What impact will the Blockchain have in terms of the design of Ryanair as an organization ? Let's say that we get the world to allow the Blockchain to evolve the way the paper proposes. Then what? How will this affect the way Ryanair will be designed and how will it function if it is based on a Blockchain architecture?

1. Impact of Blockchain on the
organizational design of Ryanair
June 14, 2017 | Group C:
Antonio Auricchio | Barbara Fontela | Avaneesh Goel | Yuxiang He | Clemens Jungmair | Andrea Roa
Executive Summary Introduction
The Irish airline Ryanair is known for its
innovative business model as a low-cost
carrier, offering plane tickets for very cheap
prices while providing extra services at
additional cost to the consumer.
Consequently, the business model relies
highly on low ticket prices and the control
over its operating costs. (1)
Historically, maximization of profits in the
aviation industry have been highly dependent
on revenues, as most costs are relatively
fixed. Consequently, airlines have been
exploiting various strategies for the
maximization of their revenues, known as
‘yield management’. While traditional carriers
introduced different booking classes, for
example, their low-cost competitors focused
on ‘dynamic pricing’. (1) The latter is known as
a technique to discriminate fare prices by
matching ticket prices with the customers´
willingness to pay.
On the contrary, Ryanair has been working on
identifying further opportunities for increasing
profitability by saving costs. The airline has
thereby created a program in which pilots´
contributions to efficiency and profitability are
evaluated and ranked to incentivize them to
take decisions accordingly.
The use of cookies and lack of transparency
regarding ticket prices have lately led to high
controversies among customers. Moreover,
pilot mistakes have put Ryanair multiple times
in the spotlight of scandals. The following
1
Despite the great success of Ryanair in the
last years, the low-cost carrier grabbed the
headlines because of several controversies.
First, Ryanair´s pricing model with the
practice of price discrimination and dynamic
pricing has led to a lack of transparency. The
adaption to a blockchain-based ticket system
would certainly resolve the issue, as clients
will have access to any recorded
transactions which will make it easier for
them to anticipate future prices.
Secondly, Ryanair pilots suffer from pressure
of the company to contribute to heavy cost
reductions. The implementation of blockchain
technology in airplane equipment that tracks,
validates and memorizes various
transactions would certainly lead to more
responsible behavior of pilots.
Last but not least, an organizational re-
design to blockchain technology would
enhance transparency about any mistakes
and incidents. They can create and record
additional events that reverse some of the
effects of the previous incident, but they can’t
delete or undo the past. These approach to
memory of institutions is closer to humans
and therefore closer to customers: brains, as
blockchains, aren’t designed to forget, they
are designed to forgive. By striving for
minimum rate of mistakes, Ryanair could
proof its trustworthiness and gain a
competitive advantage.

2. Issues at Ryanair
paper is going to first provide an overview of
the indicated issues within the organizational
design of Ryanair, and will then show how a
redesign to blockchain integration can have a
positive impact on the company. It could
record all its transactions in a public, shared
and immutable database, meaning that
Ryanair’s recorded decisions will be
transparently stored in a public blockchain
memory available to competitors, regulators
and customers.
What is Blockchain?(2)
“The blockchain is an incorruptible digital
ledger of economic transactions that can be
programmed to record not just financial
transactions but virtually everything of
value.”
Don & Alex Tapscott
1. Issues at Ryanair
1.1 Dynamic Pricing and Price
Discrimination
For Ryanair, maximizing profits is highly
related to maximizing revenues. Therefore,
the company is constantly looking for new
strategies such as “dynamic pricing” as to
modify their prices. For low-cost airlines, the
main factor that affects price is the time of the
departure. If the clients book with enough
time prior the flight, they would have access
to a lower price for the ticket, rather than if
they book it close to the departure date. This
fact was proven by The Pricing Strategy study
where they tracked 1829 flights two months
prior the flight, and 109,740 prices were
collected. (1) A major influencing variable is the
number of tickets sold for a specific flight. If
demand is higher or lower as usual, airline will
adapt prices according and thereby try to
maximize profits.(3)
Furthermore, dynamic pricing is supported by
the use of cookies on airline websites. These
internet cookies save information and help
the website identify the customer when he
reenters the page. Since web cookies can
even remember behavior and personal
information, it is strongly recommended to
clear cookies from the web browser when
looking for flights (again), as airlines may
adapts prices according to your demand and
search history.(5)
Price discrimination is another common
practice that allow airlines to maximize their
revenues. In fact, airline websites ask the
user for personal information and thereby get
to know him better. With this information, they
can make assumptions about his
socioeconomic status and propose a
personalized offer.(6)
What are web cookies?(4)
An internet cookie is a message from the
user’s web browser that is stored as a data
file. When revisiting a website, the user will
be identified and preferences and personal
information remembered.
Figure 1: Average price trend on Dublin-London Gatwick
(2006-2007; 90-day period)
Source: (1) D’Alfonso, T., et al, 2010
2

3. Issues at Ryanair
According to AOPA Air Safety Foundation,
poor decision making is the root cause of
most aviation accidents. Year after year, the
National Transportation Safety Board of the
United States attributes approximately 75% of
all aircraft accidents to decision making
errors.(7)
The notion ‘Aeronautical Decision-Making
(ADM)’ summarizes the implication behind
decision making of pilots in the aviation
industry, which are done freely by pilots
themselves. While routine tasks allow for
more time to collect information and make a
decision, other situations require highly
responsive actions under high pressure.
Historically, approaches to improve ADM were
pilot training and technological improvements
of airplane systems, which made aviation
transportation the safest way of transportation
today. Nevertheless, accidents and incidents
still occur because of the human factor that
may be the result of wrong decision making.(8)
The pilot in command of an aircraft is directly
responsible for, and is the final authority as to,
the operation of that aircraft.(9) However,
Ryanair pilots suffer from pressure of the
company to contribute to heavy cost
reductions. Since their performance is tracked
and ranked according to KPIs related to
efficiency and profitability, a pilot at the lower-
middle part of the ranking may be
encouraged by the corporation to improve the
performance. Ryanair’s ranking is a risk of
incentivizing pilots to make decisions based
on cost implications for the company and to
prioritize cost-considerations over safety
aspects.(10)
1.2 Decision Making at Ryanair Ryanair´s pilot ranking KPIs
Cost Index 6 Compliance
Compliance with the recommendations
of a tool built into the Flight
Management Systems to reduce fuel
burn.
1
5
LDA – Gear Up passing 4.0D
Bringing the landing gear or wheels of
the plane down after descending to
4000 feet (1200 meters), given that
having it down consumes more fuel
than regular flying.
One Engine Taxi > 3 mins
Shutting down all engines except one
while landing and parking to reduce
ground-level fuel burn.
Actual vs. Planned Burn
Actual fuel burn versus the fuel burn
planned before take off.
Arrival On-Time Performance
Punctuality and beating flight time
estimates.
Average APU Run Time (min)
Run time of the tool used for air
conditioning and engine start, which
also burns fuel.
6
2
3
4
Figure 2: Ryanair´s pilot ranking KPIs
Source: (10) https://www.eurocockpit.be/news/ryanair-
metamorphosis-hardly-possible
Figure 3: Ryanair ranking pilot ‘performance’
Source: (10) https://www.eurocockpit.be/news/ryanair-
metamorphosis-hardly-possible
3

4. Issues at Ryanair
1.3 Scandals and Customers
With the purpose of minimizing the cost,
Ryanair is frequently reported by the media
regarding the incidents that negatively
impacted customers’ flying experiences they
had due to its abusive practices, lack of
maintenance and inappropriate fuel saving
actions. However, due to the forgetfulness
and forgiveness of the customers, Ryanair
was slightly and short-termly influenced by
the reported scandals and did not experience
any significant loss. Instead, according to the
statistics, they had a consecutive increasingly
traffic of passengers over the past 5 years.(11)
In 2012, a customer in Andalusia sued the
Ryanair for its outrageously unreasonable
policies and practices, for instance, the
additional fee that are charged for printing a
boarding card at the airport.(12) Under
international conventions, passengers should
not be demanded of showing up with printed
boarding card nor be charged by printing
service in the case that the customers don’t
have it.(13)
Moreover, Ryanair's insufficient maintenance
for its aircraft fleet caused worrisome
incidents for the passengers. According to the
interim report by the German Federal Bureau
of Aircraft Accident Investigation, one of
emergency descent incident was due to the
failure of the main pressure controller, as well
as the a back up controller, which should be
installed appropriately during the
maintenance process.(14) Besides, a
significant damage of the aircraft while parked
at a Portuguese airport was not detected until
the crew found the control problem in a later
flight.(15)
As other carriers, Ryanair reduces the fuel
usage trying to minimize its operation costs.
Ryanair rank pilots according to their
performance in reducing the fuel burnt, which
had a big impact on their upper hand
decision-making and it indicated a high risk
for the passengers on board when
underperformed pilots are pressured to burn
less fuel at unacceptable level.(10) Fuel
shortage took Ryanair to generate 50
incidences during 2012. In 2012, on an only
one hour flight from Madrid to Valencia, three
Ryanair flights had to call mayday
emergencies because of low fuel after being
diverted through a storm.(16)
Nevertheless, the customer volume of
Ryanair kept growing despite the incidents.
As a European No. 1 airline, the rolling
annual traffic increased by 12% and reached
123.8m customers.(11) The negative impact of
the issues on the passengers diminished as
the years went by, and forgiveness from the
customers is generated as long as the values
are still being delivered by the low-cost
carrier.
Figures 4&5: Examples of news scandals of Ryanair
Source: (17) http://www.dailymail.co.uk/news/article-
2947077/Eleven-planes-forced-make-Mayday-landings-
British-airports-year-running-fuel.html
Source: (18) http://www.independent.co.uk/travel/news-
and-advice/exclusive-safety-warning-as-budget-airlines-
such-as-ryanair-cut-fuel-levels-for-flights-8749046.html
4

5. Organizational re-design through Blockchain
2. Organizational re-de-
sign through Blockchain
2.1 Blockchain applied to dynamic
pricing
Since flights are usually pre-scheduled long
time in advance, it is almost impossible to
achieve a perfect market equilibrium by
matching supply and demand with fixed
supply (the fixed number of seats on that
plane) at a fixed pre-determined price
(scenario 1). For example, as demand
increases and tickets get sold out, the
company did not maximize its profits as some
potential customers were willing to pay even
higher prices than tickets were sold.
Consequently, dynamic pricing has helped
airlines to increase economic efficiency by
adjusting prices to estimated demand and
thereby achieve several equilibria at different
price levels (scenario 2).
While Ryanair benefits from their pursued
pricing strategies, customers highly suffer
from price uncertainties and complain about
lack of transparency. In fact, consumers can
only consider historic price changes to make
their purchase decision. As a result, the lack
of transparency regarding ticket prices have
led to high controversies among customers.
The adaption of the booking platform to
blockchain technology would resolve this
issue to a large extend (see graph of the
redesign in page 8). The blockchain would
approve ticket purchases, and would record
them in distributed ledgers. Consequently, all
historic transactions would be memorized in
publicly visible ledgers that would
tremendously increase transparency to
potential customers, thereby decreases their
uncertainty as they can use this information
for price anticipation.
Costs,
Revenues
Q
MC=S
AR=D
Q*
P*
P’
Airline
Surplus
Consumer
Surplus
Market Equilibrium
Loss of
Economic
Welfare
Costs,
Revenues
Q
MC=S
AR=D
Q*
P*
P’
Airline
Surplus
Consumer
Surplus Market Equilibrium
Loss of
Economic
Welfare
Ryanair would need to be able to estimate the optimal price
(P*) in order to reach the equilibrium by offering tickets at a
pre-determined price. Prices P1 and P2 show that both
over- and underpricing would lead to suboptimal outcomes,
not because of excess demand and supply, but also
because of net loss of welfare.
Scenario 1: Fixed supply at fixed price
By using dynamic pricing, Ryanair is currently able to
discriminate prices and charge fares according to customers´
individual willingness to pay. Beyond the point where costs
have been covered, as the number of price points increases,
so do the potential profits. In terms of supply and demand,
increasing demands make the demand curve shift and create
a new equilibrium at a new price.
Scenario 2: Dynamic pricing
D
Market
Equilibrium
Excess
Demand
P
Q
S
Q*
P*
P1
P2
Excess Supply
Number
of buyers
PriceCost Selling Price
Profit
Passed-up
profit
Money left on
the table
Number
of buyers
PriceCost P 1 P 2 P 3
Profit
P
Q
S
Q*
P**
P***
D’’
D’
D
P*
5

6. Organizational re-design through Blockchain
The organizational redesign of Ryanair to a
blockchain-based booking process (see graph
of the redesign in page 8) can be seen as a
great opportunity. Not only could the airline
benefit from more trust of its customers,
transparency could certainly create high
levels of anxiety about increasing prices
among potential buyers. It can be argued that
the historic information about number of
tickets sold at respective prices for a specific
flight would reconfirm the buying decision.
Thus, people may decide to not postpone
their purchases any longer but buy their ticket
at Ryanair. Consequently, the airline could
increase their market share and capture
higher market demand.
In a second stage, Ryanair could introduce a
cryptocurrency and allow for tokening loyalty
points on the blockchain, which would give
customers immediate value.
Blockchain is fast rising new technology that came into life with the emergence of the
cryptocurrency ‘Bitcoin’. Different to conventional systems in which intermediaries control
contracts and transactions, distributed ledgers record and approve each transaction in a
peer-to-peer network. Especially the latest rise of cryptocurrencies and Initial Coin Offerings
(ICOs) indicate the great future potential of blockchain technologies and the potential
disruption of business models and industries.
The benefits of blockchain are obvious. Historically, the purchase and sale of a real estate
has been performed by a lawyer or notary who served as an intermediary and source of
trust. However, in blockchain the only need is to write a piece of code called smart contract.
The smart contract in sitting on the blockchain waiting for both inputs, the house and the
money; to be validated by thousands of computers and finally it exchanges the value.
Thanks to Blockchain, two parties are able to make an exchange without the intermediation
of a third party.
The information held on a blockchain is hosted in a decentralized and shared database
among million of computers. Every computer tapped into the system stores a copy of this
blockchain, changes to the blockchain are public creating transparency, and all transactions
are immutable, meaning they cannot be altered or deleted.
Today, corporations are designed to forget, they don’t show all their decisions and
transactions because they might be detrimental to the future. However, the decentralized
blockchain information can’t be deleted, creating a memory of the corporation’s actions that
is public to society.
What is Blockchain?(19)
Nowadays, Ryanair pilots are incentivized to
contribute to the company's efficiency and
productivity. Since their “performance” is
evaluated according to KPIs (figure 2) and
ranked among their colleagues, pilots may
decide to take risky decisions in order to
improve their ranking positions. However,
aeronautical decision making based on costs
is clearly a safety risk, and may put Ryanair in
the spotlight of further scandals (see 1.3).
The implementation of a blockchain-based
monitoring system could also solve this issue.
If technical equipment was connected to the
blockchain, risky pilot decisions that are
outside of the normal range, for example the
transaction of ordering too little fuel, would
2.2 Blockchain applied to decision
making
6

7. Organizational re-design through Blockchain
immediately be detected by a risk
management department of Ryanair that will
revise the decision. Consequently, the
organizational adaption to blockchain
technology of planes will help Ryanair to
prevent scandals to happen (see graph of the
redesign in page 8). This is especially critical
because of the memory aspect of the
blockchain. Since ledger entries are
transparent, immutable and don’t allow
Ryanair to delete scandalous ledger entries, it
is of the highest interest of the company to
invest in highly sophisticated risk
management as incidents would lead to
irreversible reputation damages of the
company.
Moreover, pilots will be hindered to take
highly risky decisions as their irresponsible
actions will most probably be detected and
blockchain will take record of them. Since
blockchain transactions cannot be reversed,
pilots may suffer from ever-lasting
consequences on their career.
Furthermore, Ryanair could adapt the current
incentive system. By adding ‘risk level’ as a
further KPI to evaluate performance, pilots
would naturally take risk into consideration
when striving for a high performance ranking
position. In other words, risk levels will be
reduced to acceptable levels while high
efficiency will be achieved on average.
Ryanair´s pilot ranking KPIs
Cost Index 6 Compliance
LDA – Gear Up passing 4.0D
One Engine Taxi > 3 mins
Actual vs. Planned Burn
Arrival On-Time Performance
Average APU Run Time (min)
Risk to Performance Ratio
1
2
3
4
5
6
7
2.3 Blockchain applied to
customers
Today institutions are designed to forget
incidents. Therefore, as it was mentioned
before, when an incident occurs, the demand
only goes down for a short period of time, due
to the forgetfulness of the customers.
By implementing the use of the blockchain,
information will be permanent and transparent
(see graph of the redesign in page 8). A
special step must be taken and included into
the organization design to prevent the
memory of the blockchain from affecting
future realities: forgiveness. While to forget is
to destroy the past, to forgive is to move on
without rewriting the history. When Ryanair
faces an irreversible event recorded in the
blockchain, they can create and record
additional events that reverse some of the
effects of the previous incident, but they can’t
delete or undo the past. This approach to
history of institutions is closer to humans and
therefore closer to customers: brains, as a
blockchain, aren’t designed to forget either.
Therefore, when a scandal takes place, the
demand will shift to lower levels, yet only for a
short period of time.
The application of blockchain to decision
making (section 2.2) would measure various
transactions, save them irreversibly in a
distributed ledger network and make them
publicly available. In other words, blockchain
would give full transparency to customers
about all historic mistakes and incidents. As a
result, if risk management and pilots’
responsible actions led to no or minimum
number of incidents, Ryanair would be able to
prove its trustworthiness.
Consequently, one can argue that the higher
levels of trust would increase demand and
Ryanair would become gain a considerable
competitive advantage over competitors.
7

8. Customer wants to buy
a Ryanair ticket
One block is created
representing the transaction
The block is broadcasted to
the network
Ryanair receives the
money from the
customer
The block is added to the chain, providing
a permanent, immutable record of the
transaction
The network validates the
transaction
The records of the
transactions are public
1 2 3
6 5 4
7
2.1 Blockchain applied to dynamic pricing
Organizational re-design through Blockchain
2.3 Blockchain applied to customers
Forgiveness
Incident Transparent record
of the transaction
[here: incident] Customers and regulators
will have full access to
transparent information
2.2 Blockchain applied to decision making and risk management
8
Fuel levels Pilot’s logbooks Maintenance
The block is added to the chain,
providing a permanent, immutable
record of the transaction
Universal Ledger
The network validates the
transaction
Pilot actions trigger
transactions on the blockchain
1
2 The records of the
transactions are public43
Performance is included
in pilot´s KPIs5
1 2
3

9. References
9
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