But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. It renegotiated contracts with ground handling firms at several airports helping to lower costs. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. All rights reserved. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. Our academic experts are ready and waiting to assist with any writing project you may have. Looking for a flexible role? Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. EasyJets no frills strategy does not only mean a cut in Cabin crew and denial of food, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining fare. So having considered the internal strengths and opportunities above, what are the potential opportunities available to EasyJet and what are the threats faced by EasyJet both from within the Airline industry and as a result of the world economy itself. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. Not that he was going away. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. Adjust your investments to EasyJet had a long-term contract with the aerospace giant that would require it to take delivery of more than 100 new planes, including at least 55 by 2024. Savings made from e-commerce is another source of value creation. 2023 Fortune Media IP Limited. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Its also hard to monitor the performance of each individual. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. At the same time, it was wooing at least some business travelers by differentiating itself from no-frills rivals like Ryanair and Wizz, offering some perks and serving first-tier airports. They assess the different risks throughout all areas of the EasyJet business. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the board. The customers of EasyJet have been using the Internet for making bookings. 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. Meanwhile, the U.K. has announced international travelwill resume as of May 17, but willoperate according to a traffic light system, with arrivals from red-, yellow-, or green-designated countries subject to different requirements. EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. 6. EasyJet currently has two suppliers, Boeing and Airbus. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. Implications from the strategy chosen. 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. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. Lundgren and the board were frustrated. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. Research expert covering mobility and logistics. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. Such lower costs benefit EasyJet initially as innovation is rewarded. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJet is forever trying to attain a cost level that is low relative to its competitors. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. Objectives To assess the psychological distress, anxiety, depression, coping strategies, Still, the connection was critical for airlines. And he was not a happy shareholder: For a decade, he had sparred with a succession of EasyJet CEOs and boardsfaulting them for overly ambitious and costly expansion plans and for ordering too many new aircraft from manufacturing giant Airbus. If you need assistance with writing your essay, our professional essay writing service is here to help! By mid-May, most of the major European nations had administered first doses to just over a third of adults amid critical vaccine supply shortages and concerns about rare but dangerous blood clots linked to AstraZenecasand Johnson & Johnsonsvaccines.Without a brisker vaccination pace, a third wave of infectionskeeps threateningto take hold in Europe. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. Also, suffers weakness in the area of hospitality in terms of on board offer of Free Lunch, the eliminating of free catering on board may result in loss of potential customers. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. Easy Jet: Company Operation Strategy : Historical-Hall-2840 easyJet's updated framework continues to build on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. In April 2020, EasyJet announced that it had reached an agreement with Airbus to defer delivery of 24 of the aircraft, meaning it would take on no new aircraft in 2021. 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. Of popular holiday destinations, only Portugal and Gibraltar were put on the initial green list, with no requirement to self-isolate upon return. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. Ryanair and Wizz Air cater almost exclusively to leisure travelers. Diversification. The U.K. is doing well: It had approved two vaccinesone from Pfizer and one from AstraZenecain December and a third, from Moderna, in early January; by mid-May it had given 68% of the adult population at least one shot. These risks may include: Shifts in consumer demand and preferences. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. major banks and insurance companies relocation call centres in Asia. Transfer the risk. Paperless operation, the management and administration of the company are undertaken on IT systems, which are accessed through secure servers; provide flexibility in the running of the airline. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. EasyJet says the funds will give it the firepower to grab slots at premium airports like Paris Orly, Lisbon, Milan Linate and London's Gatwick. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. Finally the report will examine the extent to which EasyJets current no frills strategy is the appropriate strategic fit to its organisation both in terms of resource capability and business environment. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. EasyJet also enjoys internal strengths in its operations in terms of efficient use of airports by reducing turnarounds to 30 minutes and below, EasyJet can achieve extra rotations on the high frequency routes. This is critical for EasyJet having analysed the competitive rivalry position in the industry. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Commercial airlines net profit in Europe 2013-2022, Commercial airlines change in passenger traffic in Europe 2013-2022, Number of passengers uplifted by United Kingdom airlines 2013-2021, British Airways - worldwide revenue 2010-2021, Leading airlines in Europe based on passenger numbers 2021, Net profit of commercial airlines in Europe from 2013 to 2022 (in billion U.S. dollars), Commercial airlines EBIT in Europe from 2013-2022, Earnings before interest and taxes (EBIT) margin of commercial airlines in Europe from 2013 to 2022, Year-on-year passenger traffic change of commercial airlines in Europe from 2013 to 2022*, Turnover of the air transport industry in the United Kingdom 2008-2018, Annual turnover of the air transport industry in the United Kingdom (UK) from 2008 to 2018 (in million euros), Total number of passengers uplifted by airlines based in the United Kingdom (UK) from 2013 to 2021 (in millions), Worldwide employment by registered airlines in the United Kingdom 2002-2020, Number of people employed worldwide by UK-based airlines between 2002 and 2020, Volume of turbine fuel consumed in aviation in the United Kingdom (UK) 2000-2020, Amount of aviation turbine fuel consumed annually in the operation of aircraft in the United Kingdom (UK) between 2000 and 2020 (in million metric tons), Annual revenue of easyJet plc from 2009 to 2021 (in million GBP), EasyJet plc: annual revenue by region 2018-2021, Annual revenue of easyJet plc from 2018 to 2021, by region (in million GBP), Annual operating expenses of easyJet plc from 2009 to 2021 (in million GBP)*, Annual earnings before interest, taxes, depreciation, amortization and rentals (EBITDAR) of easyJet plc from 2009 to 2021 (in million GBP), Annual operating profit of easyJet plc from 2009 to 2021 (in million GBP), Annual net profit of easyJet plc from 2009 to 2021 (in million GBP), Number of passengers carried by easyJet 2009-2021, Number of passengers traveling with easyJet from 2009 to 2021 (in millions), Passengers uplifted by EasyJet in UK 2008-2020, Number of passengers uplifted by EasyJet Airline Company Ltd in the UK from 2008 to 2020 (in millions)*, Number of seats flown on easyJet flights between 2011 and 2021 (in millions), Easyjet passenger transport volume 2013-2021, Passenger transport volume of Easyjet from 2013 to 2021 (in million revenue passenger-kilometers), EasyJet's passenger load factor 2009-2021, Passenger load factor of EasyJet between 2009 and 2021, Distance flown by EasyJet's passenger aircraft worldwide 2008-2020, EasyJet Airline Company Ltd's passenger aircraft kilometers flown worldwide from 2008 to 2020 (in million kilometers), Leading airlines in Europe in 2021, based on passenger traffic (in millions), Leading European airlines based on revenue 2021, Leading airline groups in Europe in 2021, based on revenue (in billion U.S. dollars)*, Liquidity balances of leading European airline groups 2019, European airlines with best liquidity as a share of 2019 revenue*, Liquidity equivalent days of revenue of the leading European airline groups 2020, Liquidity equivalent days of revenue of the leading European airline groups in 2020*, Number of passengers uplifted by United Kingdom airlines 2021, Leading airlines in the United Kingdom in 2021, by number of passengers uplifted (in millions), British Airways Plc's worldwide revenue from FY 2010 to FY 2021 (in million GBP), British Airways and subsidiaries: number of passengers carried 2011-2021, Number of passengers traveling with British Airways and its subsidiaries from 2011 to 2021 (in 1,000), Annual revenue of Ryanair from 2010 to 2022 (in million euros), Number of passengers carried by Ryanair 2011-2022, Number of passengers traveling with Ryanair from 2011 to 2022 (in millions). If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. Background Coronavirus disease-19 emerged in December 2019. The minute consumers start to make a choice based on this, and I think they will, an emphasis on sustainability will pay off, says BCG consultant Molenaar, and EasyJet has been out front in preparing for this.. Advantages: A bigger market share New target market The barriers to enter are higher Predatory pricing Strategic Issues facing the airline Industry 8.2. easyJets future 9. easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. Beneath the surface of EasyJets cosmetic cost savings of not offering free in-flight refreshments or different first, business and economy classes, was a philosophy of cost saving that permeated through the entire organisation. EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. Get in touch with us. This will help the companies decision makers understand where the organisation is now. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. At the end of March 2020, EasyJet grounded its entire fleet. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. Enabling risk management through a In mid-May 2020, the company revealed it had been hacked. Risk 2: Geopolitical instability. Now, more than a year later, with the pandemic still raging, and with many countries, including the U.K., having toughened travel restrictions in response to new strains of the virus, the airline industrys hopes for an early recovery are descending faster than an Airbus A320 on final approach to EasyJets home base at Luton Airport. Product Development. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices In essence, Lundgren told the BBC, thismeansonly the rich can go on holidays: The expense of these tests would be way over and above what the cost is of an average EasyJet fare, he said. It hoped these measures allow the public to feel confident flying again. 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. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. 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. This text provides general information. 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)). The54-year-old Greek-Cypriot entrepreneur hasnt had a formal management role in the airline since he stepped down as chairman in 2002, but he remained a major shareholder, owning more than a third of the company before the pandemic hit. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. In fact, Haji-Ioannou continued to press his allegations that corruption underpinned the Airbus contract, raising the matter at EasyJets general meetings in July and December. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. In 2020, it transported a EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. 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. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. The value chain analysis will show the total value added by the airline industry and EasyJet. The findings in this In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. easyJet will maintain its advantageous cost position through continued cost action. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. As Internet transactions have a lower cost associated with it EasyJet encourages its customers to book on-line by offering them a discount for on-line ticket reservations. The idea of remote working can also result in co-ordination and control weaknesses. This results in high levels of asset utilisation and reduced unit costs. There are potential opportunities in terms of new routes and expansion of services offered, EasyJet has already launched a number of new European routes, how about expansion into the Asian Pacific? As a result, it finished 2020 with more aircraft in its fleet than it had at the beginning of the year, despite the pandemic-induced travel doldrums. Today, a year after Easy Jets announcement, those perils still hang over the airline. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. Clicking on the following button will update the content below. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. The airline couldnt simply abandon it without jeopardizing any chance of a quick recovery when the crisis ended.Lundgren also thought the contract made long-term strategic sense. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2022, Quarterly smartphone market share worldwide by vendor 2009-2022, Number of apps available in leading app stores Q3 2022. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). The management of the element of working capital. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. easyJet holidays will continually optimise yields on packages sold, whilst developing the cities proposition allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. 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. But EasyJets contract required it to pay the aircraft maker at least $6 billion through 2023a sum considerably greater than the airlines entire current market Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). The threats are in terms of fines and rise in cost of raw materials. 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. The first step in the risk analysis process is identifying risks you think could affect your project. None would fly again until June 15. British Airways. Therefore, the low cost strategy is the ideal strategic fit to its environment. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. A strong and visible brand to create a high level of awareness with consumers. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. Lundgren had been an industry leader in trying to position EasyJet for this new world. EasyJet also have a reputation for paying low wages in line with its low cost strategy. 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. This will provide an evaluation of the external business environment in which the company operates. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The customers of EasyJet have been using the Internet for making bookings. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Also, only one type of aircraft is used, in order to minimise maintenance costs. It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. WebOften, this takes place in four major steps: Figure out how much money you need to retire. So when the industry was slammed by COVID-19, government was responsive to pleas for help. We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes.