Ryanair Dogfight over Europe
Dogfight over Europe: Ryanair (A)
1) What is your assesment of Ryanair´s launch strategy?
The Ryanair's launch strategy was not the best for that moment. They began flying between Ireland and London, in a very saturated market, which competed with two strong companies owned by the government and with great experience: Aer Lingus and British Airways (who also had come together to improve their perform). And also entered the market independent carriers Such as British Midland. Another important factor was that the Dublin-London route was the only one that provided reasonable returns for Aer Lingus, so it was not going to let customers easily take him by force, and Ryanair will be difficult without a really differentiating strategy. Ryanair's differentiate notion was delivering first-rate customer service "with lower fares”. But for a new company as Ryanair would not be able to compete in prices following the same strategy as other companies in the market focus on meals and amenities and good service. Ryanair also has high fixed costs (characteristic of this industry) and has enough volume in order to face a price war (economics of scale).
Although the market was saturated, Ireland is a small country with a small population and the two big companies were operating at 60-70% capacity. If since 1986 was using new Boeing 747s with room for nearly 400, means that every plane carried 360 passengers on average, which was down the performance of the planes. But on the other hand, Ryanair could only get a license for aircraft with room for 44 Passengers, so it had to make 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 because of the low initial demand Ryanair (only 4 flights per day to 44 passengers, 176 passengers) can be a good strategy to distribute the flights throughout the day and get more customers.
1) What is your assesment of Ryanair´s launch strategy?
The Ryanair's launch strategy was not the best for that moment. They began flying between Ireland and London, in a very saturated market, which competed with two strong companies owned by the government and with great experience: Aer Lingus and British Airways (who also had come together to improve their perform). And also entered the market independent carriers Such as British Midland. Another important factor was that the Dublin-London route was the only one that provided reasonable returns for Aer Lingus, so it was not going to let customers easily take him by force, and Ryanair will be difficult without a really differentiating strategy. Ryanair's differentiate notion was delivering first-rate customer service "with lower fares”. But for a new company as Ryanair would not be able to compete in prices following the same strategy as other companies in the market focus on meals and amenities and good service. Ryanair also has high fixed costs (characteristic of this industry) and has enough volume in order to face a price war (economics of scale).
Although the market was saturated, Ireland is a small country with a small population and the two big companies were operating at 60-70% capacity. If since 1986 was using new Boeing 747s with room for nearly 400, means that every plane carried 360 passengers on average, which was down the performance of the planes. But on the other hand, Ryanair could only get a license for aircraft with room for 44 Passengers, so it had to make 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 because of the low initial demand Ryanair (only 4 flights per day to 44 passengers, 176 passengers) can be a good strategy to distribute the flights throughout the day and get more customers.