Ryanair Dogfight over Europe

Dogfight over atomic number 63 Ryanair (A) 1) What is your assesment of Ryanair? s launch scheme? The Ryanairs launch strategy was not the opera hat for that moment. They began flying between Ireland and London, in a very saturated foodstuff, which competed with dickens strong companies owned by the government and with great experience Aer Lingus and British Airways (who too had come to recoverher to improve their perform). And similarly entered the market nonsymbiotic carriers Such as British Midland.An other(a) important factor was that the Dublin-London r surfacee was the entirely mavin that provided reason satisfactory go downs for Aer Lingus, so it was not going to let customers well take him by force, and Ryanair impart be difficult with disclose a rightfully differentiating strategy. Ryanairs differentiate notion was delivering first-rate customer service with grimer fares. save for a new company as Ryanair would not be able to compete in equipment casualtys fo llowing the same strategy as other companies in the market focus on meals and amenities and inviolable service.Ryanair similarly has high fixed costs (characteristic of this industry) and has enough volume in pose to face a expenditure war (economics of scale). Although the market was saturated, Ireland is a downcast country with a small population and the two big companies were run at 60-70% capacity. If since 1986 was using new Boeing 747s with room for nearly 400, means that any plane carried 360 passengers on average, which was down the performance of the planes.But on the other hand, Ryanair could just now get a license for aircraft with room for 44 Passengers, so it had to cite eight flights, with the maximum capacity to carry the same number of passengers than BA or Aer Lingus. This could decrease the efficiency of Ryanair and increase the cost per flight management. Although it also beca wont of the low sign demand Ryanair (only 4 flights per twenty-four hour peri od to 44 passengers, 176 passengers) discharge be a good strategy to distribute the flights throughout the day and get more customers.Moreover this market consists mostly by Irish emigrants who resided in the UK. These clients are marked by strong seasonal character, and the most important, the mass of customers traveling in economy class and they are very hurt sensitive, so we are going to be interested in low prices and discounts and are not interested in great facilities and services. Again we hold back that Ryanairs idea was not the most appropriate for this market, ecause although Ryanair turn down the price, customers will be more interested in large decreases in the price. Meals also make little sense in a flight of one hour duration. In favor of Ryanair we see to say however, that it test the initial service between Waterford y ? Gatwick Airport, which was a small service, in put up to prove the company? s ability to operate. So if the company had problems or losses wo uld be on a large scale and this would view as you the ability to identify problems and improvements.Similarly, although Ryanair did not get expected outcomes, with their low prices, I mobilize it would get take away some customers to the other companies and have started to consider the proposal in the market. To sum up, The Ryanair? s launch strategy wasn? t successful from my point of view because it did not do a good analysis the market to which was coming and did not calculate the chances of success between these two great companies.They were strong companies with experience and great fool recognition, so if prices dropped to the level of Ryanair and Ryanair provides the same service to the market, customers will continue to use the companies that are already used. 2) How do you expect Aer Lingus and British Airways to respond? why? As I said earlier, the only differentiation of was in the price Ryanair, therefore the immediate reaction of Aer Lingus and British Airways will be quash the price. If these two companies started a price war, Ryanair would have no chance.They were flag carriers and they had the champion of the government, so they can have loses during a while of time, at least(prenominal) until they get Ryanair out of the market. On the other hand, B. A was one of the biggest aircraft of atomic number 63 and it has an operating margin of 6. 9%, because of B. A can decreased the price at Ryanair level (? 98). While, the Dublin- London route was the only for Aer Lingus, with reasonable return of capital. Therefore is not going to let easily Ryanair steal their clients. ) How pricy is it for Aer Lingus and British Airways to retaliate against Ryanair? s launch? Even though, as we think the launch of Ryanair was not successful or at least the outcomes did not reach the expected ones, was a new competitor in the market and also with a more competitive price than theirs so it is threat their capability to meet demand.. With price-sensitive cus tomers such as travelers between Ireland and UK I imagine that the two companies would lose customers. Furthermore, a price war is never good for any company, even if it will be winner.These two companies would have to cringe their prices to more than half the normal price, which would generate losses until they get Ryanair out and this would weaken the two companies. If these companies reduce so much the price, once they get Ryanair out of the market, they can not automatically raise the price to the former number because customers would feel cheated and companies would lose their credibility. If Aer Lingus and British Airways didn? t get Ryanair out with the war of Price, they would get only weaken themselves and lose the most useful route for Aer Lingus.