Individual Analysis of Ryanair
Individual Analysis of Ryanair
The aviation industry that Ryanair was attempting to tap into was highly regulated and controlled by European government, which created cartels to fix pricing. Routes and schedules were given exclusively to certain airlines, which was set up to deter privately owned, more profitable United States airlines from entering the market. In 1978, the United States domestic airline industry deregulated, putting pressure on European companies to do the same. The United Kingdom started to deregulate bilaterally, which in turn, made the market for Ryanair more attractive. The purpose of this report is to analyze how Ryanair could compete based on pricing, route scheduling, and entry into the Dublin-London service area directly competing with the big carriers.
In assessing Ryanairs launch strategy, we need to look at the two ways it would attempt to distinguish itself from the competition, price and customer service. British Airways or BA as we will now call it, and Aer Lingus were the two major players in the industry. They were also were double the price of Ryanair for the same routes. However, if you booked a month in advance with BA and Aer Lingus, the discounted pricing was comparable. As a result, Ryanair does not have a competitive advantage based on price for customers who plan travel far in advance. The opportunity for Ryanair is the customer that needs to book a flight fast, maybe an unexpected business trip, family emergency, or impromptu vacation. They are price-sensitive with a lower income level or other preferences and less willing to pay for the add-on services. Similar to the Southwest model they need to be more of an air bus, not unlike a commuter train or ferry. On the other hand, if a customer is not in a rush to get to their destination, the rail or ferry at half the price might be an option. With that said, Ryanair has to not only become the price leader in the Dublin-London area competing against the big carriers, but a viable alternative to the casual ferry and rail traveler who never thought air travel was affordable. That leads us to the second distinguishing feature of Ryanair, customer service.
Good Customer service, in any industry, increases the customers satisfaction. I dont, however, believe it is a determining factor to sway a customer to Ryanair. As stated previously, Ryanair is dealing with a cost conscious private consumer. This traveler is less inclined to care about customer service, and more about affordable fares and how fast they can reach their destination. Another concern is that this has been a stagnant passenger market over the past ten years. Ryanair believes they can take a portion of the existing market share based on price and customer service. In my analysis, being the price leader