Refer to “Dogfight over Europe – Ryan Airlines” case study to answer below question. Kindly provide excel/solution file computed for below question. No answer without computation will be accepted.

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Refer to “Dogfight over Europe – Ryan Airlines” case study to answer below question. Kindly provide excel/solution file computed for below question. No answer without computation will be accepted.

  1. Estimate Ryanair’s profit on the Dublin-London route if they enter with the proposed I£98 price and no incumbents react — i.e., they keep price and service levels constant.
  2. How much would Ryanair’s entry cost British Airways and Aer Lingus if they do not react?  How much would it cost them to match Ryanair’s fares?
  3. Taking into account these answers and any other relevant factors, how do you expect British Airways and Aer Lingus to react?
  4. What is your overall assessment of Ryanair’s launch strategy?
Exhibit 2 Staff Productivity of U.S. and European Airlines, 1978
Airline Staff Passengers per staff member Staff per aircraft
U.S. carriers:
American 40,134 762 158
Eastern 35,899 1,099 156
Pan American 26,964 358 355
TWA 36,549 665 156
United 52,065 657 156
European carriers:
Air France 32,173 333 314
Alitalia 17,040 374 279
British Airways 54,645 308 264
KLM 17,812 231 326
Lufthansa 29,400 460 320
Exhibit 4 British Airways Average Revenue and Cost per Passenger, 1986
UK£ Percent of Revenue
Revenue 151 166.5 100.0%
Operating expenses
Staff 32.4 35.7 21.4%
Depreciation & amortization 7.8 8.6 5.1%
Fuel & oil 28.9 31.8 19.1%
Engineering and other aircraft costs 8.9 9.8 5.9%
Selling 16.4 18.0 10.8%
Aircraft operating leases 3.1 3.4 2.0%
Landing fees and en route charges 10.6 11.7 7.0%
Handling charges, catering, & other 15.1 16.6 10.0%
Accommodation, ground equipment & other 17.7 19.5 11.7%
Subtotal 141 155.1 93.1%
Operating profit 10.4 11.4 6.9%

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