Strategy | BA | Aer Lingus |
Accommodation
| PROS - They won’t lose a significant market share. Ryanair can have a maximum of 64240 passengers, which is a small percentage of the total market share.
- BA usually targets Business class customers and leisure travelers who are used to high prices. So their chances of deviating to Ryanair are less.
CONS - BA faces a chance to lose its future market share if Ryanair expands in future.
- British Airways is going for privatization in near future. It’s position can be threated in eyes of investor if seen in a weak position
| PROS - Aer Lingus has a diverse pool of activities ranging from computer reservation system, computer consulting, hotel business etc. So it would not like to unnecessarily focus on losing a small market share.
- They won’t lose a significant market share. Ryanair can have a maximum of 64240 passengers, which is a small percentage of the total market share.
CONS - Tony Ryan was an employee of Aer Lingus. If his sons’ company becomes successful in its operation, Aer Lingus would be against it.
- The Dublin-London route is a profit-making route for Aer Lingus. It would not like to lose out its profits to a small company.
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Retaliation
| PROS - British Airways would be able to decimate its competition even before it begins.
- Customers won’t have any value addition in using Ryanair.
CONS - It would lead to huge losses for British Airways. Since BA is going to get privatized, this approach does not seem viable.
- This can lead to a price war. Ryanair can further reduce its prices. This would lead to more losses.
| PROS - Aer Lingus would be able to decimate its competition even before it begins.
- Customers won’t have any value addition in using Ryanair.
CONS - This can lead to a price war. Ryanair can further reduce its prices. This would lead to more losses.
- Aer Lingus faced tens of millions of pounds of investment to replace aging jets in its fleets. It cannot afford to burn money by starting a price war.
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Selective Retaliation
| PROS - If a new line of services is offered, the existing line won’t get affected.(Example- Something like Jetlite)
- Both losses and market-share loss can be taken care of.
- Specific sections of the society(Ex- Students) can be targeted.
CONS - It would still give an opportunity to Ryanair to build a base.
- This would require a lot of marketing and implementation expenses.
| PROS - If a new line of services is offered, the existing line won’t get affected.(Example- Something like Jetlite)
- Both losses and market-share loss can be taken care of.
- Specific sections of the society(Ex- Students) can be targeted.
CONS - It would still give an opportunity to Ryanair to build a base.
- This would require a lot of marketing and implementation expenses.
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2. On the basis if the above three options, we would suggest that British Airways and Aer Lingus go with the selective retaliation approach.
Ryanair’s strategy will work because they are having a very low operation cost. The occupancy Ryanair is targeting is 100% and with a capacity of 44 seats this should be a easy task. Using effective pricing techniques, Ryanair can also attract customers who are using ferries. In case of a selective price war, Ryanair still hold the edge due to its very low operating costs.
