Dogfight Over Europe: Ryanair (A)
In the mid-1980s, the European airline industry was tightly controlled by governments. Major airlines like British Airways (BA) and Aer Lingus were government-owned and served as national carriers. These "flag carriers" had little competition and often kept prices high, especially for flights within Europe.
After World War II, international agreements and airline alliances made it hard for new companies to enter the market. The International Air Traffic Association (IATA) even worked like a cartel, controlling prices and routes.
However, change was coming. People were unhappy with high fares, and charter airlines (which offered cheaper, non-scheduled flights) became popular in the 1960s. By the 1980s, they carried 60% of European passengers. At the same time, traditional airlines were struggling financially because of rising fuel costs, new wide-body jets, and economic slowdowns.
In the U.S., airline deregulation in 1978 led to lower prices and new low-cost airlines. This inspired similar reforms in Europe. The Single European Act of 1986 promised a unified market by 1992, which meant the airline industry would gradually open up to competition.
Some countries, like the UK, moved faster. The British government planned to privatize British Airways, which had become profitable after big staff cuts and better service improvements. Aer Lingus, Ireland’s national carrier, faced losses on long-haul flights and relied heavily on government support. It tried to make money by running other businesses like hotels and IT services.
Into this changing landscape came Ryanair, founded by Cathal and Declan Ryan. Their father, Tony Ryan, had experience in the airline leasing industry. After a small start, Ryanair got permission in 1986 to fly between Dublin and London (Luton Airport), directly competing with BA and Aer Lingus on a very profitable route.
While BA and Aer Lingus charged up to I£208 for a round trip, Ryanair entered with a flat fare of I£98 and focused on strong customer service. They aimed to attract passengers who were otherwise using slow ferry and rail routes due to high airfares.
