Market maturity: 3
Market share: 3
Business Model: 4
Data Provided/ Interaction: 5
1-Fares Rate: 5
2-Target Consumer: 6
3-Dublin/London Route Condition: 7
4-Airports condition: 7
Efficiency Claims by Ryan Air: 9
2-Operational Cost Savings: 9
3-Reduced Fares: 10
Commission Analysis: 10
Efficiency Conclusion: 13
Commitments Proposed by Ryanair 14
1- Commitments proposed in Phase I: 14
2- Commission’s assessment of Phase I commitments: 14
3- Commitments proposed in Phase II: 154- Commission’s assessment of Phase II commitments: 15
5- Final Set of Commitments proposed by Ryanair: 15
6- Final Commission Assessment: 16
The main purpose of this paper is to analyze the proposed fusion between Ryanair and Air Lingus, the main players on Dublin/London routes. It aims to evaluate thesituation of the merger and its influence on the market behavior, competition and quality of services provided.
Ryanair, one of the largest airlines in the world, is an Irish-based “low cost” airline offering point-to-point scheduled air transport service on more than 400 routes across Europe. With more than 40 million passengers carried in 2006
Aer Lingus is the former Irish “flag”-carrier,which has changed its business model in recent years to offer mainly “low cost” point-to-point to short-haul flights. It operates more than 80 routes and carried more than 8.6 million passengers in 2006. The company is limited to Irish routes both ways operating from Dublin, Shannon and Cork.
The commission is the executive body of the European Union. The body is responsible for proposinglegislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union. The Commission operates as a cabinet government, with 27 Commissioners, one Commissioner per member state.
With reference to this subject, the Commission receives a notification of a proposed concentration by which Ryanair acquires, within the meaning of the Merger Regulation,control of the whole Aer Lingus group by way of a public bid announced on 23 October 2006. In order to evaluate its economical feasibility, the commission studies the Raynair proposal methodically according to different points as will be mentioned in our study below.
Based on the different data collected from the detailed information provided by the Commission, market surveys and theperception of the consumers, both airlines subject of this study (Ryanair and Aer Lingus) are operating similarly through the different lines within their area of activities and specifically on the Dublin/London line.
The Commission relies on data provided to imply that, according to the negligible differences between the two business models (Ryanair/Aer Lingus), it is quite certain that theunilateral effect will threaten existing and new comers to the market. It also strengthens its investigation by looking at different aspects such as market maturity, and how market shares would be distributed.
In reference to the information provided, the Commission sees that the number of passengers (4,250,000-4,300,000) carried by scheduled airlines and the number of weeklyrotations (320) operated by scheduled carriers didn’t experience any serious change for three consecutive years (2004, 2005 and 2006). This flat behavior of the market along with the absence of seasonal pattern leads to consider the Dublin/London route matured and consequently not attractive to new comers or even for existing carriers planning for expansion.
Ryanair acknowledges that the competitive...