Ryanair

Dogfight over Europe: Ryanair

1. What is your assessment of Ryanair’s launch Strategy?

* Ryanair’s launch strategy was solid because it targeted an already proven profitable route

* Underpriced the competition by streamlining its costs

* Made air travel more affordable and more attractive than other modes of transportation for this route

* Ryanair recognized the profitability of the Dublin-London route, which was the only route that was profitable for Aer Lingus

* Raynair saw an opportunity

* Ryanair introduced a low cost, unrestricted fare

* Focus on service

* Undercut BA and Aer Lingus by £110 per ticket

* Ryanair was able to offer this low fare because it only planned to run four roundtrips per day, use small aircrafts, and fly to a secondary airport which charged lower fees

* Ryanair’s launch will be successful because of their low operating costs and their ability to expand the market

2. How do you expect Aer Lingus and British Airways to respond? Why? How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair’s launch rather than accommodate it?

* Aer Lingus and British Airways will not be able to respond effectively to Ryanair’s launch

* According to Game Theory principles, Aer Lingus and British Airways will not be able to compete with Ryanair’s low fare because their cost to fly each passenger exceeds Ryanair’s fare per passenger by I£110

* It would be too costly for BA and Aer Lingus to reduce their fares to compete with Ryanair

* If they don’t reduce prices, they will lose customers

3. Can the Ryan brothers make money at the I£98 fare they propose?

* They’ve concentrated all their efforts and resources upon very specific travel between Ireland and England that allows them to be competitive and cost-efficient compared to BA and AL

* However, even given the fact that their costs are lower, it would be difficult to make a profit at the...