What Is Your Assessment Of RyanAir
1. What is your assessment of RyanAir's launch strategy?
Ryan Air’s launch strategy of only having one route from Waterford to Gatwick Airport was a smart move because they didn’t enter into a route that was competed for by other established companies. It was a close flight and it was within the financial capabilities of the company to operate the flight for a profit. It also created brand awareness for the company which is very important when a small company like RyanAir is entering a market where Aer Lingus and BA pretty much own the market.
2. How do you expect the incumbents to respond? Why?
I would expect the incumbents to lower their prices for tickets for the London-Dublin route to try and keep RyanAir from gaining a significant portion of the market share. This price cut would eat into the immediate financials of these two companies but if they don’t do this, RyanAir will pose a bigger threat when they gain traction and start entering other routes that the incumbents are in. The two companies are forced to go into a price war with Ryan Air because brand loyalty is not very effective in the airline industry when most consumers were just looking for the cheapest deal to travel. This is apparent in the case when it said three quarters of a million travel by sea ferries or rail even if it took nine hours compared to one hour by plane.
3. How costly would it be for the incumbents to retaliate rather than accomodate RyanAir?
It is very costly for the incumbents to retaliate against RyanAir instead of accommodating them. As I mentioned above, one of the few ways the incumbents can retaliate is by reducing their flight prices and that will negatively impact their financials. It is very difficult for the incumbents to adjust their pricing because they operate with the government and can’t just lower prices to match RyanAir. Also, from a financial standpoint it would be better if the incumbents just accommodated RyanAir. In the case it says the customers
Ryan Air’s launch strategy of only having one route from Waterford to Gatwick Airport was a smart move because they didn’t enter into a route that was competed for by other established companies. It was a close flight and it was within the financial capabilities of the company to operate the flight for a profit. It also created brand awareness for the company which is very important when a small company like RyanAir is entering a market where Aer Lingus and BA pretty much own the market.
2. How do you expect the incumbents to respond? Why?
I would expect the incumbents to lower their prices for tickets for the London-Dublin route to try and keep RyanAir from gaining a significant portion of the market share. This price cut would eat into the immediate financials of these two companies but if they don’t do this, RyanAir will pose a bigger threat when they gain traction and start entering other routes that the incumbents are in. The two companies are forced to go into a price war with Ryan Air because brand loyalty is not very effective in the airline industry when most consumers were just looking for the cheapest deal to travel. This is apparent in the case when it said three quarters of a million travel by sea ferries or rail even if it took nine hours compared to one hour by plane.
3. How costly would it be for the incumbents to retaliate rather than accomodate RyanAir?
It is very costly for the incumbents to retaliate against RyanAir instead of accommodating them. As I mentioned above, one of the few ways the incumbents can retaliate is by reducing their flight prices and that will negatively impact their financials. It is very difficult for the incumbents to adjust their pricing because they operate with the government and can’t just lower prices to match RyanAir. Also, from a financial standpoint it would be better if the incumbents just accommodated RyanAir. In the case it says the customers