Examining Ryanair’s Launch Strategy Essay Example

for start up Ryanair, compared to 264 staff per aircraft employed by British Airways - to sustain a price strategy of I£ 98 per passenger, Ryanair would need 59 staff only, and hence can limit staff costs to I£ 7.98 per passenger.

•The case states that Ryanair proposed to launch their Dublin-London service on a 44-seat Turboprop as compared to British Airways and Aer Lingus plying a fleet of aircrafts, ranging from Turboprops to Boeing 747. The use of only one kind of plane might help Ryanair limit its Engineering, other Aircraft related handling, ground equipment and maintenance costs.

•As per the case facts Ryanair has decided to work with London’s secondary airport, Luton instead of the main airport Heathrow from where British Airways and Aer Lingus operate. We can safely assume that at secondary airports like Luton, the traffic is not congested and fees might be comparably lower. This would help Ryanair reduce their Landing fees and en route charges, bringing down the costs further.

•We know that British Airways provides its own passenger and ground services, caters its own flights, and performs most of its own maintenance at Heathrow. If Ryanair were to outsource and contract out all these services to third-party providers, it would help limit its fixed costs and improve operating profit margin.

•British Airways sells tickets over phone, through retail point of purchase and agent network globally. If Ryanair were to contract this activity out to third party or use e-ticketing, it would help control cost of sales component and improve upon the operating profit margin.

In nutshell, the launch strategy that Ryanair has adopted is though valuable and rare at this point in the

market, but is quite imitable. With competition such has British Airways and Aer Lingus who have deeper pockets and sovereign backing, unless Ryanair differentiates itself on cost leadership, product/service benefits and branding, the current strategy won’t work, and would rather lead into a price war. Theoritically, the firms will keep driving down the price, till they reach their marginal costs, at which the economic profits will be zero, leading to exit of less profitable firms and consolidation in market place.