Operating Costs – Ryanair

Ryanair’s operating costs as of 2004:

Ryanair’s operating costs as of 2015:

 

Mar 31, 2014

Passengers(m)        81.7m

Revenue(m)             €5,037m

Profit after Tax        €523m

Basic EPS(€ cent)    36.96

Route charges rose by 7% to €522.0m due to the increased number of sectors flown and higher unit charges.

Staff costs increased by 6% to €463.6m primarily due to the increased level of activity and a 2% pay increase granted in April 2013, partially offset by the weakening of sterling to the euro.

Airport & handling charges increased by 1% to €617.2m, due to the 2% increase in sectors flown, increased charges in Spain, a quadrupling of Italian ATC charges during the summer, offset by the mix of new routes and bases launched and the weakening of sterling to the euro.

Fuel & oil costs increased by 7% to €2,013.1m due to higher euro fuel prices and the increased level of activity in the period.

Information courtesy of: https://investor.ryanair.com/wp-content/uploads/2015/04/Q4FY-2014-AnnualInterm_Results-Results.pdf

  1. The operating costs for Ryan air have in fact increased in some departments such as fuel and oil, which has increased quite considerably since 2004, by 25 million euros. Another that has increased at a large rate is Route charges, which has increased from 110 million euros in 2004, too 520 million euros as of 2014. Also the staff costs for Ryanair has increased from 120 million too 460 million as of 2014.
  2. I believe that the recession of 2008 may be an indication as too why the operating costs for Ryanair has increased at such a scale, due to the fact that Ryanair is most notably known as a cheap airline, and due to the recession, citizens would have less disposable income me, however they would still have wanted to go abroad during the summer or any season really, therefore resulting in an increase in the popularity of Ryanair as of there cheap prices, opposed to airlines such as Emirates. The fact that Ryanair would have been accommodating a larger amount of customers then they would have to increase spending on necessitates, such as oil and fuel, so they can provide more flights, and staff costs would have increased due to increase of Ruanair and a 2% pay increase as of April 2013.
  3. Ryanair could reduce there operating cost in the future by reducing the costs of outsourcing, instead of investing time and money into technology which is a gamble, they can instead outsource to different business consultants. An area of a business that does largely benefit form outsourcing is advertising and marketing, therefore if Ryanair outsource it to another business practice, it would be  more cost efficient for them and they would have a greater amount of time and money to spend on other areas of the business.
  4. 2 Objectives I could find about Ryanair regarding there future are : Online quality of the website and mobile app and too create a better ambience whilst inside the cabin, for example making the yellow lights on board more subtle, and replaced by appropriate themed image of the destination.
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