Ryanair Entry into Ukraine: To FLY or To Comply

Ireland-based Ryanair DAC (Ryanair) was the largest European low-cost airline, serving approximately 120 million customers in 34 countries in 2016–2017. The airline was considering entering new markets as its growth in existing markets had plateaued. The untapped Ukrainian market offered a huge growth opportunity for Ryanair as the country had recently signed a free-trade agreement with the European Union (EU) and was about to enter a visa-free regime that would increase travel between Ukraine and the EU. However, in July 2017, Boryspil International Airport (KBP) in Kyiv returned a co-signed service agreement that withheld several important terms and breached earlier verbal agreements it had made with Ryanair. KBP didn’t want to provide a preferential tariff for Ryanair’s flights to London because this would conflict with existing routes. It also insisted on solving disputes in Ukrainian courts rather than in UK courts, as Ryanair preferred. As the airline was confronted by KBP, Ryanair’s chief executive officer, Michael O’Leary, needed to decide what to do in order to enter the Ukrainian market: What were the available entry options and entry timing? How should Ryanair proceed?

This case can be used in undergraduate- and graduate-level courses on strategy, business economics or public policy. In strategy courses, it could be used to highlight the link between macro economics and business unit strategy. In a business economics and public policy course, it could be used to highlight regulatory issues and other non-market factors. After working through the case and assignment questions, students will be able to do the following:<ul><li>Define organizational strategy, and explain how strategy interacts with new market environments.</li><li>Describe the threats and opportunities firms face when they enter new markets, emphasizing the roles of market and non-market factors.</li><li>Evaluate the attractiveness of a new market, and compare the benefits of first-mover advantage with those of a strategic alignment between the new market entry and organizational strategy.</li><li>Explain how the existing business strategy of an organization interacts with its international strategy and how the demands of the international strategy might switch strategic shift.</li><ul>

• macroeconomics
• cost leadership