DogFight over Europe: Ryanair
Global Business Strategy
What is your assessment of Ryanair’s launch strategy? Is it sensible? Will it succeed? We believe that Ryanair’s launch strategy was successful and we will justify this statement with information that was provided in the Ryanair’s case. To begin with, Ryanair airline was not that hard to establish for Cathal and Declan Ryan because of the capital that Ryanair’s founders managed to get from their father, Tony Ryan, who was a co-founder of Guinness Peat Aviation, which was the largest aircraft leasing company. This was a very good start for the brothers because they did not need to search for investors or convince banks to give them loans, which would probably be very difficult because of the amount of money they needed. Furthermore, we believe that those two brothers were the right persons to make such a big step and establish an airline company because as it was mentioned in the case their father worked in airline industry for a long time, so he had huge experience and he was able to share it with his sons and advise them on certain steps and help them to explore the market from different kinds of perspectives. Another smart choice of them was to start their business with a small plane that had only fourteen seats. We believe it was clever because they spotted the weakness of their competitors in having utility rates of just around two thirds. By having small aircrafts they increased the likelihood of being fully booked and therefore more profitable. Further, they did not spent a lot of money and other resources for the first step just in case it would not work later on and that they would not have huge loses at the very beginning. Also their first plane started to operate between Waterford (southeast of Ireland) and London Gatwick airports and here you can notice that they have chosen secondary airports to operate because we assume they wanted to reduce their cost by going to less crowded airports to save some time while landing and taking off because these airports where not as huge and busy as, for example, Heathrow airport in London. Furthermore, Ryanair founders’ one of the goals was to show that their company was able to operate perfectly as a scheduled airline and they succeeded, which gave them a good first impression among the people. By entering the market with small planes and just one route, gave them a better position for success. In addition, another factor, which shows that Ryanair’s launch strategy was a success, was that in a short period of time (approximately one year) from the first route they managed to gain a license for flights between Dublin and Luton airport, which is another secondary airport in London. Also we may assume that the choice to operate on this route was a good strategic move because they noticed that even though, British Airways and Air Lingus already operated on this route these airline companies had only about 60-70% of their planes capacity full, despite the fact that it was a busy route. In the case it was mentioned that there was more or less a constant number of passengers on this route for a long time, so Ryan brothers saw a good way of gaining new customers. Moreover, because of a quite high round-trip prices (£189) BA and AL were losing a lot of customers for rail and ferry companies because people were able to buy tickets only £55 even the trip with rail and ferry took them about 9 hours. As a result, Ryan brothers decided to have four round trips per day with their 44-seat turboprop for a price of only £98, so they easily managed to gained customers. 1
Another thing that helped Ryanair to earn loyalty and satisfy customers was their main focus to deliver first-rate customer service and offer meals and amenities similar to their rivals. A clever idea as well, was to charge a simple, single fare for a ticket with no restrictions, as it generates some level of initial trust on the customers side. Overall, we...
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