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1. What's your assessment of Ryanair's launch strategy?

Ryanair was launched with two important strategies in mind. They wanted to deliver first-rate customer service, with meals and amenities comparable to what Aer Lingus and British Airways provided. They wanted to be positioned in the same comfort category as the mentioned airlines. They were planning on establishing a comparative advantage in terms of the price that it offered. They charged a simple, single fare for a ticket with no restrictions. In announcing its Dublin-London service, Ryanair publicized a fare of £98. The disadvantage of keeping such a low-fare lies in the cost management. Ryanair had to keep a tight control of its expenses.

In line with Ryanair’s cost-cutting policies the same set of employees would ticket the customers on a flight, board them onto the plane, and provide in-flight service. When aircraft were delayed at Dublin Airport, employees would rush from the head office to the gate to make sure that the passengers were taken care of. Ryanair tried to keep prices roughly10% below the best prices offered by competitors. Ryanair was trying to attract the ferry users. The traffic on the Irish Sea ferries fell substantially.

Ryanair’s passenger volume grew quickly but so did its losses. So much so that the company was staring at bankruptcy by 1991. The company evaluated several options to rejuvenate its bottom line and finally adopted a no-frills approach. The company cut its cost to the bone, and dropped its fares to levels unheard of in Europe. Loss-making routes were dropped and planes redeployed on a handful of remaining routes. Efforts to preserve and generate cash became paramount. All in- flight amenities, such as free coffee and snacks, were eliminated. Freed of coffee and snack service, flight attendants began to emphasize in-flight duty-free sales more prominently; over time, duty-free items became an important source of revenue and margin. Labor contracts were...