Ryanair’s Launch Strategies- Strategy Case Solution Sample




Ryanair Case


From the perspective of a consultant to the Ryan Brothers:
–What is your assessment of Ryanair’s launch strategy?
–Using the competitor analysis framework (goals, strategies, assumptions, capabilities), how do you expect Aer Lingus and British Airways to respond?
–Sketch out what you believe to be the game played by Aer Lingus and BA.
–How costly would it be for Aer Lingus and BA to retaliate versus accommodate Ryanair’s launch?




“From the perspective of a consultant to the Ryan Brothers:

–What is your assessment of Ryanair’s launch strategy?

Ryanair in its inclusion of the British and the Ireland airspace used to most basic of the techniques that is taught in marketing that is to find a possible entry point or a market that has unsatisfied overprices and underserved customers and swoop in to provide a service that is specific as well as like a fresh breath of air for those customers. The British airspace between UK and Dublin was heavily controlled by only the BA airlines, and air Lingus who are taking into view the low competition, as well as the higher demand and frequency of customers in this route, had kept the price of the ticket at around 200 pounds. On the liberalization and privatization of the various airline routes by the government after the world war II many of the private planes not only started their airline but also provided charter facilities to circumvent the bigger nationalized carriers. Ryan Air while entering into this fray decided to book their trump card on two main things. The first being the price which they drastically reduced to 98 pounds per ticket which resulted in a huge gap between that of Ryan air and the other airlines that ply that route. They also complimented this reduction in price with making a guarantee to give good facilities as well as meals that resulted in a combines USP of good service at a much lower cost. Thus they created a completely new niche for themselves that helped them to create a segment of customers that were much more price conscious and would like to travel on Ryan Air in comparison to other higher priced airlines. However, this type of strategy is a double-edged sword as it comes with any cons that are needed to be taken utmost care to make this strategy a success. The Cons comprises of making sure that in the face of lower revenue due to the lesser price of the tickets doesn’t result in a loss-making structure. For this the aircraft companies that follow this type of structure results in giving very high priority to keeping a skeletal crew that will be able to do multitasking and thus result in a highly stressed crew. Aircraft companies like this also have to make sure that the aircraft remain in the air most of the time as this will reduce the turnaround time and results with the maximum number of flights and a thus higher number of passengers plying and higher income. All this together results in a very constricted structure and administrative system that needs to be followed by strictly. There have been many airlines that have not been able to manage the above-mentioned points and has fallen victim to bankruptcy after facing multiple years of loss-making ventures. If Ryan Air can actually get through this obstacle, then it will truly create its place to be a carrier for a different and strong segment of people and thus will never have a dearth of passengers for their various flight and routes.

–Using the competitor analysis framework (goals, strategies, assumptions, capabilities), how do you expect Aer Lingus and British Airways to respond?

Goals – The goal that has been set here by Ryan Air is very evident. It wants to tap into the market that has been ignored by the bigger airlines by keeping their focus on the cartels that they have formed with higher. The airlines of BA and Air Lingus can take two steps in order to curb it. One is to increase the possible amenities that are associated with it and tag a luxury brand with themselves which will create a different segment for them and thus will remove their competition from Ryan air. However, they need to understand that this will completely remove the lower segment of people from their customer list or else they can reduce themselves to the level of Ryan Air and slash their prices and fight on the common turf

Strategies – While trying to find our strategies let’s look into a PEST analysis for the present scenario

Political – Generally Heavy Support of Government to their flagship carriers and is something that might be good news for the flagships but on the other hand a government looking to increase tourism will heavily support airlines like Ryanair

Economical – Low Income of Ireland economy after recession may lead to an increased impetus towards Ryan Air

Social – Lower cost will attract a higher demographic customer but on the other hand he lacks luxury tagline with Ryan air will stop the frequent business travelers to use it

Technological – The improvement of technology in the hangers and aerodromes may result in a successful completion of Ryan Airs target low turnaround and may be the doom of the bigger airlines


The strategy should focus on creating a diversified airline of the flagships one providing higher amenities thus attracting the business class while another low-cost subsidy to eat into the profit of Ryanair.

Assumption – All the above strategies are done by taking into the assumption that Ryan Air will not enter into the higher cost segment, will continue to operate indefinitely and Government will be more inclined towards the flagships.

–Sketch out what you believe to be the game played by Aer Lingus and BA.

Players – BA and AL, Ryan Air
Possible Strategies – Retaliate or Accommodate
Customer base = V
Assumptions – 75% of the customers are price conscious
Cost of ticket price of BA and AL – 151 pound
Cost of ticket price of RA – 98 pound
Sample size – 100 customers

Successive Game Theory

Case 1 – BA and AL retaliate (Lowers to 80 Pounds) and RA keeps same price (98 pound)
Existing Customer of BA and Al = 25

Customer defecting from RA(Approx 30%)

Total BA and Al customer = 25 + 20 = 70

BA and Al Revenue = 45* 80 = 3600 pounds

RA Revenue = 55 * 98 = 5390 Pounds

Case 2 – BA and AL accommodate and keep same price while Ryan Air reduces

This is not a valid case as Ryan Air has no incentive to reduce as it already pays at a lower cost

Case 3 – Both keep same

Existing Customer of BA and Al = 25

BA and Al Revenue = 25 * 208 = 5200 pounds

RA = 75 * 98 = 7350


In all the cases of game we see that Ryan Air is earning more than BA so that needs to be ignored but BA is earning the higher income when it maintains it price and caters to niche customers so it will maintain its price


–How costly would it be for Aer Lingus and BA to retaliate versus accommodate Ryanair’s launch?

To answer this, we have to look both from a qualitative and a quantitative point of view.

British Airways and Aer Lingus are national carriers and thus they have a huge responsibility of uploading national interests above profits and gains. This is the most primary thing that has to be kept in mind while analyzing the pros and cons of retaliating or accommodating.

Ryan Air’s point of differentiation is only the price. Considering that the national carriers have certain standards to maintain, it would be very problematic on their part to come into a price war with Ryan air. Though as of now, Ryan Air is trying to replicate the services offered by both other airlines but eventually they can cut down on those extra frills any day to reduce their cost whereas British Airways or Aer Lingus cannot do that to reduce the price. British Airways primarily focuses on the long haul international journeys and thus shifting their concentration and efforts on competing on a small route between Dublin and London might not be fruitful enough in the long run. Along with that, the current price tag of 140 Pound is 30% higher than the price which Ryan air is offering and if they want to cut down the prices to retaliate with Rainier there will be a huge decline in the perceived value of the existing customer base of British Airways which they cannot afford to lose. Also since the fleet sizes and competitions are very different for British Airways and Aer Lingus with Ryan Air, cutting down prices might take a hit on the operations of both the airlines. So they might think that they can gain more customers by reducing the price is But eventually they might end up spending more for the operations Which are totally different for both the airlines.

So from the analysis, we can see that it is beneficial for British Airways and Aer Lingus to accommodate Ryan Air and instead of cutting down prices they should more focus on the differentiation which they have with Ryan Air. They can advertise their differences and try to gain more customers to fill the gaps in the price-sensitive customers which they lose to Ryan Air. Instead of cutting down prices they can invest that amount to increase operational efficiency and customer service thus increasing customer satisfaction and making a mark in the airline’s industry.


For the sake of mathematical calculations, let us assume the following –
1. Ryan Air is flying with full capacity
2. Operating margin is same as BA or Aer Lingus
3. British Airways and Aer Lingus share the profit or loss equally and have equal operational cost in the said route

Number of passengers in a flight of Ryan Air is 44. So, total number of passengers flown in a year
44 (passenger at a time) * 4 (flights per day) * 365 = 64240 passengers per year.
Thus BA and AL loose 32120 passengers each yearly.

So, individual revenue lost for BA or AL = 32120 * 151 (average of highest and lowest fare as per case) = 4859756 pounds each per year.
So, now even if they retaliate, the loses will be shared among three airlines (considering Ryan Air still get average occupany in their flights), loses are 3239827 pounds each.

From this also we can see its better for BA and AL to focus on their strenghts and accommodate Ryan Air to focus on service quality and new customer acquisition insteadof retaliating.


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