Ryanair Launch Strategy Assessment

Ryanair Launch Strategy Assessment: Commencing service on the lucrative Dublin-London route in 1986, Ryanair faced high threat from the main competitors, British Airway (BA) and Air Lingus (AL), and aimed to provide an inexpensive alternative to existing flight options with comparable in-flight amenities and improved customer services. By offering a I£98 single fare with no restrictions and running 4 round trips per day, Ryanair could attract customers through the significantly lower price and the greater flexibility of booking travel and tourism. Using the smaller 44-seat turboprop, Ryanair could maximize its capacity utilization and achieve almost full load as compared to the current 60-70% load for BA and AL, and the lower margin would be compensated by the larger volume of sales. By implementing these elements of a low cost strategy, Ryanair should be able to gain market shares not only from BA and AL, but also gain customers from the rail and ferry services, as these substitutes took much more time but did not provide a favorable price/value tradeoff.

However, cost of operation would be a major concern for Ryanair. Attempting to differentiate itself through first-rate customer services and amenities comparable to what AL and BA provided, Ryanair might face the risk of unclear positioning and choosing a strategy that was inconsistent with its limited resources. Additionally, Ryanair’s plan to fly larger jets soon might clash with rivals’ strategy and cause competitor retaliation. Overall, Ryanair’s strategy seems effective and partly consistent with its resources and goal, but certain adjustments might be necessary to build a clearer positioning. A further analysis of competition is needed to help Ryanair better construct the strategy.

Competitor Analysis: Response from British Airway (BA) and Air Lingus (AL)

BA had the resources to retaliate Ryanair if they wanted to. They could buy smaller planes, use the Dublin-London planes for more profitable long-haul flights, and match Ryanair in price, thereby driving them out of the business. BA could also attract customers by providing featured and value-added services. Additionally, they could cooperate with travel agents and increase booking via computerized reservation systems while Ryanair didn’t have comparable systems.

However, BA focused on international and transatlantic flights between major airports and was unlikely to respond to Ryanair. Even though BA might incur loss on Dublin-London route due to Ryanair’s entry to the market, the effect would be small as 90% of BA’s revenues came from international flights. British Airways could also anticipate that Ryanair would not want to expand beyond short regional flights and leave such routes to Ryanair and focus resources on international travel. In addition, BA was preparing for its privatization in 1987 and would allocate most resources on this important goal, thus they might just overlook Ryanair.