1. Analyze competitive environment prior to the entry of Ryanair.

Generally, the airline industry is not very attractive. Barriers to entry are fairly low in this business, as deregulation made it easier for new entrants to lease planes and pick off the more profitable routes of the major carriers. Moreover, airports are public property so new airlines could get access to gates and resources. In addition to being able to lease planes, maintenance, ground crews and other aspects of the service could also be outsourced. In addition to low barriers to entry, pricing rivalry in the industry is fairly high. While initially regulated by the government, deregulation likely will lead to increased price rivalry with airlines forced to compete on quality and service. Transparency of prices makes it much easier for consumers to compare prices and the new entrants made friendly competition (informal collusion) less feasible. Switching costs for consumers were also low and consumers prove to be very elastic, willing to switch airlines to chase the lowest costs, particularly within the tourist segment. The truth was that before the entry of Ryanair, the passenger Ireland-England market seemed to be at maturity and dominated by the duopoly Aer Lingus and British Airways. In 1984, British Airways registered record profits and in 1986, operated one of the world’s most extensive airline route networks, serving 145 destinations in 68 countries.

2. Condition under which Ryanair enter the market

Aviation industry in the 50s was highly regulated; there were only the “flag companies”. It was an industry where there was a major challenges to generate profits.
Internal features of the industry were:
- Inefficiency (because of colonies)
- Supported by governments (corporations)
- Bilateral (coordination to divide the market)
- Aircraft with little capacity
- Limitations