STRATEGIC MANAGEMENT (CASE STUDY)

Strategic management (case study)

Strategic management (case study)

Why has the Commission prevented a new entrant like Ryan air from expanding?

Ryan air is not stopped from expanding. It continues flawlessly free to elaborate as it has up until now, through organic growth. It can furthermore conquer other airlines as long as it doesn't impede competition.

However, Ryan air is no longer a little new entrant airline: as considers the number of travellers assisted, Ryan air itself cites latest IATA statistics as asserted by which Ryan air graded in 2006 on the first location with 40,532,000 worldwide travellers and therefore conveyed more worldwide travellers than Air France, Lufthansa or British Airways.

While Aer Lingus is lesser than these carriers, it conveyed 8.6 million travellers in 2006 (around 7.5 million on short-haul routes). (Frequent Flyer, 1995)

The amalgamated entity would have a fleet of more than 150 airplane utilised on short-haul (intra-European) paths, with firm instructions for more than 160 added short-haul aircraft.

The comparable consequences of the transaction were analysed on one-by-one short-haul paths between Ireland (in specific Dublin) and diverse European destinations. On these markets, both Ryan air and Aer Lingus are apparently the most significant operators bearing simultaneously round 80% of all intra-European travellers to/from Dublin. Further, their undertakings exactly overlap on 35 paths on which more than 14 million travellers are conveyed annually. (Deming, 1982)

Both the Commission's market enquiry and interior articles of both carriers verified that on these paths, Ryan air and Aer Lingus apparently comprise the major comparable constraint on each other. This is furthermore taken into account by both of them when working out their charges and other components of their comparable behaviour. For all these travellers the transaction would lead to important elimination of alternative between accessible airlines. (Caves, 1962)

 

What of Ryan air's assertion that buyers would have kept more than €100 million in the first year?

Competition next liberalisation of the EU's air journey market has conveyed important advantages to consumers. It has endowed new, low-cost, carriers to go in the market and agitate up a commerce that had long been overridden by nationwide flag carriers and government-regulated fares. It is this new dynamic affray escorted in by liberalisation that has kept buyer hundreds of millions of euros.

The €100m number concerns to a suggested "remedy" by which Ryan air would consign to smaller Aer Lingus' short-haul fares by 10% for a time span of one year after getting a beside monopoly place at Dublin airport. While this is a headline-grabbing number, this kind of firm promise would be nearly unrealistic to monitor. Moreover Ryan air provided no firm promise on what would occur to Ryan air's own charges, or what would occur to Aer Lingus charges after the first year. (General Accounting Office, 1996)

What is certain is that Ryan air suggested ending the strong affray between Ryan air and Aer Lingus at Dublin aerodrome that has shoved charges down and conveyed Irish buyers an expanding alternative of direct air journey attachments from ...