Dogfight over Europe: Ryanair
(1) Describe and assess Ryanair’s launch strategy (In 1986, when they entered the Dublin-London route)
Ryanair was launched at a time that did not seem highly favorable to the airline industry. As a matter of facts, in 1986, the market was still recovering from the aftermaths of the OPEC oil embargo and the 1979’s oil crisis which led to an important increase in the jet oil prices, along with a recession that cut demand for air travel and thus gave an impulse to the aircrafts’ cheaper substitutes, such as trains and ferries. Despite that high bargaining power of suppliers and threat of substitution products that made the external environment unfavorable, the Ryan brothers’ wish to launch their airline did not diminish. The company’s first service was launched in 1985 between the southeastern Irish city of Waterford and Gatwick Airport, located on the outskirts of London. One year later, the newborn company started operating between Dublin and the British capital. 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. Last but not least, charter flights, which thrived during the 1960’s to bypass the European regulations and to tap the increasing demand for leisure travel, were transporting 60% of all European passengers by the mid-1980’s. 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
Ryanair was launched at a time that did not seem highly favorable to the airline industry. As a matter of facts, in 1986, the market was still recovering from the aftermaths of the OPEC oil embargo and the 1979’s oil crisis which led to an important increase in the jet oil prices, along with a recession that cut demand for air travel and thus gave an impulse to the aircrafts’ cheaper substitutes, such as trains and ferries. Despite that high bargaining power of suppliers and threat of substitution products that made the external environment unfavorable, the Ryan brothers’ wish to launch their airline did not diminish. The company’s first service was launched in 1985 between the southeastern Irish city of Waterford and Gatwick Airport, located on the outskirts of London. One year later, the newborn company started operating between Dublin and the British capital. 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. Last but not least, charter flights, which thrived during the 1960’s to bypass the European regulations and to tap the increasing demand for leisure travel, were transporting 60% of all European passengers by the mid-1980’s. 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