Dogfight over Europe: Ryanair Team Jedis Julia

Transcript:Dogfight over Europe: Ryanair Team Jedis Julia:
Dogfight over Europe: Ryanair Team Jedis Julia Chen Zhiyun Chen Antonio Olmos Wendy Phu 1. What is your assessment of Ryan Air’s launch strategy? 2. How do you expect Aer Lingus and British Airways to respond? Why? How costly would it be for Are Lingus and BA to retaliate against Ryanair’s launch rather than accommodate it? 3. Can the Ryan brothers make money at the Irish pound 98 fare they propose? Questions - 4 round trip flights every day on a 44 seater - offered meals and amenities comparable to competition - two distinctions: - Employees focus on first-rate customer services - Charge a simple, single airfare with no restrictions Irish pound 98 Ryanair's Launch Strategy Choice of 44 seater aircraft - since Aer Lingus and BA only filled about 60% of their flights, it's better to have fewer seats Cheaper airfare - attempt to capture the market Simple, single fare with no restrictions - appeal to the consumer market First rate customer service - customer loyalty Strategy Assessment The lower rate would capture new customers on the margin rate lower than the 99 discounted rate from BA & Aer Lingus non-restricted with premium customer service Total air passengers on the route have been stagnant the past 10 years may not capture enough passengers to make a profit May face retaliation from BA and Aer Lingus to recapture the market Ryanair: Profit at Irish Pound 98? Aer Lingus & BA currently offer a similar unrestricted trip for 208 Also offer a discount fare at 99 Required a one month in advance booking Aer Lingus & BA are well established airlines Offer full range of classes of services First class to economy Flights typically 60-70% full Aer Lingus and British Airways Response Aer Lingus and British Airways could offer their discounted fares at 97 Both airlines have abundant capacity Majority of cost is fixed Marginal cost would consist of extra 2 of discount and the cost of meal Marginal revenue more than offsets incremental costs Aer Lingus and British Airways Response... Marginal cost of Ryanair to retaliate is very low Lowering their fare prices would increase their revenue by a large amount. The cost of retaliating against Ryanair would be a lot smaller than accommodate it. Aer Lingus and BA have a better chance of remaining profitable in the Dublin-London service. Retaliation Against Ryanair THANK YOU!!