RyanAir: The ' Southwest' of European Airlines

            
 
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Case Details:

Case Code : BSTR059
Case Length : 14 Pages
Period : 1985 - 2003
Organization : Ryanair
Pub Date : 2003
Teaching Note : Available
Countries : Europe
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Background Note

Ryanair started operations in July 1985, flying between Waterford in the southeast of Ireland and London's Gatwick airport. Three brothers, Catlan, Declan and Shane Ryan were the founding shareholders of Ryanair, which was set up to offer low-cost no-frills services between Ireland and London.

The airline began operations with a fifteen-seater turbo prop commuter plane which was leased to the company by Guinness Peat Aviation (GPA),6 of which their father, Tony Ryan, was the chairman. Ryanair got an early break when, shortly after its formation, the UK and Irish governments signed a new air services agreement that deregulated air traffic between the two countries. In anticipation of the increased air traffic between the two countries, the Irish government decided to license a second Irish operator on the route from Dublin to London. Ryanair happened to be the only airline to apply for the license. It was granted the license to operate on the Dublin (Ireland)-Luton (London) route.

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By the end of the first year, the Ryanair had carried 5,000 passengers and had a staff of 57. To meet increased operational requirements, Ryanair purchased two more planes (24-year-old 50-seaters) from Dan Air.

The airline quickly realized that it could capitalize on the market by offering cheap fares, and set its initial fare at IR 95 (1 Ireland Pound was equal to approximately 1.44 US Dollars) for a return ticket. The price was 20 percent lower than the cheapest fare of its competitors. Gradually, the airline replaced its old aircraft with newer aircraft purchased from TAROM, a Romanian air transport company. By the end of 1986, services to London were firmly established. However, further expansion had been blocked because the requisite licenses could not be obtained. To overcome this, Ryanair acquired an 85 percent stake in London European Airways (LEA, a Luton-based airline). LEA had been flying scheduled flights to Amsterdam and Brussels from London, but the flights had been suspended in early 1987...

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6] GPA was set up in 1975 as an aircraft leasing company. Tony Ryan was a founder member of GPA.

 

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