1. Describe Ryan Air’s entry strategy:
Ryan Air started ‘small’ by initially focusing on the Dublin-London service four round trips per day with a 44-seat turboprop. At this time, they have yet to receive permission to fly larger jet aircraft on the route. They also focus on 2 main areas: First-rate customer service and simple, single-fare tickets with no restrictions. Additionally, Ryan Air would offer meals and amenities that were comparable to what is provided by Aer Lingus and British Airways.
2. Evaluate Ryan Air’s entry strategy:
When entering the market, the Ryan brothers took into account these factors: 1. Potential routes and customers: They started off by focusing on competitors’ most lucrative routes (Dublin-London route is reputed to be quite lucrative for both Aer Lingus and British Airways).
They also took into consideration other untapped potential customers (Passengers from train and sea ferries).
2. Pricing strategy: They are late-movers and therefore can fully utilize low price entry strategy to quickly gain market share. Low fares can also be used to stimulate demand. 3. Financial resources: Their father, Tony Ryan (co-founder of Guinness Peat Aviation, largest aircraft leasing company in the world) provides sufficient wealth to invest a million Irish pounds in his sons’ efforts to launch an airline.
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Simply said, they successfully competed against British Airways and Aer Lingus by utilising their low-price/quality-service entry strategy and also by taking the abovementioned factors into consideration.
3. Place yourself in the shoes of the CEO of BA or AEL. How would you respond to Ryan Air’s entry?
Both British Airways and Aer Lingus are well-established air carriers and the Dublin-London route is understood to be a highly lucrative route for both airlines. Although it may seem like a good idea to compete against Ryan Air by opting to offer lower fares and greater flight frequencies, this would, however, end up causing them more of a problem as was mentioned in the text, fares on domestic routes were often kept high to subsidize international services. In other words, both BA and AEL have a certain reliance on the high fares of the domestic route, and if they still do pursue a lower fare/greater flight frequency battle against Ryan Air, this would mean that they would have to offset this by refocusing certain parts of their international services. The only problem with this is that this could inherently jeopardize the brand image of both British Airways and Aer Lingus.
As a CEO of BA or AEL, as both BA and AEL are well-established air carriers, rather than focusing on the price-war against Ryan Air, I would instead focus my attention on other aspects of my air carriers that Ryan Air still have yet to establish such as brand image, customer loyalty and even focus on improving certain aspects that could be synonymous to the brand image such as customer service and possibly even consider outsourcing certain functions to reduce costs.
