Free Essay: Dogfight over Europe RyanAir B / C (individual graded) 1. What went wrong? Why did Ryanair move from a successful launch to. Citation: Rivkin, Jan W. “Dogfight over Europe: Ryanair (B).” Harvard Business School Supplement , June (Revised October ). On a Saturday night in January, , Ryanair stood on the brink of financial collapse Though Tony Ryan and others had pumped I£20 million into the.
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Two majors Airlines operated on this latter route at that time: British Airways and Aer Lingus, the Irish flag-carrier company. Moreover, some strong US airlines reached out for new routes into Europe after the deregulation of the domestic US airline industry, which made the pressure of competitors even more intense in the airline industry. We will write a custom sample essay on Dogfight over Europe: Despite this high unwelcoming rivalry in the market, Ryanair made the choice to focus on the challenging Dublin-London route, which was reputed to be quite lucrative for both British and Irish flag-carriers.
At that time, data showed that three-quarters of a million round-trip Dublin-London travelers opted to use rail and sea ferries rather than aircraft. This information, highlighting the high pressure and threat that the airline industry was undergoing on behalf of the substitution products, confirmed the unattractive character of the local market. In spite of this fact, Ryanair initiated service on the Dublin-London route inusing a seat turboprop during its early stages.
Ryanair adopted a launch strategy that differentiated it from its competitors in two main ways.
First, it employees would focus on delivering first-rate customer service; second, the company would charge a simple, single fare for a ticket with no restriction, while British Airways was offering a spectrum of ticket prices with varying restriction and the full range of classes of service. At the same time, Ryanair would offer meals and amenities comparable to what Aer Lingus and Ryanaif Airways provided.
Thus, the newborn company benefited from the beginning from ryanir distinctive business model focused on low operational costs and low fares, but ryanar was not undermining the quality of its services. Indeed, Gatwick and Luton airports were charging low landing and take-off charges compared to Heathrow main airport, which allowed Ryanair to keep its overhead costs at a lower level than British Airways, and thus gave it a competitive advantage toward other airline companies.
However, this choice of secondary airports could also arise as a weakness of the company, since it prevents it from reaching a broader target of customers who predominately go through main airports such as Heathrow.
Thus, this pricing strategy could enable the company to gain large shares in the market of these potential customers. And why do you expect each of them to respond that way? Indeed, the newborn company, benefiting from low costs, setting low fares, but offering a similar level of quality, would rapidly gain market shares over its competitors.
Moreover, for being the only Irish airline before Ryanair, the company, which was touting the many benefits it brought to the Irish community, might have been benefiting from a good reputation and reliability in its local market. These resources and capabilities, reinforced by the recent successful introduction of a computer reservation system, therefore gave to the company a — temporary — advantage toward the newborn Ryanair. Besides, it may be all the more attractive to customers since it was spending tens of millions of pounds in renewing its fleet of jets, while Ryanair was just starting to operate with turboprops, and still did not have permission to fly larger jet aircraft on the route.
This focus is highlighted by the fact that international journeys accounted for roughly two thirds of the seats that the company sold, and nine tenth of its revenues.
Indeed, BA already operates on a different segment than Ryanair, targeting business class and international customers. Moreover, with the ryyanair deregulation of the European airline industry whose foundations were laid by the Single European Act, British Airways should benefit from a major opportunity to expand to new European routes, relying on its valuable international experience.
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Dogfight over Europe: Ryanair (B)
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