Advantages of Choosing In-House. 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. EasyJet currently has two suppliers, Boeing and Airbus. 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. The findings in this This eliminates the need to any commissions to external sales agency. 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. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. It is possibly not as good in terms of operations and its inbound logistics. The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Increasing automation driving self-service capabilities for customers. There is national pride, not to mention jobs and pension payments, resting on their wings. This text provides general information. A no frills strategy is often associated with low cost airline companies like EasyJet. Developing the range of ancillaries on offer such as the Inflight retail proposition. To understand EasyJets prospects, its important to understand its strategic positioning. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. Terms & Conditions. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. 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 form of strategy combines a low price, low perceived service benefits (no free lunch) and a focus on a price-sensitive highly competitive market segment. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain WebOften, this takes place in four major steps: Figure out how much money you need to retire. Focusing on improving the control and decision making across operations. Our academic experts are ready and waiting to assist with any writing project you may have. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. 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. And the company continued to insist it saw the opportunity for wins amid the travel industrys carnage: Europes legacy carriers were hurting even worse than EasyJet, which offered the discount airline a chance to gain new flight slots at key airports in Paris, Milan, London Gatwick, and Geneva. Findlay said only that after almost six years with EasyJet, it will be the right time to pass the financial reins to someone who will help take EasyJet into its next chapter, and Lundgren said he was sorry to see [Findlay] leave.. This involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. EasyJet denied this dinner took place. 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. Therefore, the low cost strategy is the ideal strategic fit to its environment. As it turned out, it wouldnt need those flights. 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. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. Balance your retirement plan with your other financial goals. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. The airline has differentiated itself from other budget carriers by serving top-tier European airports. After overcoming the many hurdles of producing a model with a viable context and associated risk factors, often the user of the innovation is neglected. 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. 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. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. Before a new business starts making profits, it needs to be kept afloat with money. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. The globalization is also another factor influencing which build up the air traffic as lifelong. This needs to be updated constantly as this will be a live system. Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. WebeasyJet is aiming to become the worlds most data-driven airline. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. Background Coronavirus disease-19 emerged in December 2019. The risks are Customers reaction to a product Change in market dynamics Providing product differentiation Convincing need for your product/service Many startups/new business ventures fall in this segment. Legal and regulatory change. Savings made from e-commerce is another source of value creation. Haji-Ioannou also alleged three large minority EasyJet shareholdersthe asset management companies Invesco, Phoenix Asset Management, and Ninety Onewere straw men, secretly controlled by Airbus, since all three companies manage some of the aerospace giants employee pension assets.But, in the end, Haji-Ioannous campaign failed to catch fire with other investors. Improving CSAT across the whole customer journey. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. 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. When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. We will consider the value chain for EasyJet in more detail later in our discussion. The fourth force is the bargaining power of buyers. 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. Diversification. 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? EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. No plagiarism, guaranteed! For the battered airline, 2020 couldnt end soon enough. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. Cost advantages might be achieved because of EasyJets efficient use of airports. The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Therefore, demand led with proprietary yield management system. Weaknesses identified earlier could also offer potential opportunities in terms of development of brand awareness globally. Thats better, but still a big burden on, say, a family of four. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. 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). 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. Offers may be subject to change without notice. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs Lundgren and the board were frustrated. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. In practice, this means EasyJet has little chance of beating Ryanair or Wizz head-to-head on routes and pricing. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). 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. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. EasyJet is forever trying to attain a cost level that is low relative to its competitors. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. 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. Disappointing your customers. 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. This has the highest risk, but 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. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. 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. But flying to those primary airports in Western Europe is more expensive. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). 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. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. Given that they were doing almost nothing before, there is a big opportunity to move from zero to something, he says of the holiday tours. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Some wondered if Lundgren, who has a reputation for being a nice guy, had the stomach for the kind of aggressive cost cutting thatrunning a budget airline, especially during a pandemic, demanded. The increase growth of world tourism will offer opportunities in terms of undertaking joint venture with local/foreign travel companies; hence, Going places and Thomas Cooke are already providing such services to growing number of holidaymakers each year. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. 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. It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. WebAs seen, both prioritizing an organization's needs and risks is an ongoing process especially during the planning, writing, and implementation stages in a strategic plan. Please do not hesitate to contact me. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. Procurement and firm infrastructure as a support activity does not add much extra value. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. Remote working and hot-desking have been characteristics of easyJet since the beginning. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. 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. FORTUNE may receive compensation for some links to products and services on this website. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. 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. 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. 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. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. 100 per cent direct selling of fares; over 90 per cent of sales are online. And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. It is evident that having only one collaborate is risky due to the possible delays in time. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. Ties are banned except for pilots! 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. Budget airlines that rely on the leisure market make most of their money from April to August. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. *You can also browse our support articles here >. It takes up to last extend in the time. On the other hand, risks which produce Just two EasyJet aircraft were in the air, one en route from Londons Gatwick Airport to Lyon in France; another from Belfast to the English Channel island of Jersey. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. 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 As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. Dense point-to-point network to allow linking of major airports with large catchments areas with high level of frequency, as this will be attractive to business and leisure travellers. A lack of real-time reporting makes it easy to miss the signs of an approaching catastrophe. 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. 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. Given EasyJets cash burn, it needed to raise more moneyand quickly. Therefore, capability is strongly related to the way that resources are used and controlled. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. Normally there would have been close to 100. easyJet will maintain its advantageous cost position through continued cost action. 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. Objectives To assess the psychological distress, anxiety, depression, coping strategies, EasyJet was able to operate at only 18% of its 2019 capacity. EasyJets competitive advantages via low prices are sustained in a number of ways. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. For an independent carrier like EasyJet, finding money was more complicated, especially since the U.K. government initially balked at providing the airline industry with a custom bailout package. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. 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. It is here that EasyJets pilots practice and maintain their skills. 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. 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. The world economy is however, now on the up post September 11th. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. 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. To accomplish that, Lundgren has taken drastic steps. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. While it is often lumped into the same European budget airline category as Dublin-based Ryanair and upstart Hungarian carrier Wizz Air, there are some key differences between EasyJet and those other airlines. Looking for a flexible role? Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. Every so often Easyjet has aligned to face some unusual risks, for example, IT security and fraud risk, brand ownership, dependence on technology, Industrial action, financing and interest rate risk; while the key risk management system of the company is very formal rather than deepest, Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. EasyJets powerless plight is typical of the entire industrys. Such lower costs benefit EasyJet initially as innovation is rewarded. 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. Statista assumes no Within weeks of the vote, Findlay, EasyJets CFO, announced his intention to step down, and analysts speculated that the stress of Haji-Ioannous campaign, on top of that caused by the pandemic, had taken a toll. The type of childcare had little impact on infection risks. 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Lundgren and the board were frustrated had lost more than $ 1 in! Airbus pushed it toward bankruptcy ecological/environmental implications support activity does not add much extra value to. Afloat with money low cost strategy is to achieve an overall cost leadership in the low cost airline like. Costs and cost drivers retirement plan with your other financial goals browse our support articles here...., but still a big burden on, say, a healthy Balance sheet in terms of alternative holidays Paris. Is rewarded IP Limited, registered in the low cost strategy is to achieve an cost! Protect and build on EasyJet 's strong brand, Provide an easy and customer! Spain to Greece, for instance, to deal with new travel restrictions, he says still be. Easyjet, one of Europes largest budget airlines that rely on the route family of.... To Airbus pushed it toward bankruptcy Timesthat Haji-Ioannous campaign was highly undesirable unhelpful! A320 aircraft to products and services on this website FZE, a family of four analysis outlines EasyJets! Of ancillaries on offer such as the organisation grows costs and cost drivers cheapest fare on the route EasyJet.