Exposure

Methods: We assessed whether adult females would be willing to partake in a pilot testing plan for antenatal intoxicant exposure in a bad obstetric unit antecedently shown to hold a high prevalence of FAEE-positive meconium when tested anonymously. The testing plan involved voluntary testing of meconium for FAEEs and long-run developmental followup of positive instances through an bing public wellness plan.

Consequences: The engagement rate in the showing plan was significantly lower than when proving was offered anonymously ( 78 % vs. 95 % , severally ; p & lt ; 0.05 ) , and the positiveness rate was 3 % A in contrast to 30 % observed under anon. conditions ( P & lt ; 0.01 ) .

Interpretation: These low rates suggest that the bulk of imbibing female parents refused to take part. We conclude that despite the possible benefits of such screening plans, maternal involuntariness to consent, probably due to fear, embarrassment, and guilt, may restrict the effectivity of meconium proving for population-based unfastened showing.

Introduction:

Fetal Alcohol Spectrum Disorder ( FASD ) encompasses the wide scope of physical, cognitive, and behavioural disablements that can originate due to antenatal intoxicant exposure ( 1 ) . Affecting an estimated 9.1/1000 unrecorded births, it is a taking preventable cause of mental deceleration in the western universe ( 2 ) , with estimated one-year costs in Canada transcending $ 5 billion in productiveness losingss, medical costs, particular instruction, societal services, and projecting behaviors ( 3 ) .

Although the primary alcohol-induced harm is lasting, early diagnosing is good and associated with a reduced hazard of secondary disablements such as disrupted school experience, unemployment, institutionalization, and problem with the jurisprudence ; probably because it permits early intercession and specialised support ( 4 ) . Unfortunately, acknowledging FASD is highly ambitious and diagnosing is frequently contingent upon set uping a history of important in-utero intoxicant exposure ( 1 ) . Since maternal studies are undependable in providing this information due to remember prejudice and common underreporting ( 5 ; 6 ) , nonsubjective biomarkers have been investigated. Fatty acerb ethyl esters ( FAEEs ) are non-oxidative metabolites of ethyl alcohol formed by esterification of ethyl alcohol to endogenous fatty acids or fatty acyl-CoA ( 7 ; 8 ) that sedimentation and accumulate in foetal meconium ( 9 ; 10 ) . Numerous surveies have validated meconium FAEEs as biomarkers of heavy antenatal intoxicant exposure happening in the last two trimesters of gestation ( 11-19 ) ; understanding between meconium FAEEs and assorted alcohol-related results has been demonstrated ( 18 ; 20-23 ) ; and this trial has been used anonymously to obtain epidemiological informations on antenatal intoxicant exposure in selected populations ( 23-25 ) .

It has been recognized that meconium analysis may function as a neonatal showing tool for the designation of alcohol-exposed neonates, and could potentially be implemented as a cosmopolitan screen or targeted to bad populations ( 26 ) . Such testing would non merely supply accurate exposure history required for diagnosing, but if implemented along with a comprehensive follow-up plan and intercessions, could ease early acknowledgment and intervention of FASD ( 26-28 ) . As an added value, it may place and let for intercession in problem-drinking female parents, which, in bend, may forestall future alcohol-exposed gestations ( 7 ) . However, since informed consent from a competent patient or appointed guardian prior to intervention or testing is an ethical and legal constituent of medical pattern ( 29 ; 30 ) , a testing plan of this nature would necessitate consent of the kid ‘s legal defender ( typically the parent ) . This may decrease the value of meconium showing in a clinical scene since embarrassment, guilt, and frights of stigma and child apprehensiveness may discourage adult females who consumed intoxicant from accepting to proving despite the possible value to child wellness.

To find if adult females would volitionally take part in a neonatal showing plan for antenatal intoxicant exposure, we offered meconium proving with subsequent followup, intercessions and societal supports, to adult females from a regional Ontario population presenting in a bad obstetric unit antecedently shown to hold a high prevalence of alcohol-exposed newborns as determined by anon. meconium proving. We assessed the rates of voluntary engagement and positiveness for intoxicant exposure, and compared these with the rates observed with anon. proving.

Methods:

Capable enlisting:

Written informed consent for meconium FAEE analysis and followup of those proving positive was sought from all Grey-Bruce adult females presenting at St. Joseph ‘s Health Care in London Ontario from November 1st, 2008 to May 31st, 2010. Briefly, Grey-Bruce occupants identified by nurses were informed of the survey, offered showing, and given an Informed Consent papers to reexamine and subscribe if they chose to take part. Womans were besides informed of the survey through booklets and postings in the pregnancy ward. It was stressed that a positive trial or self-report of imbibing in gestation would non ask engagement of kid protection bureaus, but would be used to originate follow-up by the Public Health nurse and her section and to mobilise support services if needed.

Meconium aggregation, handling, and analysis:

Meconium specimens from newborns born to accepting adult females were collected into 50-mL screw cap conelike polypropene tubings ( Sarstedt AG & A ; Co. , Numbrecht, Germany ) by nursing staff and labeled with the capable figure to guarantee confidentiality. Samples were stored onsite at -20A°C and shipped on dry ice to the Motherisk Laboratory at Hospital for Sick Children in Toronto, Ontario on a fortnightly footing where they were stored at -80A°C until analysis.

Meconium FAEEs were measured utilizing headspace solid-phase microextraction and gas chromatography-mass spectroscopy. The method involves the sensing and quantification of four FAEEs ( ethyl palmitate, linoleate, oleate, and stearate ) utilizing matching d5-ethyl esters as internal criterions. It has been developed and validated in our research lab, and published in item elsewhere ( 31 ; 32 ) . Heptane, ethyl esters ( palmitate, linoleate, oleate, stearate ) , fatty acids ( palmitic, linoleic, oleic, stearic ) , anhydrous ethanol-d6, and thionyl chloride were obtained from Sigma-Aldrich Co. ( St. Louis, MO ) . Acetone was obtained from EMD Chemicals Inc. ( Gibbstown, NJ ) . Chromatograms were analyzed utilizing LabSolutions GCMSsolution package version 2.50SU1 ( Shimadzu, Kyoto, Japan ) . A cumulative amount of a‰?2.00 nmol FAEE/gram meconium was considered positive, bespeaking heavy imbibing with 100 % sensitiveness and 98.4 % specificity as was established in a population baseline survey that measured meconium FAEEs in newborns born to ascetics, societal drinkers, and confirmed heavy drinkers ( 16 ) .

Maternal and neonatal features:

Capable features along with gestation and bringing information were obtained from charts of accepting adult females. Additionally, information on intoxicant usage was obtained by the nursing staff utilizing the Parkyn Screening Tool ; a everyday postpartum questionnaire.

Follow-up and neurodevelopmental appraisal:

Children with positive meconium consequences were followed-up through Ontario ‘s ”Healthy Babies Healthy Children ” ( HBHC ) plan that involves postpartum home-visits by public wellness nurses who provide personalized support and instruction to households with neonates ( 33 ) . In this survey, the nurse assigned to a positive instance was notified of meconium trial consequences, conducted an in-depth household appraisal ( including a screen for intoxicant usage upsets ) , and enrolled the household in an on-going home-visiting plan with an individualised household service program that included regular appraisals of developmental mileposts utilizing the Ages and Stages QuestionnairesA® ( ASQ ) . Children with positive trial consequences besides received neurodevelopmental appraisal by a certified clinical psychologist during two place visits ; around 3 months and 1-1.5 old ages of age. The Bayley Scales of Infant and Toddler Development, Third Edition ( Bayley-IIIA® ) was used, which measures infant cognitive, lingual, and motor operation.

If developmental holds were detected, extra service suppliers were engaged through referrals to intercession plans and specialized services that were provided through HBHC plan and Grey-Bruce Health Unit at no cost to the household. Need for referral to diagnostic services at the Hospital for Sick Children was assessed. Extra support services for the household were available if needed, including dependence intervention, guidance, rearing support, instruction on FASD, nutrition, employment, and diversion.

Comparison with anon. meconium testing:

The showing plan was launched in a bad obstetric unit where a old survey, utilizing anon. meconium testing, observed a 12-fold higher hazard of FAEE-positive meconium in adult females referred to this site as compared to the general population of the part ( 30 % vs. 2.5 % ) . About 95 % of adult females participated in that survey. To find whether adult females who consumed intoxicant during gestation agreed to take part in the pilot unfastened testing plan, the rates of voluntary engagement and positiveness for antenatal intoxicant exposure observed in our unfastened plan, were compared to rates observed in that old anon. survey conducted in the same obstetrical unit a twelvemonth before ( 25 ) . Fisher ‘s Exact Test was used to compare the consequences of the two surveies. Two-tailed P-value & lt ; 0.05 was considered statistically important.

Ethical motives:

The survey was approved by the research moralss boards of the Hospital for Sick Children and the University of Western Ontario.

Consequence:

Willingness of female parents to take part in unfastened testing plan:

Sixty female parents from Grey-Bruce were identified at St. Joseph ‘s Hospital and offered meconium showing, of which 47 adult females consented, numbering a 78 % consent rate ( Figure 1 ) . The maternal and neonatal features of accepting topics are presented in Table 1. The consent rate was significantly lower than that observed in old survey in which meconium was tested anonymously ( 95 % vs. 78 % ) ( P & lt ; 0.05 ) ( Table 2 ) . Of involvement, we documented one case where a adult female recalled take parting in the anon. prevalence survey with her old babe, but refused to take part in this unfastened testing plan when told there would be follow-up of positive instances. Additionally, we encountered a adult female who, although agreed to take part, was uncooperative, repeatedly pretermiting to advise the nurses that meconium had passed and flinging the samples so that none were collected.

Positivity for antenatal intoxicant exposure in pilot testing plan:

Samples were collected from 50 newborns of which 39 were successfully analyzed ( Figure 1 ) . Merely one of the 39 samples tested above the positive cut-off ( a‰?2 nmol/g ) for FAEE ( 52 nmol/g ) , which translated to a 3 % positiveness rate for antenatal intoxicant exposure. Eleven samples were non-analyzable because of presence of contaminations and/or postpartum stool that impeded chromatography. The ascertained 3 % positiveness rate for antenatal ethyl alcohol exposure was tenfold lower than the 30 % positiveness rate observed under anon. conditions in the old survey ( P & lt ; 0.01 ) ( Table 2 ) .

Maternal self-report of intoxicant usage in gestation:

Chart reviews did non uncover that substance maltreatment ( intoxicant or drugs ) was the primary ground for referral to St. Joseph ‘s Health Care in any of the instances. Three adult females admitted to devouring any sum of intoxicant in gestation on their antenatal consumption signifiers, including the adult female whose babe ‘s meconium tested positive for FAEEs. However, none reported refering intoxicant usage, with one adult female saying that she drank a‰¤2 drinks per hebdomad, another coverage that she consumed an “ occasional drink ” , and the 3rd saying she drank merely prior to her cognition of gestation without traveling into farther inside informations.

Follow-up and neurodevelopmental appraisal of positive instance:

One newborn tested positive for heavy antenatal ethyl alcohol exposure ( 52 nmol FAEE/g meconium ) . Follow-up was arranged as per protocol through the HBHC plan and a public wellness nurse assigned to the instance initiated an appropriate household service program affecting place visits and frequent appraisals of the baby ‘s development. Neurodevelopmental appraisal conducted by a certified clinical psychologist at 3 months of age utilizing BSID-IIIA® did non uncover any holds ; nevertheless, holds in motor development became evident in 6-month and 8-month appraisals conducted by the public wellness nurse utilizing ASQ. At the 14-month appraisal conducted by a clinical psychologist utilizing BSID-III, the kid scored in low mean scope on motor and linguistic communication graduated tables, exposing holds peculiarly in gross motor and expressive linguistic communication operation, which were good below age outlooks ( in the 9th and 5th percentile, severally ) . The baby was enrolled in an Infant and Child Development plan and will be referred to a Language and Speech development plan. Referrals to diagnostic clinics have non yet been made, and it is non known whether the ascertained holds are alcohol-related or possibly due to other factors.

Interpretation:

We observed that engagement and positiveness rates in our unfastened pilot testing plan were significantly lower than those observed when the trial was offered anonymously in the same bad unit, proposing that many adult females who consumed intoxicant in gestation refused to take part, non wishing to be identified by the showing plan. Of involvement, if we assume that all refusals were in fact positive samples, the positiveness rate in our population would number 27 % , which is similar to the positiveness rate observed by Goh and co-workers with anon. meconium testing ( 25 ) .

To our cognition, this is the first survey to use biomarkers of foetal intoxicant exposure in an unfastened showing plan designed to ease diagnosing and intervention of alcohol-affected kids. Our consequences suggest that, despite the possible benefits that such screening plans may supply ( as was exemplified by the positive instance ) , adult females ‘s involuntariness to consent may decrease the value of unfastened population-based showing. Schemes to better engagement would necessitate to be investigated if meconium showing is implemented in clinical pattern. For illustration, the “ opt-out ” method to derive consent was shown to give higher proving rates in neonatal HIV showing ( 34 ) . Engagement rates may besides increase with societal selling, public instruction, and as the trial becomes established in society. If this occurs, the testing plan piloted here may function as a theoretical account for a plan that can be implemented in a clinical scene since it utilized presently bing services in the community. The developmental followup of kids identified by the screen was integrated into Ontario ‘s HBHC plan, and aid to kids exposing holds was provided through bing community wellness plans and services, such as address and linguistic communication, baby and kid development, and rearing support ; which may all be adapted to integrate intercessions and schemes shown to be effectual in helping kids with FASD and their households ( 35 ; 36 ) .

Low engagement is non the lone possible obstruction to implementing testing in clinical pattern. The costs and resources required for proving, follow-up, diagnosing, and intercessions, every bit good as, system capacity to manage these instances, must be considered. Two cost-effectiveness surveies analyzing similar conjectural showing plans showed that decrease in secondary disablements and primary bar of FASD by intercession and instruction of female parents may take to social nest eggs ( 27 ; 28 ) . However, more surveies with concrete cost input variables are needed to find this. Furthermore, several ethical considerations could besides impede testing execution. Although showing can better quality of life through early diagnosing, observing maternal imbibing during gestation and labeling kids as “ at-risk ” may transport serious psychosocial deductions for these kids and their households, and affect relationships both within the household and between the household and society, including their service suppliers ( 37 ) . The trial consequences may potentially be misused by tribunals, societal services, insurance companies, and even within the health-care system through stigmatisation of patients ensuing in their under-treatment. To guarantee that households experience maximal benefits and minimal hazards, issues environing confidentiality, entree to consequences, and their usage, must be carefully considered.

Our survey has restrictions. The pilot testing plan was implemented at a third parturition site, which was chosen due to the high prevalence of FAEE-positive meconium shown in a old anon. survey. Because Grey-Bruce communities are reasonably little in size, the consequences may hold been different if showing was implemented at a primary parturition site, where patients may be more trusting of their wellness attention suppliers, who probably provided them with antenatal attention. Alternatively, because the community is little, adult females may be even less likely to accept because of frights of stigmatisation and other societal deductions that may be more marked in a little community. Whatever the instance may be, the consequences may non be applicable to a primary health-care scene in a little community.

To sum up, this is the first survey to implement an unfastened neonatal testing plan for antenatal intoxicant exposure aimed at easing sensing and direction of FASD. Follow-up, intercessions, and support plans were individualized and offered within the model of presently available services in the country, thereby patterning a plan that could be implemented in clinical pattern. We demonstrated that adult females ‘s involuntariness to partake in this showing, particularly of those who consumed intoxicant in gestation, may impede the execution of such testing plans in clinical pattern. Future surveies should research schemes that may better adult females ‘s willingness to consent, every bit good as, evaluate and reference other possible barriers to testing by finding the cost-effectiveness, logistics, and best patterns for plan execution.

Business vulnerability is a measure of how susceptible an organization is to external events and the possible consequential impact on its business costs and profits. In this essay, I will assess the vulnerability of Ryanair and its degree of expose to macroeconomic shocks. I will also analyse Ryanair’s performance since 2000 in comparison to its rival BA, as well as their strategies in how effective they are in raising profits and minimizing their exposure. Ryanair is a low cost Irish airline and one of the most profitable in the airline industry. However, it can be seen as vulnerable and exposed to macroeconomic shocks.

To a degree this is due to Ireland’s openness. Desmond Gillmor describes it as “one of the most open of economies,” and “because of this high degree of openness, the economy is strongly influenced by the external conditions prevailing in the international economic system. ” (Gillmor 1985, p. 5) The airline industry in which Ryanair operates is fairly elastic as shown below. (Knight, B. 2006, p. 14) From the graph, one can see that if the GDP increases or decreases by 1 per cent, the demand for air travel will increase or decrease by 1. 7 per cent: air travel and Ryanair is fairly exposed.

A firm’s average total cost curve (shown below) and the steepness of it can express the firm’s vulnerability. The steepness of the curve is mainly determined by the scale of fixed costs and as a result, those firms will experience more volatility in their financial performance. In addition, increasing returns to labour which is particularly found in professional services also impacts on the gradient. Furthermore, firms which are dependent on external inputs, for example, in construction, are vulnerable to shifts in the curve due to increases in the costs of their inputs.

The ‘flute’ curve shown above reinforces the vulnerability of Ryanair due to its steepness. This can be explained by high fixed costs such as a large number of fleet and the heavy dependency on external inputs such as fuel. The graph below shows that since 2003 Ryanair has more than doubled their fleet to 163 aircraft. (Ryanair, 2008, p. 3) The latest Chairman’s Report released by Ryanair reports on the effect of fuel prices: “The high and rising price of fuel is of major concern to Ryanair and the entire aviation industry.

Last year our hedging programme delivered fuel at an average cost of $65 per barrel. Today we are facing prices of approximately $130 a barrel. Ryanair has responded to these higher oil prices by reducing costs across all other areas. ” (Ryanair, 2008, p. 4) They are also exposed to fluctuations in foreign exchange rates, the extent to which they made a loss of over i?? 5m due to changes in the American dollar and British Sterling exchange rates against the euro. This exposure can be minimized by hedging with financial derivatives.

Even though Ryanair incur costs that they have little control over such as fuel, “there are others that will influence the costs per seat-km flown that they can influence. These include aircraft utilisation, aircraft turnround times, seat pitch, the use of fewer crew and cheaper secondary airports, along with direct selling and paperless ticketing. ” (Pitfield, D. E. 2007, p. 77) These factors all form a part of Ryanair’s strategy to penetrate the market further and reduce its vulnerability by exploiting market imperfections.

“Ryanair has responded to these higher oil prices by reducing costs across all other areas. A company wide pay freeze was implemented and redundancies have been suffered at our Dublin call centre. Significant cost reductions have also been achieved on airport, maintenance, and handling contracts, and we will benefit from the addition to our fleet of cheaper and more fuel efficient aircraft. We have also increased our charges for baggage and airport check-in as we continue to encourage passengers to avail of web check-in and travel with carry on luggage only.

” (Ryanair, 2008, p. 4) They have even gone as far as planning to close down their check-in desks1 and the possibility of charging passengers to use the on-flight toilet facilities. 2 Source: Ryanair Annual Reports Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008.

In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price and carry more passengers than BA in the European market. The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin.

British Airways, a competitor to Ryanair, has reviewed its short-haul operations and is planning to spend a portion of its marketing budget promoting shorter haul flights. However, they believe that services such as in-flight refreshments and business class seats are expected by their customers, and intend not to cut back on these services but focus on this differentiation and thereby create market imperfections. In the journal article titled “Easyjet and Ryanair flying high on the Southwest model”, Chris Avery, an analyst at JP Morgan, believes that the answer to the threats from low cost airlines by BA has been perfect.

They acknowledged that they were no longer the public’s favored provider and have taken measures to, not only, protect their primary market, but also to learn from their rivals. With BA’s key financial figures reported in British pounds and Ryanair’s in Euros in their respective annual reports, there is difficulty in comparing them. Nevertheless, I will look at other key statistics. (Ryanair, 2008, p. 6) Looking at the figures above, one can see that Ryanair charges passengers considerably lower, including no fuel surcharge.

This is one for Ryanair’s USP and such low costs form a barrier for new entrants. (Ryanair, 2008, p. 7) With regards to consumer satisfaction, Ryanair’s service is greater than that provided by BA. Source: Mintel From above, one can see that Ryanair have the second largest number of active aircraft behind BA. Nevertheless, if the average age of the fleet is taken into account, Ryanair has one of the largest young fleet. However, one can’t disregard the different sizes of the two firms.

Since British Airways is a larger firm compared to Ryanair and offers different services, as well as owning a larger fleet of aircrafts, it may be more greatly exposed to the external environment. To be able to manage these uncontrollable external shocks, Ryanair needs to reduce its vulnerability and exposure to the market. To do this, its total cost curve needs to become gentler (and like a ‘saucer’ as shown on page 2). This can be explained by reducing the airline’s fixed costs and that a downturn in demand will cause profits to fall but not as much as previously.

Also, with the average fare being i?? 22 cheaper than its local rival Easyjet (see page 5), Ryanair could raise their price and still retain their customers. Ryanair operates in an oligopoly: Above the kink, the demand is relatively elastic as all other firm’s prices remain unchanged. However, below the kink, demand is relatively inelastic because all the competitors will introduce a similar price cut which would eventually lead to a price war. Consequently, the optimal output is that at the kink. Ryanair have decided to offer “all passengers on all routes their lowest fare guarantee.

On those very rare occasions when passengers find a lower promotional fare on a competitor airline for a similar itinerary then we will happily refund them double the difference. ” (Ryanair, 2008, p. 6) This ensures customers, especially in a downturn were consumers are looking for the cheapest prices. Consequently, if Ryanair want to achieve supernormal profits, they need to erect barriers to entry and make the airline industry non-contestable. Such barriers can be placed by enhancing Ryanair’s current supply chain.

For example “by solely operating Boeing 737 jets Ryanair can keep training, maintenance and operating costs in check. In January 2003 a massive order for 100 of the latest 737-800 variants worth $6 billion was announced in response to the airline’s escalating success. ” (Anon. 2004, p. 5-6) This is unlike its competitors who have more than one type of aircraft. Also, they could try and offshore the administrative side of the organisation to reduce their costs, as well as invest less in advertisement and try to offer more services to compete against BA’s new proposed plan and to differentiate themselves further.

Such differentiating ideas include launching a new all-frills airline for flights to USA. 3 Furthermore, since Ryanair has received previous criticism, they could strengthen the barriers by investing in the brand. Their competitors are forced to incur the same costs to build their brands to contest the industry, as well as new entrants. This reduces market contestability and enhances profits. If they fail, this sunk cost can’t be recouped.

Business vulnerability is a measure of how susceptible an organization is to external events and the possible consequential impact on its business costs and profits. In this essay, I will assess the vulnerability of Ryanair and its degree of exposure to macroeconomic shocks. I will also analyze Ryanair’s performance since 2000 in comparison to its rival BA, as well as their strategies in how effective they are in raising profits and minimizing their exposure.

Ryanair is a low cost Irish airline and one of the most profitable in the airline industry. However, it can be seen as vulnerable and exposed to macroeconomic shocks. To a degree, this is due to Ireland’s openness. Desmond Gillmor describes it as “one of the most open of economies,” and “because of this high degree of openness, the economy is strongly influenced by the external conditions prevailing in the international economic system. ” (Gillmor 1985, p. 5) The airline industry in which Ryanair operates is fairly elastic as shown below. (Knight, B. 2006, p. 14)

From the graph, one can see that if the GDP increases or decreases by 1 percent, the demand for air travel will increase or decrease by 1. 7 percent: air travel and Ryanair are fairly exposed. A firm’s average total cost curve (shown below) and the steepness of it can express the firm’s vulnerability. The steepness of the curve is mainly determined by the scale of fixed costs and as a result, those firms will experience more volatility in their financial performance. In addition, increasing returns to labor which is particularly found in professional services also impacts the gradient.

Furthermore, firms that are dependent on external inputs, for example, in construction, are vulnerable to shifts in the curve due to increases in the costs of their inputs. output saucer e. g. shoe shiner flute e. g. airlines ATC output saucer e. g. shoe shiner flute e. g. airlines ATC The ‘flute’ curve shown above reinforces the vulnerability of Ryanair due to its steepness. This can be explained by high fixed costs such as a large number of fleet and the heavy dependency on external inputs such as fuel.

The graph below shows that since 2003 Ryanair has more than doubled its fleet to 163 aircraft. (Ryanair, 2008, p. 3) The latest Chairman’s Report released by Ryanair reports on the effect of fuel prices: “The high and rising price of fuel is of major concern to Ryanair and the entire aviation industry. Last year our hedging program delivered fuel at an average cost of $65 per barrel. Today we are facing prices of approximately $130 a barrel. Ryanair has responded to these higher oil prices by reducing costs across all other areas. ” (Ryanair, 2008, p. ) They are also exposed to fluctuations in foreign exchange rates, the extent to which they made a loss of over €5m due to changes in the American dollar and British Sterling exchange rates against the euro. This exposure can be minimized by hedging with financial derivatives. Even though Ryanair incur costs that they have little control over such as fuel, “there are others that will influence the costs per seat-km flown that they can influence. These include aircraft utilization, aircraft turnaround times, seat pitch, the use of fewer crew and cheaper secondary airports, along with direct selling and paperless ticketing. (Pitfield, D. E. 2007, p. 77) These factors all form a part of Ryanair’s strategy to penetrate the market further and reduce its vulnerability by exploiting market imperfections. “Ryanair has responded to these higher oil prices by reducing costs across all other areas. A company wide pay freeze was implemented and redundancies have been suffered at our Dublin call center. Significant cost reductions have also been achieved on the airport, maintenance, and handling contracts, and we will benefit from the addition to our fleet of cheaper and more fuel efficient aircraft.

We have also increased our charges for baggage and airport check-in as we continue to encourage passengers to avail of web check-in and travel with carrying on luggage only. ” (Ryanair, 2008, p. 4) They have even gone as far as planning to close down their check-in desks and the possibility of charging passengers to use the on-flight toilet facilities. Source: Ryanair Annual Reports Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above.

The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008. In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism, and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price, and carry more passengers than BA in the European market.

The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin. British Airways, a competitor to Ryanair, has reviewed its short-haul operations and is planning to spend a portion of its marketing budget promoting shorter haul flights. However, they believe that services such as in-flight refreshments and business class seats are expected by their customers, and intend not to cut back on these services but focus on this differentiation and thereby create market imperfections.

In the journal article titled “Easyjet and Ryanair flying high on the Southwest model”, Chris Avery, an analyst at JP Morgan, believes that the answer to the threats from low cost airlines by BA has been perfect. They acknowledged that they were no longer the public’s favored provider and have taken measures to, not only, protect their primary market, but also to learn from their rivals. With BA’s key financial figures reported in British pounds and Ryanair’s in Euros in their respective annual reports, there is difficulty in comparing them. Nevertheless, I will look at other key statistics. (Ryanair, 2008, p. ) Looking at the figures above, one can see that Ryanair charges passengers considerably lower, including no fuel surcharge. This is one for Ryanair’s USP and such low costs form a barrier for new entrants. (Ryanair, 2008, p. 7) With regard to consumer satisfaction, Ryanair’s service is greater than that provided by BA. Source: Mintel From above, one can see that Ryanair has the second largest number of active aircraft behind BA. Nevertheless, if the average age of the fleet is taken into account, Ryanair has one of the largest young fleets. However, one can’t disregard the different sizes of the two firms.

Since British Airways is a larger firm compared to Ryanair and offers different services, as well as owning a larger fleet of aircraft, it may be more greatly exposed to the external environment. To be able to manage these uncontrollable external shocks, Ryanair needs to reduce its vulnerability and exposure to the market. To do this, its total cost curve needs to become gentler (and like a ‘saucer’ as shown on page 2). This can be explained by reducing the airline’s fixed costs and that a downturn in demand will cause profits to fall but not as much as previously.

Also, with the average fare being €22 cheaper than its local rival Easyjet (see page 5), Ryanair could raise their price and still retain their customers. Ryanair operates in an oligopoly: Q Price Above the kink, the demand is relatively elastic as all other firm’s prices remain unchanged. However, below the kink, demand is relatively inelastic because all the competitors will introduce a similar price cut which would eventually lead to a price war. Consequently, the optimal output is that at the kink. Ryanair has decided to offer “all passengers on all routes their lowest fare guarantee.

On those very rare occasions when passengers find a lower promotional fare on a competitor airline for a similar itinerary then we will happily refund them double the difference. ” (Ryanair, 2008, p. 6) This ensures customers, especially in a downturn where consumers are looking for the cheapest prices. Consequently, if Ryanair wants to achieve supernormal profits, they need to erect barriers to entry and make the airline industry non-contestable. Such barriers can be placed by enhancing Ryanair’s current supply chain.

For example “by solely operating Boeing 737 jets Ryanair can keep training, maintenance and operating costs in check. In January 2003 a massive order for 100 of the latest 737-800 variants worth $6 billion was announced in response to the airline’s escalating success. ” (Anon. 2004, p. 5-6) This is unlike its competitors who have more than one type of aircraft. Also, they could try and offshore the administrative side of the organization to reduce their costs, as well as invest less in advertisement and try to offer more services to compete against BA’s new proposed plan and to differentiate themselves further.

Such differentiating ideas include launching a new all-frills airline for flights to the USA. Furthermore, since Ryanair has received previous criticism, they could strengthen the barriers by investing in the brand. Their competitors are forced to incur the same costs to build their brands to contest the industry, as well as new entrants. This reduces market contestability and enhances profits. If they fail, this sunk cost can’t be recouped. London to Genoa (GOA), Hamburg (HAM), Pisa (PSA), Stockholm, and Venice. (Pitfield, D. E. 2007, p. 78)

The table above shows the market share achieved by Ryanair in 2003, in the first month and year of operation. “There seems to be a difference between Italian destinations and the other two. However, the Venice route also looks closer in character to the other northern European destinations in that although the initial market penetration is good, it does not grow as rapidly as GOA or PSA. This is almost certainly because of the competition offered by EasyJet from STN to VCE. It seems that where competition is less and a dominant market role is achieved, large market shares can be achieved.

The resulting market share is less if there is more competition. ” (Pitfield, D. E. 2007, p. 79) Consequently, to mediate this threat against the opposition, Ryanair could analyze their current routes and maybe switch from more competitive routes to those that are currently non-existent, for example, Norway. Finally, to increase its market share, Ryanair could seek to take over a competitor. Having successfully taken over Buzz in 2003, Ryanair has mixed experiences with this strategy with two unsuccessful attempts to take over Aer Lingus in 2006 and 2008.

In the latter case, the approach was rejected due to valuation and competition grounds: “an aviation monopoly would not have been in the best interests of Irish consumers. ”

References

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