RYANAIR CASE ANALYSIS

SECTION E, GROUP 2
8/19/2013

Also. We also expect greater number of people moving from ferry to Ryanair air services to save 8 hours of travel time  At a time. mostly after careful comparison as opposed to making an impulsive decision.  Market Segments : o Based on purpose of travel : business and leisure/vacation o Based on spending ability : high(business class) and low(economy class)  Benefits sought by consumer o Value for money o Customer service o Unrestricted prices o Tourist : promotional fares  Motivation for consumers behind purchase o Saving travel time for customers who are currently using the ferry o Saving expenses for customers who are travelling by BA or Aer Lingus  Customer would purchase an air ticket.000 + 525. only one return ticket is likely to be purchased. Cathal and Declan Ryan in 1985. Apart from that. Assuming that 70% of those people will shift to Ryanair to save time (while the rest might still want to travel by rail and ferry to save cost). They started with a 14-seat turboprop aircraft between Waterford and London. 3. Customers  Market Size: Currently half a million round-trip passengers fly the route each year.  Purchase frequency would depend on the type of consumer. engineering and maintenance contractors. Collaborators Ryanair should have alliances with the caterers as they intend to provide in-flight food. The number of airline customers has been stagnant for a decade. 2. . They are an integral part of the ecosystem of airline business. Company Ryanair is an airline service founded by Tony Ryan and his sons. After its success and proving their mettle. the other collaborators such as fuel purchases.000 customers.Ryanair Case Analysis Situation Analysis (on the basis of 5Cs) 1. staff accommodation etc would be similar to any other airlines.business travellers would probably take frequent flights while tourist demand would largely be seasonal. Bulk purchases are unlikely. we could potentially have 500. but those out for leisure travelling would expect some promotional prices. which was a lucrative route in terms of profit. they started operating between Dublin and London. we can capture the market of customers who are opted for rail and sea ferries instead of aircraft.  Consumers’ needs and preferences would vary according : o Purpose of travel: Business class consumers’ need for excellent customer service might be largely stable.

In UK and New York.  British Airways has a wide range of ticket prices and services offered to customers. it was concluded that yes. Thus. Fares could potentially go down. which during the time of slowdown is a viable option Social: The travellers can be moved from rail-and-ferry to the airline mode of travel. The market potential was two fold . the Single European Act called for the creation of unified European market by 1992. The open and competitive market could result in more customers choosing to fly rather than other modes of travel. They are earning much more profits in other segments – airline related services and other non-airline businesses. with the introduction of Boeing 747. they might consider reducing their fleet of jets. Context Political: In 1986. the decision to foray into the market by Ryanair was worthwhile.those travelling by rail or sea ferries might chose to spend more so as to save their time 4. It was also planning to upgrade its intercontinental fleet. there were prospects of liberalization in the European airline industry.  Aer Lingus and British Airways have very high fares. Competitors  Ryanair is directly competing against well established players . thus opening up a new potential market. The events impacted the European airlines as they had high fixed costs. BA has an exceptional advantage over Ryanair from this perspective-they are operating at an entirely different scale from Ryanair. Technological: In 1970s. with more flights operating between popular destinations and new flights being introduced in other locations.  Aer Lingus has to replace its aging jets and might have to sell a part of the company to finance the capital expenditures. Hence. Price conscious customers might chose to travel via a more economic option Ryanair. especially if the customer service offered is first-class as Ryanair claims. Is the decision to launch the proposed serviced by Ryanair worthwhile? On the basis of the market potential. a huge fleet of 163 different varieties of aircraft. Economic: Ryanair is offering economical options to air travellers on Dublin-London route. Oil prices shot up and the ensuing recession cut the demand for air travel. Some questions that were discussed: a. BA provided its own passenger and ground services which Ryanair might not be in a position to afford right now. It has an extensive route network – 145 destinations in 68 countries. 5.o Options available in the mode of travel . So. The routes and network might get denser. There could be numerous effects of this political development. sea ferries and rail  Ryanair is positioning itself as a low cost carrier in the airline market. capacity of aircraft carriers was increased.Aer Lingus and British Airways. It is well known for its service to business travellers.

c. (based on the calculations that there were a half a million round trips every year)  Moreover. the passengers of rail and ferry would consider shifting to air travel since the value addition with respect to the Ryanair was immense. the value addition in the form of services and staff from BA and Aer Lingus was higher. b.  Concentrate on its own segment and let the competition cater to the market IMPLICATIONS: This would mean peaceful co-existence with the competition. Also. IMPLICATIONS: Thus. though BA and Aer Lingus would face losses in the competing sector. 1370 passengers travelled by British Airways and Air Lingus every day. it could cannibalize the competition by offering lower prices. The use of PORTER’S FIVE FORCES to analyse the case Threat of new Entrants: Low  High entry barrier due to large capital requirement  Restricted airport slots availability. Although some part of the market would be lost. but are cheaper by 43  People in hurry opt for lesser time consuming Buyer’s Bargaining Power: Low  No loyalty and as Ryanair is the cheapest they will easily shift  Price sensitive Supplier’s bargaining power: High  Route permissions  Change in the price of fuels  Capacity of the flight Internal Rivalry: High  As Ryanair is low cost it poses threat to BA and Aer Lingus  BA and Aer Lingus can cut down costs to compete with the new fare provided (as given 99 is charged for a month pre booking) therefore highly competitive Thank You . This can be termed as GOOD COMPETITION. namely British Airways and Aer Lingus can go about approaching the competition in the form of Ryanair in two ways  Lower its prices and get involved in a price war. How would the incumbents respond to it? The incumbents. This can be termed as BAD COMPETITION. it could concentrate on maintaining its services and catering to the premium segment. Threat of Substitutes: Medium  Trains and ferries take 9 times the travel time.

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