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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, AirArann has a competitive advantage but the question is whether customers are willing to pay higher prices for that. Given the fact, that inter-Ireland flights are very short, it might be the case that customer do not value additional services, as the flight will only take 20-40 minutes...
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