Dogfight over Europe Ryanair (A) Case Solution

The resources that are available to both British Airways (BA) and Aer Lingus are supported by the government and a reputation of a number of years. The governments representing BA and Aer Lingus have many times made decisions in favor of their national flag carriers. Hence, the national flag carriers generally rely upon their government’s support, a well established local network, good relations and reputation with the Civil Aviation Authority (CAA), and a market presence of many years. Any new entrant to the airline industry and specifically the route from London to Dublin would have access to a large passenger base willing to travel on the route.

Ryanair has entered the route of Dublin to London due to the profitability potential on this route. Ryanair may also have been attracted to the route by reviewing the strategy of BA and Aer Lingus which has seen success and profitability over the previous many years. However, the losses of BA over the last one or two years may have encouraged Ryanair to exploit the opportunity while BA recovered on its losses. Moreover, the routes between London and Dublin have been operating successfully due to the large demand by the Irish community members traveling to and fro between London and Dublin.

The initial response of both British Airways and Aer Lingus is likely to be to develop stricter controls to restrict access of Ryanair to the market and to discourage getting clientele away from the existing BA and Aer Lingus. This is because both BA and Aer Lingus are consolidating their positions in the market. In the later stages when Ryanair has set its foot into the market and started familiarizing itself, the response of BA and Aer Lingus is likely to differ to the entry of Ryanair. For example, Aer Lingus is likely to focus on retaining its share and not give any share to Ryanair through quality and customer service initiatives.