Dogfight over Europe: Ryannair
1- What’s your assessment of Ryanair’s launch strategy?
Nowadays, the strategy of the airlines companies it’s easier to understand
than before. What we want to say is that, at the beginning, the governments
supported the Airlines; ant hey had the monopole of the flies. So they can fix the
price but they could also fix the service that they were going to present to the
customers. As we see in the text, the airlines companies were like monopoles, they
could devise the world by different companies, and every state had his own
company. We could think that Ryan air, battled this , in fact they used the
liberalism of the other airlines companies to put themselves in the Market.
The fact was that in this time, only the big companies that used to be the only ones
had the permission to operate in the important airports. That’s a bad point for
Ryan air, because it’s important to captivate the customer where he is. And they
are in the big airports , it’s a habit for them to go to the important airports and no
to the secondary’s one.
The Ryan brothers started with a small aircraft, so they had only the
Possibility to operate in small trips. They choose Waterford to Gatwick which is(
for London )a secondary airport. We think that It was just the moment were
anything could go down. They had the necessaries customers to be as big to have
the permission to operate between Dublin and Luton (again it’s around London).
The point is there, because they had a lot of customers they were having
the permissions easily. They were practicing the “low cost” trips.
The fact is that Ryan air took advantage of the deregulation of the airlines
companies market. They choose the right time to enter the market. The only
problem that was standing was the competition , because there were already large
companies which were really known. Ryan air was at the begging very
Disadvantaged because of the lake of resources (comparing to the competitors).IT
Was very risked to start just with a 44-seat turboprop, which was doing four round
Trips per day between Dublin and London.
What made the difference? Ryan airlines was smaller than the competitor’s
That means that the enterprise is more flexible , with prices per example. So
they wanted to win a part of the market , and we think that they did the right thing
to do by proposing low prices to the customers , because the two most important
competitors can’t afford to reduce prices like they do. But they could also start a
“Price – War” ; This is the higher risk that we saw , because if there’s a Price – War ,
the competitors would take out Ryanair from the market.
Ryan Brothers were seeing that the small size of the two competitors was an
advantage for them.
Besides another major problem it’s that, Ryannair is able to offer to their
costumers low prices, since they have to deal with minor costs, and this is
an advantage but, if they reach to attract more competitors they would have
to buy some more airplanes. If thy became bigger they are going to have the same
problems that the competitor’s already had.
How do you expect Aer Lingus and British Airways to respond?
The presence of a new competitor in the market represents a danger for the
competitor’s. It’s a penetration of the market price below the market’s price, it’s t
the force of Ryan air. So Aer lingus and British Airways had two ways to react to
this , they can maintain their current prices , or as we said before , start a price
But there’s a problem for both companies , they have serious disadvantage ,
: The cost of structure. And it’s really hard to cut them (stuff , accommodations ,
catering and the price of the planes). We think that they are not able to respond to...