Competitor Analysis: Ryanair, British Airways, and Aer Lingus

(Quantitative and Qualitative analysis tables omitted for preview. Available via download)

It can be expected to see a retaliation from Aer Lingus towards Ryanair as the upstart company operates directly within the most profitable airline route that Aer Lingus controls. The disruption of this cash route could prompt an aggressive Aer Lingus response. British Airways, on the other hand, could also find justifications for retaliation given the positive public relations campaign surrounding the first independent airline, following the deregulation of the 1980s, that is capable of standing up against the state monopoly on air travel. The British Airways control over the airline business in the United Kingdom is clearly threatened by the low-cost pricing model of Ryanair; at the same time, however, BA does not expect Ryanair to become a major international competitor unlike Virgin airlines and the company’s upstart nature works against it, as there is little previous evidence to support the idea that private airlines can operate in the modern age with sufficient profitability. Both Aer Lingus and British Airways could likely support the idea of accommodation, given that the development and branding of the Dublin-London route under Ryanair could potentially lend itself to the acquisition and buying out of Ryanair by its competitors at a later date. Acquiring an already profitable airline business like Boeing and cash route is an alternative option available to the established companies.

Ryanair can expect one of two reactions from Aer Lingus and British Airways. The first option, retaliation, is an expensive proposition for both of the established airlines, as it would necessitate cutting fares to remain competitive with the upstart company. This method, however, would result in proportionally lower returns on passenger fares and, even assuming an increased volume from the influx of ferry and sea travelers, would result in overall reduction of profits and perhaps even an operating loss for both Aer Lingus and British Airways. The second option, accommodation, would see Aer Lingus and British Airways choosing to let their fares remain at their current levels. In this case, Ryanair would presumably fill up their entire plane capacity and cost Aer Lingus/BA a total of I£8.8 million. Regardless of the option chosen, it is clear that Ryanair, given the numbers mentioned above, operates at a much higher level of efficiency and thus retains far more of its revenue as profit compared to Aer Lingus/British Airways.