Ryan Air Expansion to Russia.
Introduction
Ryanair ltd has its headquarters in the county of Dublin in Ireland. It operates from its bases at
Dublin and London Stansted Airports. Currently it owns a fleet of three hundred and three
airplanes including the modern 737- 800 series which makes up most of its planes numbering
close to three hundred in numbers. Ryanair was established by Christopher Ryan together with
two other associates, Liam Lonergan and Tony Ryan. It initially started with a single plane, the
14-seat Embraer Turbo propelled aircraft which operated from the Waterford Airport to Gatwick
Airport. Currently, Ryanair has assets worth over $9 billion, an annual turnover of $3 billion, a
net income of over $339 million and a workforce of slightly over 8500 employees worldwide.
The analysis and audit of the Russian Business environment and the factors that may affect the
survival of Ryanair ltd and hinder its growth strategies in Russia. (www.fiac.ru/files/Russia-
investment-climate-2012). Between the years 2008 and 2009, Russia had its first recession after
ten years of steady economic growth. The Russian economy was also seriously affected by the
world financial crisis just as much as most parts of Europe due to its relative integration of its
short term macro-economic procedures and policies that ultimately assisted the economy to make
a complete turn-around in the performance of the economy in the preceding years i.e. 2009 and
- The Russian GDP in the year 2011 grew slightly more than 4.2% making it one of the
Ryan Air Expansion to Russia. 2
world’s highest growing economies behind China and India at 9.5% and 7.8% respectively. Its
Foreign Direct Investment was $18.4 billion in the year 2011 which represented an increase of
33% from the previous year i.e. 2010. The total new investment in Russia during the year 2011
increased by 66% to stand at $190.6 billion and which included total loans advanced for
investment into the equity market. (www.fiac.ru/files/Russia-investment-climate-2012).
The size of the Russian population and the general consumer market together with its skilled
labor force and the vast natural resources available to stabilize its economy makes it a favorable
and ideal investment ground for foreigners and other interested investors. The Russian
consideration and accession to the ranks of World Trade Organization (WTO) has contributed
positively to the attraction of more investment and also acts as a persuasive factor to new
investors in the country.
According to Pestle analysis, the political factors play a key role in determining the location and
the eventual investment in a country. Political stability in Russia is satisfactory with the election
of the president and its subsequent parliamentary elections being peaceful, its history of hard-line
stance has been relaxed but there is more to be done. While the economic factors have been
discussed above the most attractive investment in Russia currently is the consumer market driven
process which certainly includes the airline industry followed by the natural resources. While the
major weakness of the Russian investment environment are the bureaucratic red tape, inadequate
infrastructure and corruption in government agencies. These issues can be addressed as the
overall opportunities available are enormous as nearly 40 of Fortune 100 companies have
branches in Russia or are have shown interest in investing in Russia.
Ryan Air Expansion to Russia. 3
Most of the Russian economic and legal policies and laws have been amended to encourage
foreign investments. Among the policies created to encourage foreign investment is the Russian
Direct Investment Fund (FDIF). It’s part of the process to modernize the economy of Russia by
promoting Development and transforming Moscow into an international financial and trade
center. The social factors include the rapid increase of the middle class in Russia which has
created a market of over 10 million people in the last five years and the improved lifestyles of the
citizens of Moscow and the ever changing influence of information technology has significantly
affected the investment environment in Moscow and Russia as a whole. Technology also brings
with itself a new share of threats in the form of new competition due to the increased awareness
of the new business opportunities in Russia that attracts all investors. Russia has a lot of business
opportunities and favorable environment. The technological advancement in Russia is only
measurable to the best in the world. Russia has for many years exported intellectual services
besides its innovative successes in high tech products based on its historical tradition in
producing challenging projects. Ryanair can utilize its technological advancement to boost its
sales and marketing strategy to penetrate its internal market and other countries bordering it.
However the Ryanair should be aware of the need of the Russian Government to guarantee and
uphold the protection of investor’s right and the introduction enforceable anti-corruption laws.
Also to clarify to support the development of highly skilled labor force with ability to
communicate effectively in other languages other than the Russian language. The government of
Russia should demonstrate the willingness to ease the process of registration and the general
process of establishing a new company.
Ryan Air Expansion to Russia. 4
