Team Lakers David Mangold Xiang Zhang Tiffany Lau Emily Nguyen Assessment of Ryanair Launch strategy is profitable Can still make money at a fare of 98 Irish pounds Response Expect no retaliation ID: 537061
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Slide1
RyanairTeam Lakers
David
Mangold
Xiang Zhang
Tiffany Lau
Emily NguyenSlide2
Assessment of Ryanair
Launch strategy is profitable
Can still make money at a fare of 98 Irish poundsSlide3
ResponseExpect no retaliation
Most small airlines failed historically
1
Price war would be impractical
Cost of retaliation > cost of
accommodation
1
Page 2 of “Dogfight over Europe:
Ryanair
”Slide4
Under accommodation, assume a loss of 10% of customers
Under retaliation, price is set 1 Irish pound below
Ryanair’s
fare
Indifference point occurs when there is a loss of about 42% of customersSlide5
Cost to retaliate = original profit-retaliation profit
=11.4 – (-58.1)
=69.5
Cost to accommodate = original profit-accommodation profit
=11.4 – (-5.25)
=16.65
Cost to retaliate is 52.85 Irish pounds more than to accommodate