Dog fight:Part A

Q3. Competitor’s response

Considering equal market share for both the competitors in the market before Ryanair’s operations.
Hence, BA and Aer Lingus both would lose 64240/2= 32120 passengers per year.
Loss in Revenue = 32120*166.5 = 5347980 pounds per year.
If Aer Lingus and BA did not come up with any reactions to Ryanair’s entry, each of them could lose a
substantial amount of revenue and customer base.

British airlines: Since they are well established in the market and may have a large amount of
investments available (government owned), they can sell tickets at a loss ( price lower than Ryanair)
for a short period to capture the market. Ryanair, being launched just a year ago, may not have
sufficient capital to reduce the price of tickets more (the profit margin for air tickets is very sleek- (eg
BA profit in Europe- 4.4%-pg4)) and sell them in losses which may force them to either shut their
operations or come up with an alternative plan.

Aer Lingus: Well Established. Have multiple sources of income

Since, their air transport business is already not doing that great (Pg5), it makes no sense to
reduce the price of their tickets and go into more losses. They may use their maintenance
services and technology to portray themselves as a premium airlines and not budget airlines.
Though this may reduce their market share, but would provide them with a different customer
base (upper middle class, business travellers etc)

They may also collaborate together, thus reducing the number of flights between Dublin-London
with an effort to use full capacity of the flight (earlier 60-70% full), reduce operational expenses
and provide competitive pricing.