Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. Our mission to make business better is fueled by readers like you. And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. WebThe following operating risks are associated with pursuing sustainability initiatives as part of a marketing plan: Loss in profitability Loss of focus Just as sustainability would seem to be a rallying cry for consumers, some companies have jumped on sustainability as a This time, he succeeded in scheduling a showdown vote for May 22, 2020. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. The value chain analysis will show the total value added by the airline industry and EasyJet. This results in a very strong competitive rivalry in the industry. In terms of analysis, EasyJets distribution activities are important in terms of e-commerce, as EasyJet like to consider itself as the webs favourite airline. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. Still, the connection was critical for airlines. Thats better, but still a big burden on, say, a family of four. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. Cost advantages might be achieved because of EasyJets efficient use of airports. For the battered airline, 2020 couldnt end soon enough. To what extent does EasyJets concentration on Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. Where normally there would be the roar of engines and the trundling rumble of buses and baggage carts, the whistling wind is often the only sound. The fuel-efficient jets could help EasyJet reduce its carbon footprint at a time when consumers and governments seemed increasingly likely to hold airlines accountable for their climate impact. Focusing on improving the control and decision making across operations. The first step in the risk analysis process is identifying risks you think could affect your project. The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. To accomplish that, Lundgren has taken drastic steps. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. WebOften, this takes place in four major steps: Figure out how much money you need to retire. The company negotiated with trade unions to move more of its pilots and cabin crew on to seasonal contracts, which would allow the company to better match its expenses to periods, such as the summer, when it generated moreprofit. Enterprise risk management does not create the organisations strategy, but it helps in understanding the risks associated with alternative strategies being considered and, ultimately, with the adopted strategy. 1 Based on share price of 6.62 at 30 September 2021 SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. This eliminates the need to any commissions to external sales agency. So when the industry was slammed by COVID-19, government was responsive to pleas for help. But at the same time, Haji-Ioannou and his family sold off a portion of their shares, bringing their total holdings to less than 27% of the company by May 2020. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. It now owns just over half its fleet, down from 70% in 2019and six of every 10 planes it does own have been pledged as collateral against its loans. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. We are happy to help. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). Research expert covering mobility and logistics. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. WebeasyJet is aiming to become the worlds most data-driven airline. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Protecting and building brand awareness and consideration. 8. With Ryanair maintaining high margins despite reducing yields through strict cost management. EasyJet in its pursuing of low-price strategies may be prepared to accept the reduced margin either because it can sell more fares than competitors. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. It hoped these measures allow the public to feel confident flying again. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. Previously it used telesales and now sales are through e-commerce web site. POLITICAL Following the European deregulation of commercial aviation, a fleet of low cost carriers are reshaping the local airline landscape. WebSupport Risk Management by conducting risk awareness workshops and trainings. But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. Transfer the risk. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. Are you interested in testing our business solutions? EasyJet also has a strong cash flow position primarily from its policy to retain profits and reinvest it back to the business. Capabilities to turn resources into advantages, Customers demand change to more flexible schedules, comfortable and relevantly cheap services, Extremely high competition for customers and resources. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. major banks and insurance companies relocation call centres in Asia. But nothing has been normal for EasyJet since March 23, 2020. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. In April 2020, the airline was able to negotiate a$845 millionloan through the U.K. governments COVID Corporate Finance Facility for large U.K. employers. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. EasyJet also have a reputation for paying low wages in line with its low cost strategy. Potential negative outcomes include bad publicity and a Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. quick order processing). Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. 3. A Balanced scorecard approach is need to effectively conclude a balanced perspective on EasyJets resource capability in order to ensure that the low cost strategy is supported and is. EasyJet denied this dinner took place. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. A strong and visible brand to create a high level of awareness with consumers. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)). The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. Furthermore, a lifetime history of D 100 per cent direct selling of fares; over 90 per cent of sales are online. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. Create a retirement strategy that diversifies your assets and manages risk. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. 2 airline by market share for each airport it serves. EasyJet cost efficiency is achieved in a variety of way as shown in the following diagram: The success of low-fare (cost) strategy is primarily dependent on the maintenance of a low cost base. The website features a map of the world that displays a small airplane icon for every flight in the air, based on radar and transponder data. Budget airlines that rely on the leisure market make most of their money from April to August. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. These risks may include: Shifts in consumer demand and preferences. Standardisation in its activities as an airline leads to both economies of scale and a simpler product, which is cheaper and easier to distribute. The company carries out It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. Effective use of digital and data tools to underpin growth and deepen customer relationships. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. They have focused on expanding into new markets in Eastern Europe. Prioritising slot-constrained airports as these are where customers want to fly to and from and as a result have superior demand and yield characteristics. Budget airlines that fly point-to-point, such as EasyJet, can easily stimulate their demand by running price promotions and advertising and then shifting flight schedules to cover those new bookings. 1 or No. WebThere is one main reason which influences these economic factors is the recession in the Easy jet. Therefore, the low cost strategy is the ideal strategic fit to its environment. This has the highest risk, but The fourth force is the bargaining power of buyers. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. The threats are in terms of fines and rise in cost of raw materials. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. This strategy is focused on keeping costs down and EasyJets policy of no free lunch and efficient use of airports by limiting turnaround to 30 minutes. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Ryanair had even tried to capitalize on this connection between vaccinations and travel in its marketing, rolling out at jab and go advertising slogan in January, which it had to withdraw after objections from Britains Advertising Standards Authority that it was not promoting responsible behavior. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. Remote working and hot-desking have been characteristics of easyJet since the beginning. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. And the simulators have been kept busy virtually around the clock, even during the pandemic, as EasyJet has sought to keep its pilots properly certified so they will be ready when flying returns. The pace of recovery will be determined by vaccination rates, Alton Aviations Ryan says.The problem for EasyJet is that almost all the routes it flies involve Europe, and the continent was lagging far behind on vaccinations. As funding from operations are clearly a major contributor to value creation. Web1) Economic Risks. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. It takes up to last extend in the time. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. EasyJet is forever trying to attain a cost level that is low relative to its competitors. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. At a budget carrier, you need to be aggressive and ruthless and abrasive, says Joachim Kotze, an airline industry analyst for financial research firm Morningstar. WebOften, this takes place in four major steps: Figure out how much money you need to retire. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. Rely on the human factor as one of the Airbus contract is effectively a commodity product it telesales! Pass the one million mark since the beginning modern, efficient and relatively environmentally friendly meet the medium-term target 100m+! 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