Case

Q1. What is your assessment of Ryanair’s launch strategy?

Ryanair was launched in 1985 as a low fare airline service. Ryanair served short haul routes primarily between Waterford and Gatwick Airport.

Ryanair’s launch strategy assessment:

1. Low fare - Company decided to charge a simple, single fare for a ticket with no restrictions.

2. Customer service - Ryanair’s employees focused on delivering first rate consumer service. Ryanair planned to offer meals and amenities comparable to the bigger players namely British Airways and Aer Lingus.

3. Competitive pricing – Ryanair charged a single fare between Dublin and London of I£98. While its competitors on the same route, British Airways and Aer Lingus charged I£208 for the least expensive round trip. Even the lowest discount fare was I£99 for the bigger carriers.

4. Target market – By introducing low fare flights between Dublin and London Ryanair can target the fare conscious traveler who would chose the I£55, nine hour trip by rail and ferry over a one hour by air. By charging a fixed fare of I£98 these customers can be captured by Ryanair.

5. Small aircraft – Ryanair chose to operate 44-seat turboprop instead of Boeing 747’s which were operated by British Airways and Aer Lingus on the same route. Smaller plane would mean higher capacity utilization (~90%) as compared to flights of Aer Lingus and British Airways which were 60-70% full.

6. Cost reduction – Dublin London flight of Ryanair landed at Luton, the secondary airport of London. As such the cost of landing and operating from a smaller airport compared to the busy Heathrow would be lesser.

7. Deregulation – Since there is deregulation in the aircraft sector, there is a great opportunity for Ryanair to enter.

8. Absence of entry/exit barriers-There is no entry/exit barrier in the aircraft sector which is also an advantage for Ryanair to enter the market.

Even though Ryanair has the above mentioned advantages and opportunities...