calendar year with respect to the Pilot leaves has caused immense complications.
To provide a solution for the given scenario, the airline company decided to organize its overall crew ratio and decided to send some of the plots to holidays during the peak season in July and August as it are believed that there was a surplus of pilots during the season. To resolve the issue, the Chief Operations officer took out a solution and decided to ask the pilots to sell their annual leaves (Ryanair.com. 2018). This was suggested as in this manner, they would not be required to take any leave, which would have a two way advantage in the sense that the airline will not face any possible shortages and secondly the pilots can earn some income and combat any shortages, However, this move was not welcomed by the employees because according to the Flight Regulation Authority some of the employees were not permitted to fly more than 1000 years quota. Secondly, the pilots did not like the way the change was implemented.
A mixture of the above stated problems has caused havoc on the bay and the pilots are clearly not willing to take a bow, furthermore, if the company does not want to break the flight regulations as well, they simply do not have pilots to schedule the 2200 flights schedules per day.
Hence, the strategic operational problem has become a huge barrier with respect to the airlines success.
Question 1
What could be a possible solution for the above problem?
Question 2
Provide recommendations for the Ryanair to avoid such problems in the future
Question 1- Suggestive Answer
The first possible answer to Question 1
The possible solution for Ryanair Airlines in the given scenario would be to adopt a retrenchment strategy. A retrenchment strategy can be defined as a strategy whereby the organization decides to retrench or make the size of its operations smaller. The given suggestion is being made because; the company has been facing immense problems. These problems range from the downfall of its low budget strategy to the pilot shortage problems. The airline had decided to operate on a low budget strategy whereby the pilots were provided with various incentive schemes and other career development plans (Eden and Ackermann 2013). However, with the limit of the Flight authority and the orders from the Irish Aviation authority to change the calendar year being currently adopted by the Ryanair it is advised that instead of causing a bad name to the reputation and cancelling the flights, the airline company needs to slow down and reduce its operations size to an extent that it is easily able to manage the existing flight schedules.
The company by cancelling the flights due to the shortage of pilots is acting as a pinch to the low budget strategy as the airlines is required to pay a certain percentage of the ticket price to the customers which are a further loss to its pocket (Jarzabkowski and Kaplan 2015). Hence, a retrenchment strategy is advised.
The second possible answer to Question 1
As Ryanair has been a significant part of the development of Europe and it has been one of the largest airlines operating in the country with the most covered routes and is a critical contributor to the economy (Johnson 2016). The Airlines goes against the existing norms and creates employment plans for various potential candidates, which is a positive activity on the side of the Airline Company.
The airline can request the Irish Authorities and the government as well to allot the company a buffer time of one year to adjust with the new system (Wright, Paroutis and Blettner 2013). A buffer time of one year would provide the company with ample time to adjust its operations and ensure that it is successfully able to implement the new colander along with the management of the flight hours which are permissible to the different pilots along with the holiday leaves which are allowed. Following a systematic manner for the implementation of the pilot schedule and incorporate their leaves with the maximum number of flight hours as well.
Trying to manage the transition in the limited time period which is presently with the airline company is increasingly difficult and thus, to manage the varying operations the company would require some time to alter the stated schedule and incorporate the new policies.
The first possible answer to Question 2
For future the company needs to realize that it needs to evaluate and scan the external environment carefully before making any policies and decisions which it will incorporate or work upon within the organization (Frynas and Mellahi 2015). The given problem with respect to the shortage of the Pilots came into the picture when the organization was unable to plan and prepare for the future. The policy of the various organizations adapting to the normal calendar year as prescribed by the Irish government should have been viewed as an indication that in future even Ryanair would have been asked to do the same (Hubbard, Rice and Galvin 2014). The preparation for the change should have been adopted much earlier. Therefore it is suggested that the firm uses an external environmental analysis method like the PESTEL Analysis or the Michael Porter`s Five Forces in order to predict the future and understand the main criteria of what is required in the given industry and what can the company do to avoid the blockades.
The importance of using strategic analysis tools in the given industry cannot be undermined (Hill, Jones and Schilling 2014). Use of a strategic tool shall go a long way in identification of potential threats and opportunities for the firm.
The Airline Company Ryanair needs to engage in the following to ensure that it is able to improve the strategic position of the firm in the given industry:
References
Barrett, S.D., 2016. Ryanair and the Low-cost Revolution. In Air Transport in the 21st Century (pp. 163-178). Routledge.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Gudiksen, S., Poulsen, S.B. and Buur, J., 2014. Making business models. CoDesign, 10(1), pp.15-30.
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for sustainability and corporate social responsibility. Business Strategy and the Environment, 22(7), pp.442-455.
Harrison, J.S. and John, C.H.S., 2013. Foundations in strategic management. Cengage Learning.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Ryanair.com. ,2018. Official Ryanair website | Book direct for the lowest fares | Ryanair.com. [online] Available at: https://www.ryanair.com/gb/en/ [Accessed 29 Apr. 2018].
Thomas, M., 2015. Ryanair: success before love. Strategic Direction, 31(8), pp.1-3.
Vogel, R. and Güttel, W.H., 2013. The dynamic capability view in strategic management: A bibliometric review. International Journal of Management Reviews, 15(4), pp.426-446.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
Wright, R.P., Paroutis, S.E. and Blettner, D.P., 2013. How useful are the strategic tools we teach in business schools?. Journal of Management Studies, 50(1), pp.92-125.
Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), pp.403-411.
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