Ryan Air Case
Ryanair’s launch strategy seems it will be successful because of their ability to enter the market without setting off alarms with competitors (BA & AL). They plan to do this by entering the market slowly with only one route (Dublin-London), a 44-seat turboprop as opposed to a large 747 and by servicing only secondary airports. This strategy is key because it does not confront the major airlines directly and will allow Ryanair to build its brand, knowledge of the industry and a customer base without incurring high initial costs or inciting heavy competition.
In addition to the stealth like market entry, Ryanair plans to take a focus strategy to brand the company as a low cost flight option through I£98 roundtrip airfare while still giving quality service by offering meals and amenities, first-rate customer service and no booking restrictions. This focus strategy will address many of Ryanair’s valuenet forces (see Figure A). The low cost position will make Ryanair competitive relative to the rail/ferry substitues. However, Ryanair plans to offer a more attractive option for the money with its 1 hour travel time as opposed to the 9 hour travel time of rails/ferrys. The major airlines will be able to compete with service; however, Ryanair can undercut them with pricing. Ryanair’s flat, restriction free low price can expand the customer base and potentially create ties with complementors such as travel agents by allowing them to book last minute tickets at low prices. The low flat fee also provides better insulation to Ryanair from declines in demand due to potential recessions. This business model (low cost/differentiated service) can put Ryanair in a new efficient strategy frontier (Figure B).
Historically the European government has been selective in supporting its flagship airlines through subsidies. Assuming that it would continue to do so, Ryanair might face challenges due to the dynamics of the airline industry with respect to government regulations and
In addition to the stealth like market entry, Ryanair plans to take a focus strategy to brand the company as a low cost flight option through I£98 roundtrip airfare while still giving quality service by offering meals and amenities, first-rate customer service and no booking restrictions. This focus strategy will address many of Ryanair’s valuenet forces (see Figure A). The low cost position will make Ryanair competitive relative to the rail/ferry substitues. However, Ryanair plans to offer a more attractive option for the money with its 1 hour travel time as opposed to the 9 hour travel time of rails/ferrys. The major airlines will be able to compete with service; however, Ryanair can undercut them with pricing. Ryanair’s flat, restriction free low price can expand the customer base and potentially create ties with complementors such as travel agents by allowing them to book last minute tickets at low prices. The low flat fee also provides better insulation to Ryanair from declines in demand due to potential recessions. This business model (low cost/differentiated service) can put Ryanair in a new efficient strategy frontier (Figure B).
Historically the European government has been selective in supporting its flagship airlines through subsidies. Assuming that it would continue to do so, Ryanair might face challenges due to the dynamics of the airline industry with respect to government regulations and