Estimate the profit Ryanair would earn on the Dublin-London route if they enter with the proposed price of I98 and none of the incumbent firms react to their entry (i.e. they keep their prices and service levels constant).

We don't have Ryanair's average revenue and cost per passenger in 1986. We only have British Ariway's. What I got from the reading is that "Ryan brothers intended to run four round trips per day with a 44 seat turboprop"

• Number of passengers per year = 4 * 44 * 365 = 64240
• Total revenue = 64240 passengers * I98 = 6295520

Please help me answer this question!

Exhibit 4 British Airways Average Revenue and Cost per Passenger, 1986 Revenue Percent of Revenue UK 1 151.3 166.5 100.0% Operating expenses Staff 32.4 35.7 21.4% Depreciation & amortization 7.8 8.6 5.1% Fuel & oil 28.9 31.8 19.1% Engineering and other aircraft costs 8.9 9.8 5.9% Selling 16.4 18.0 10.8% Aircraft operating leases 3.1 3.4 2.0% Landing fees and en route charges 10.6 11.7 7.0% Handling charges, catering, & other 15.1 16.6 10.0% Accommodation, ground equipment & other 17.7 19.5 11.7% Subtotal 140.9 155.1 93.1% Operating profit 10.4 11.4 6.9% Source: Case writer calculations, based on British Airways Prospectus, February 11, 1987.