Ryanair Case Solution

Topics: Aer Lingus, Marginal cost, Ryanair Pages: 2 (345 words) Published: November 19, 2011
Ryanair case

What is your assessment of Ryanair launch strategy?

From my point of view, the strategy implemented by Ryanair was perfect because it is focused on capturing those passengers who have the price as the main criterion in choosing the mean of transport. There is a wide difference between the fare of the air companies with the ferry or rail giving rise to another variables, as comfort or no time, do not influence by the time of the decision-making. However, Ryanair managed to change this perception developing a low-price strategy which decrease the big price difference between the airplane and the others means of transportation. Moreover, this strategy have made possible that another variables like comfort or speed, which are exponentially higher in the plane, began to be valued by this target. Therefore, I think that Ryanair managed to capture the market niche that until now had not been achieved by their competitors.

How do you expect Aer Lingus and British Airways to respond? Why?

Both airlines will have to cut prices to comply with Ryanair's strategy which means a war of prices. The main reason is that the consumer always prefer to pay less for the same service, therefore, sales of competitors flights began to fall. Moreover, if we consider that this journey is one of the most profitable for Aer Lingus and British Airways, these companies need to adjust quickly before consumers start to feel Ryanair loyalty creating greater difficulty of return of these passengers.

How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair's launch rather than accommodate it?

No make sense to taking reprisals because the marginal cost on air companies rivals is greater than the marginal benefits to be gained.

Can the Ryan brothers make money at the L98 fare they propose?

Ryanair is a competitive and cost-efficient company compared with their competitors but they was concentrating their resources...
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