Dogfight over Europe: Ryanair (a) - Case Analysis

975 Words4 Pages
Indian institute of management Dogfight Over Europe: Ryanair (A) | Case Analysis

Overview Cathal Ryan and Declan Ryan have started Ryanair since 1985. For nearly a year, Ryanair had operated a 14-seat turboprop between Waterford and Gatwick Airport on the outskirts of London. The airline targeted low-fare segment market. It initiated service from London’s secondary airports. In terms of competition, Waterford and Gatwick didn’t pose any challenges. In 1986, Ryanair gained a license to operate between Dublin and Luton, another secondary airport of London. In that year, they announced the commencement of service from Dublin and London. On this route, British airways (BA) and Aer Lingus were already operating. This route is
…show more content…
Aer Lingus and BA’s least expensive, unrestricted round-trip fares on the route were priced at I£208. Discount fares as low as I£99 were available, though they had to be booked one month in advance.
Nevertheless, Ryanair needs to evaluate its operating expenses and check whether such a drastic drop in market prices can be sustained by it. British Airways – Defending market share British Airways, being the market leader in the given market scenario can take the following steps to protect its market share 1. Reduce prices to compete with Ryanair As can be understood from the analysis given below, if British Airways can cut it’s staffing by 25%* and increase it’s utilization to 90% from 60%, it shall be able to reduce the prices significantly to I£104, still I£6 more than Ryanair. As British Airways is a renowned market leader, people would be inclined to travel by British Airways by paying the I£6 extra than by a relatively unknown carrier Ryanair. Also, such a reduction in tariff on all of BA’s routes might not be necessary. It can very well position separate flights/routes for this rate so as to offset any reduction in utilization through profits in other routes. | British Airways | BA Optimized | BA with 90% capacity utilization and reduced staffing | Ryanair | | I£ | Percent of Revenue | I£ | I£ | I£ | Total Revenue | 3,06,36,00,000 | | 2,87,78,93,400 |

More about Dogfight over Europe: Ryanair (a) - Case Analysis

Get Access