Dogfight over Europe: Ryanair
Dogfight over Europe: Ryanair (A)
This case addresses the airline industry’s context after World War II until late 1980. The case is mainly focused on Ryanair’s entrance to the airline market and its road to expansion.
Brief description of airline industry context:
Initially, the main players was Europe’s national governments, as a result of merging small private-owned airlines into national “flag carriers” (service focused on international routes from each nation’s capital to colonies). The aviation advances in the WWII aftermath made air travel much more affordable. A new player, United States, soon became a dominant force in the industry as they have free competition on international routes contrasting with public, “flag carriers” in Europe. To prevent this predicted dominance, IATA emerged and “pooling agreements” become a common resource to create entry barriers. Later on and as a result of the collapse of European Empires, most profitable target routes were mainly to North America and private charters airlines took advantage of their discounted charges to put Europe’ system of regulation in pressure. Despite some attempts of IATA to contradict this trend, heavily regulated and fragmented airline industry collapsed and the liberalization of the European airline industry took place in late 1980s as a combination of OPEC oil embargo and Single European Act, predecessor from an agreement to the abolition of “pooling agreements”, pricing fixing and government subsidies.
1) British Airways: In 1986, BA become one of the world’s most extensive airlines routes (near 80% of its passengers passed to London Heathrow Airport). Ticket prices were offered accordingly to services desired, ranged from first class to economy.
2) Aer Lingus: Aer Lingus specialized on routes between Ireland and Britain. Liberal bilateral agreement between...
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