What competitive strategy should Aer Arann formulate to survive in this industry? What key steps should it take to implement this strategy?

Strategic option 1: stand and fight
The question is whether Air Arann wants to compete pricewise or benefitwise. Pricewise competition seems not very promising as Ryanair can exploit more economies of scale and thereby has lower operating costs. Air Arann fuel efficiencies depend heavily on the load factor which is very likely to decline due to a decreasing overall demand and Ryanairs competition on the same routes. Hence, as long as Air Arann and Ryanair are competing in the same market, the scale benefit will be on Ryanair’s side. Also, Ryanair is not depending on the inter-Ireland market and thus can follow an aggressive price strategy even with negative profit for some time in order to eliminate Air Arann. An increase in market share for Air Arann due to lower costs seems thus unrealistic.
Benefitwise, due to a higher service level,......

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Title: Air Arann Case - Peter Mcnamara Ucd, Dublin
Approximate Word Count: 916
Approximate Pages: 4 (250 words per double-spaced page)

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