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Old 31st March 2008 | 18:12
  #25 (permalink)  
Sunfish
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Joined: Aug 2004
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From: moon
The problem with the Ryanair business model is that it is a variant of an old game played in manufacturing industry. That's the "I will price my product at cost and wait for everyone else to go broke, then I'll raise my prices and clean up" model.

It is a very very dangerous business strategy to have one part of your business cross subsidising another part of it, yet it appears to this simple person that this is exactly what Ryanair has done - selling the flight for next to nothing and then making your profit on all the add-ons and peripheral charges (food, drink, baggage, car hire, etc.).

It's dangerous because such a model is very sensitive to changes in volume, as well as consumers "learning" cheaper behaviour, taking the cheap product and avoiding the expensive "extra's".

It would appear the stock market agrees.

Or there is the old Jewish saying "If you give your product away for free you will have lots of customers."
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