Dogfight over Europe: Ryanair (A)

Ryanair, an Irish airline, was founded by two brothers Cathal Ryan and Declan Ryan. The
airline initiated services in 1985. At first,

Statement of the problem  Ryanair used only a 14-seat turboprop aircraft to

run a schedule service between Waterford and
Gatwick Airport. Within a year, they gained a
license to operate between Dublin and London.
 But for the first time, they would face other major
competitors like Aer Lingus and British airways
operating on the same route.
 Dublin and London route was quite lucrative for
both carriers.
 Not only airline carriers, passengers preferred rail
and ferry transport to travel through the route.
 Ryanair intended to use 44-seat turboprop for
which permission from officials was still pending.
 By the mid-980s, charter flights would transport
60% of all European passengers.
 Ryanair worked out a fare of I£ 98, which is much
lower compared to airlines competitors and higher
as to ferry and rail.

Causes of the problem

5C’s analysis

Company

Ryanair has positioned itself as a low cost carrier. They are intending to distinguish
themselves from other carriers in two ways. First, its employees would focus intently on
delivering first-rate customer service. Second, they would charge a simple and single fare for
a ticket with no restrictions. The company can also leverage the knowledge and experience of
Tony Ryan who had long worked with Aer Lingus.
Competitors

Ryanair faces a stiff competition from other airlines. Their main competitors include British
Airways and Aer Lingus. Both of them are national flag carriers.

British Airways

 Employees around 38000

 Extensive airline route networks, serving 145 destinations in 68 countries
 Biggest carrier of international passengers
 Fleet of 163 aircrafts, ranging from 44-seat turboprop to Boeing 747 with 400
capacity
 Huge capital investment, planning to buy 55 new aircrafts
 Extensive network of retail shops and agents for selling tickets
 Known for improving in-flight amenities
 Operating margin of 4.4% in Europe
 Staff productivity was lower i.e. 308 passengers per staff member

Air Lingus

 Collaboration with irish govt

 Dominated by tourist passengers
 Statement of objective- safe, efficient, reliable and profitable
 Limited home market, financial resources and cyclical product
 Offer maintainance and engineering training to other airlines
 Computer reservation system- computer consulting and data processing
 Hotel business
 Continuing operating losses on atlantic route
 Ageing jets required replacement
 Planning to sale a part of the company

Customers

 Lot of options to choose from, different airlines, ferry or rail

 Cost conscious cutomers

Context
  Unstable oil prices
 Single European act of 1986
 Technology advancements
 Delayed permission approvals
 Govt own flag carruies
 Less fleet less pollution

Decision criteria and alternative solutions

Criteria: maintaining low operating cost

 Collaborate with Guinness Peat Aviation for leasing aircrafts, tony ryan had strong
relations with the company, not require to have one time investment, get latest
aircrafts, can tap seasonal demand quickly, even maintenance is done by the lessors,
could focus on its employee productivity and customer service, benefit from the
network of the company. Cons: fixed outflow in the form of lease payments,
maintenance costs can be huge, interference by the lessor company,
