Strategic Interactions Ryanair & Easyjet Don’t Be Blinded by the Price, Sunglasses to See the Whole Picture

They started off absolutely focused on cost, then they focused on choice and then they improved the service. As is displayed below, while Ryanair may have isolated pockets of cost disadvantage, such as Route charges or Airport handling, however at an overall level, the cost advantage for Ryanair is much more than its other LCC fraternity. Ryanair enjoys a whooping 76% cost advantage over its nearest competitor EasyJet. This cost differential helps Ryanair to pass the value benefit to its end customers. (Please refer Exhibit 2)

Because of the deregulation of the government policy, there are a number of new airlines that entered the industry at first. However the most significant barrier to entry that new entrants face is significant post-entry competition from existing major airlines. The existing market is already saturate. In order to open market the new entrances have to lower the price of their limited routes. But they are facing the stronger competitor who can provide lower price on the same routes while create profit on the other non-competing routes.

These are some of the strategies that “traditional” airlines use to eliminate the unnecessary costs and “frills”.

Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008. In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price and carry more passengers than BA in the European market. The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin.

“Game theory is the study of interactive decision making--that is, in situations where each person 's action affects the outcome for the whole group. Game theory provides a useful guideline on how to behave in strategic situation involving interdependence” (Maurice and Thomas, 2008, p.513). As we know that for a oligopoly competitive market the game theory is a mathematical technique for analyzing situations in which two or more corporate players make decisions that influence one another 's payoffs. As discussed, when McDonald’s corp. reduced the price of its big Mac by 75% due to the effect of game theory the demand of the company product did not changed as expected because the other players in the market adopted there strategy accordingly to counter the McDonald’s Corp strategy. For McDonald’s Corp to think their plan would work, they must have thought the promo would bring in non-regulars with no response by competitors or regular diners.

IntroductionThis report has been written in order to provide an environmental and competitive analysis of the low-cost airline industry sector from the position of Easyjet. It will give a brief history into Easyjet and the low-cost airline industry. It will analyse the internal strengths and weaknesses as well as the external threats and opportunities. Competitors will be analysed through the use of porters 5 forces model. Recommendations will be made for easyJet's marketing strategies for the next three years.

EasyJet has adopted its business model from Southwest Airlines from the United states. It is adapted to the European market trough further cost-cutting measures. Important points in this business model are high aircraft utilization, short times on airport, charging for not needed extras and put much efforts in keeping the operating costs low. The key words in the strategy of Easy jet are “low price and no frill” based on Porter’s generic strategies (2.1.1) (appendix XX). This states for:

I.INTRODUCTIONThis report outlines the analysis of two low-cost airlines performance in Europe, namely easyJet PLC and Ryanair Hldgs during their financial year between 2006 and 2008. It examines the companies' portfolio, future prospects and competitors to analyse the threats and opportunities facing their business. In conclusion, there is a recommendation whether to invest on easyJet and/or Ryanair's shares.

Ryanair was founded in 1985 by the Ryan family, which was headed by Tony Ryan. It was the first budget airline in Europe, modeled after the successful US carrier, Southwest Airlines. It was founded to provide scheduled passenger airline services between Ireland and the UK, as an alternative to then state monopoly carrier, Aer Lingus. At the beginning, Ryanair was a full service conventional airline, with two classes of seating, leasing three different types of aircraft. Despite growth in passenger volumes, by the end of 1990, the company faced a great conflict, disposing of

Ryanair has always managed to come up with cost effective strategies which helps it to maintain a competitive advantage over its rivals. It also considers the present environment as the basis for formulating its strategies, for example, the airline made an effort to gain soccer fans as its customers by announcing a special return flight for all Arsenal fans from London Stansted to Barcelona Girona, so that they can watch the club’s vital champions league match in Barcelona on the 6 April, the flight would leave from London on 6 April at 8:30 am and

The aim of this report is to carry out a strategic analysis of Ryanair. This will involve investigating the organisation’s external environment, to identify opportunities and threats it might face, and its strategic capability, to isolate key strengths and any weaknesses that need dealing with. Finally, a SWOT analysis will be carried out to assess the extent to which Ryanair’s strategies are suitable to what is happening in its task environment.

* Ryanair immediately responds to opportunities and threats in order to cut costs and sustain the low cost basis (e.g. abandonment of ice cubes...) or to increase profits (e.g. ancillary services...)

This article is focusing on the Ryanair case study in addition to understand the main model and values in the strategic management field. In addition, Ryanair is founded in 1985 and it’s an Irish low cost airline which has become Europe most popular aviation providers (Eleanor, 2016).

As a mathematical tool for the decision-maker the strength of game theory is the methodology it provides for structuring and analyzing problems of strategic choice. The process of formally modeling a situation as a game requires the decision-maker to enumerate explicitly the players and their preferred moves,

The strategy of Ryanair is partly described in the summary of this report. In the following points it will become clearer how this strategy is built up by using