Dogfight over Europe RyanAir B / C (individual graded)
1. What went wrong? Why did Ryanair move from a successful launch to near bankruptcy? One of the biggest reasons for Ryanair’s downfall was that it tried to position itself as a low fare airline along with having first-rate services. It kept an unrestricted fare while still focusing on the best customer service and relationship. Although the low price was able to get Ryanair the customer base it needed, the increase in sales was not enough to make up for the cost of the amenities that Ryanair promised to its customers. This business model did not do sell well and proved to be very inefficient. Another significant reason was because of Ryanair’s expansion. It expanded its rounds to where some of its competitors were, specifically Aer Lingus. This overlap in routes led to a price war among the two companies. Ryanair tried to price its fares at 10% lower than its competitors which dug them deeper in a hole. The case also mentions that despite the route separation by the government, Ryanair continued to lose money – up until the January 1991. Ryanair failed to anticipate and defend against retaliation from its competitors. Ryanair went head-to-head against its competitors in a very tough price-war which undermined the industry structure. The CEO commented that “Aer LIngus will, of course, compete to the very limit of our ability as we have always done”. 2. How did Ryanair move from bankruptcy to become one of the most profitable airlines? - One of the most important reasons why Ryanair turned around was because of their low cost strategy and became a low-cost, low-fare airline.. It dropped loss-making routes and planes redeployed on a handful of remaining routes. Ryanair turned its focus away from customer service and, as a result, was able to generate and preserve cash. For example, the case mentions that all in-flight amenities, such as free coffee and snacks, were eliminated. Additionally, labor...
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