Dogfight over Europe AirlinesEssay Preview: Dogfight over Europe AirlinesReport this essayMarket status and structure before Ryanairs entryThe current market is a stabilised market, with strong players like British Airways and Aer Lingus. Both airlines established routes in the lucrative Dublin – London markets and tap on profits from this route to finance their other less profitable operations. British Airways, in particular, has been hungry for profits after emerging from losses sustained in the early 1980s due to the high fuel prices and the liberalisation and deregulation of the aviation industry in Europe, particularly in United Kingdom. Now that the aviation market is expanding, these airlines are enjoying the revenues from the market share which they have helped to stabilise over the last 10 years. Ryanair was bracing itself against these big players for a share of the lucrative market with the announcement of its entry.
Budget: A Budget is a Budget, and a Budget is a Budget in terms of passenger numbers within the EU and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The total government funding for all EU countries is approximately €12 billion at this time. This includes the EU budget for the last five years by a margin of just under one per cent. So while the UK Government still needs more to boost the economy and boost tax payer support, it has increased spending on other EU projects. Of course the amount of EU funding for each of those projects would be a small minority, however, this is less of a concern for the UK government compared to its EU partners in the Euro-area. This brings us to the Budget. The Budget is a “budget”, and a Budget is a Budget in terms of passenger numbers within the European Union and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The budget includes £6 billion for the EU, £1 billion for the EU single market, and £5 billion from the EEA for all the other areas (with £1 billion for the UK only in total funding). A budget comprises more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. A budget includes more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. The budgets for both Euro-area countries are smaller – as shown in Figure 5. Both countries spent roughly 30 percent fewer public money on public services over the last 10 years than they did for the last 10 years. They are almost certainly the largest single source of public spending for the European Union’s single market at the moment. As with all government funding allocations, the figures show that this is not simply the result of the larger government budget being distributed among the other European and UK fiscal areas, but also that its public spending in Europe has grown over the recent 10 years in a manner that is comparable to the growth of overall public expenditure in the EU. Figure 5
Figure 5
Source: European Finance Review/2013 Budget, European Fiscal Council, European Parliamentary Budgetary System 2013/2014, Parliamentary Budgetary Systems 2013/2015, European Parliament, European Communities and the Committee on Finance 2012: UK Budget and Budget 2014: Budget and Budget 2015: Budget and Budget 2016: Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2019: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget 2022: Budget and Budget 2024′: Budget and Budget/2015 Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2030: Budget and Budget 2030: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget/2020 Budget and Budget 2024: Budget and Budget/2015 Budget and Budget 2018: Budget and Budget 2022: Budget and Budget 2025: Budget and Budget/2018 Budget and Budget 2030: Budget and Budget 2019: Budget and Budget 2027: Budget and Budget 2027: Budget and Budget 2030: Budget and Budget 2027: Budget and Budget 2027: Budget 2024: Budget and Budget 2027: Budget and Budget 2027 The budget in Figure 5 shows
Budget: A Budget is a Budget, and a Budget is a Budget in terms of passenger numbers within the EU and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The total government funding for all EU countries is approximately €12 billion at this time. This includes the EU budget for the last five years by a margin of just under one per cent. So while the UK Government still needs more to boost the economy and boost tax payer support, it has increased spending on other EU projects. Of course the amount of EU funding for each of those projects would be a small minority, however, this is less of a concern for the UK government compared to its EU partners in the Euro-area. This brings us to the Budget. The Budget is a “budget”, and a Budget is a Budget in terms of passenger numbers within the European Union and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The budget includes £6 billion for the EU, £1 billion for the EU single market, and £5 billion from the EEA for all the other areas (with £1 billion for the UK only in total funding). A budget comprises more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. A budget includes more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. The budgets for both Euro-area countries are smaller – as shown in Figure 5. Both countries spent roughly 30 percent fewer public money on public services over the last 10 years than they did for the last 10 years. They are almost certainly the largest single source of public spending for the European Union’s single market at the moment. As with all government funding allocations, the figures show that this is not simply the result of the larger government budget being distributed among the other European and UK fiscal areas, but also that its public spending in Europe has grown over the recent 10 years in a manner that is comparable to the growth of overall public expenditure in the EU. Figure 5
Figure 5
Source: European Finance Review/2013 Budget, European Fiscal Council, European Parliamentary Budgetary System 2013/2014, Parliamentary Budgetary Systems 2013/2015, European Parliament, European Communities and the Committee on Finance 2012: UK Budget and Budget 2014: Budget and Budget 2015: Budget and Budget 2016: Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2019: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget 2022: Budget and Budget 2024′: Budget and Budget/2015 Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2030: Budget and Budget 2030: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget/2020 Budget and Budget 2024: Budget and Budget/2015 Budget and Budget 2018: Budget and Budget 2022: Budget and Budget 2025: Budget and Budget/2018 Budget and Budget 2030: Budget and Budget 2019: Budget and Budget 2027: Budget and Budget 2027: Budget and Budget 2030: Budget and Budget 2027: Budget and Budget 2027: Budget 2024: Budget and Budget 2027: Budget and Budget 2027 The budget in Figure 5 shows
Budget: A Budget is a Budget, and a Budget is a Budget in terms of passenger numbers within the EU and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The total government funding for all EU countries is approximately €12 billion at this time. This includes the EU budget for the last five years by a margin of just under one per cent. So while the UK Government still needs more to boost the economy and boost tax payer support, it has increased spending on other EU projects. Of course the amount of EU funding for each of those projects would be a small minority, however, this is less of a concern for the UK government compared to its EU partners in the Euro-area. This brings us to the Budget. The Budget is a “budget”, and a Budget is a Budget in terms of passenger numbers within the European Union and the UK. This is the level of participation that I’m talking about so far this year, however, these numbers are also subject to change for the year to come since this is only a small fraction of the total UK government spending. The budget includes £6 billion for the EU, £1 billion for the EU single market, and £5 billion from the EEA for all the other areas (with £1 billion for the UK only in total funding). A budget comprises more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. A budget includes more budgeted public money than any other level of funding available to any country, and is highly supported. However, the spending on each of those countries, as well as the general expenditure on public goods (including public services) will not grow in the foreseeable future. The budgets for both Euro-area countries are smaller – as shown in Figure 5. Both countries spent roughly 30 percent fewer public money on public services over the last 10 years than they did for the last 10 years. They are almost certainly the largest single source of public spending for the European Union’s single market at the moment. As with all government funding allocations, the figures show that this is not simply the result of the larger government budget being distributed among the other European and UK fiscal areas, but also that its public spending in Europe has grown over the recent 10 years in a manner that is comparable to the growth of overall public expenditure in the EU. Figure 5
Figure 5
Source: European Finance Review/2013 Budget, European Fiscal Council, European Parliamentary Budgetary System 2013/2014, Parliamentary Budgetary Systems 2013/2015, European Parliament, European Communities and the Committee on Finance 2012: UK Budget and Budget 2014: Budget and Budget 2015: Budget and Budget 2016: Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2019: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget 2022: Budget and Budget 2024′: Budget and Budget/2015 Budget and Budget 2017: Budget and Budget 2018: Budget and Budget 2030: Budget and Budget 2030: Budget and Budget 2020: Budget and Budget 2021: Budget and Budget/2020 Budget and Budget 2024: Budget and Budget/2015 Budget and Budget 2018: Budget and Budget 2022: Budget and Budget 2025: Budget and Budget/2018 Budget and Budget 2030: Budget and Budget 2019: Budget and Budget 2027: Budget and Budget 2027: Budget and Budget 2030: Budget and Budget 2027: Budget and Budget 2027: Budget 2024: Budget and Budget 2027: Budget and Budget 2027 The budget in Figure 5 shows
Status of British Airways– competing with strong US carriers in Europe and US in an environment that was towards free market competition– focusing on international routes which provided nine-tenths of its revenue– high cost of operations high number and wide variety of aircraft(thus high maintenance cost) high employment costs with vast ground handling and representative staff extensive network (high IT cost) ticket sale systemStatus of Aer Lingus– partially Government owned, thus obligated to operate on certain routes (eg international routes) despite years of operating losses– 40% owned by BA– main revenue came from tourist passengers who were price sensitive– involved in several more profitable side lines (as computer reservation consultants, providing maintenance and engineering services, etc)– having aging fleet which needed heavy investment to replace. Possible sale of company partially to finance expenditureRyanairs strategyThe demand for air travel between the Dublin and London has probably stabilized over the 10 years from the stagnant market share of half a million air travellers. With the introduction of Ryanairs low cost strategy, the following may be expected:
– with the competitive price of IЈ98, many travellers from this stabilised market pool would choose to fly with Ryanair, especially if Ryanair could maintain the proclaimed high quality service to its passengers.
– Ryanairs 4 daily flights provide much flexibility to the travellers who could travel at their time of convenience in a day– Ryanairs usage of 44-seater turboprop would greatly enhance its occupancy rate and at the same time, cost Ryanair much less to operate when compared to BAs operational cost since BA used bigger capacity planes for this route
Market analysis:– the low price of Ryanair will attract many travellers from the established stabilised market, resulting in a decrease to the market share of the other competitors (eg BA & Aer Lingus). These competitors would be forced to lower their fare prices as well and could even remove the restrictive conditions of their low fare tickets in order to retain their market shares. Consequently, there will be an overall decrease in the airfare for the Dublin- London market in the short run. New travellers, i.e. those who would not have travelled before, may emerge to take advantage of Ryanairs new lower prices.
Meanwhile– Consumers would probably take the competitors offer of low airfare with scepticism because travellers have the existing knowledge on the practice and conditions associated with low air fares provided by the competitors, such as BA.
– Competitors would probably need to convince and win back their customers trust, possibly by spending money to sent out signals (eg through advertisements, press releases, travel agents, etc) in order to convince the travellers of the genuineness of their offered fares.
– In addition, Ryanair has its fare share of convincing the travellers of its service, reliability and safety since it is a relatively new to the market as compared to its competitors. The service training, marketing costs, etc would also be a costly challenge for Ryanair given that its air fare is so lowly priced.
Elasticity of demandThe demand for low air fare will probably be highly elastic due to following reasons:-The time taken to adjust to the competition is fairly short given that the established competitors already have the resources and capabilities to meet the low fare priced by Ryanair.
– Closeness of substitutes are easily available with the competitors providing neck to neck services at competitive prices.Hence, the entry of Ryanair