Dogfight over Europe Ryanair A Case Solution

Case Solution

In April 1986, the Ryan brothers and sisters announce their fledging Irish airline travel Ryanair will rapidly commence service between Dublin and London. The first time, Ryanair will face formidable rivals for instance Aer Lingus and British Airways around the major route. Students are asked for to judge Ryanair's entry and anticipate the response of incumbent service companies.

Excel Calculations

Questions Covered

1. Can the Ryan brothers make money at the I₤98 fare they propose?  Please prepare a breakeven analysis to prove your point.

NOTE:  Landing fees are fees that airports charge to airlines as part of the airport’s revenue base. A specified landing fee such as X dollars or X Irish pounds is charged to the airline for every passenger that lands or takes off on a given flight. 

2. How do you expect Aer Lingus and British Airways to respond to the Ryanair entry into the Dublin/London market?  Why?  If you were Aer Lingus, what would you do in response to Ryanair’s proposed new route?  Would you retaliate by lowering fares?  To what level?

3. How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair's launch rather than allow it?  You need to have a cost to the combination of British Airways and Aer Lingus in Irish pounds of accommodating the Ryanair entry (not cutting their fares) and a cost of retaliating against that entry with some sort of price change.

4. What is your overall assessment of Ryanair's launch strategy?  Is it going to work?