Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. In 2020, it hemorrhaged the same amount. 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. With so much uncertainty, leisure travelers are holding off on booking summer flights, prolonging EasyJets pain. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Lundgren says he likes the site because it keeps airlines honest: When customers can see that their inbound aircraft hasnt even taken off from its previous destination yet, theres no point in feeding them the bad news with an eyedropper, as airlines traditionally had done, gradually announcing slightly longer delays. The airline also managed to reduce itsfuel cost per seat flown by 2.9% through a series of small changes: instructing pilots to use only one engine when taxiing, for example, and to climb to cruising altitude as fast as possible, since level, higher-altitude flying is more fuel-efficient. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. major banks and insurance companies relocation call centres in Asia. The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. )The crisis has also posed complications for the 54-year-old Lundgren that his competitors dont face, including some particularly unwelcome excess baggage in the form of Stelios Haji-Ioannou. After listing the risks and putting them in a risk matrix, the report will then aim to explain how the risk will affect easyJet and justify the position of it in the risk map. 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. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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, This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. The value chain analysis will show the total value added by the airline industry and EasyJet. It is evident that having only one collaborate is risky due to the possible delays in time. Please do not hesitate to contact me. 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. 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. Study for free with our range of university lectures! 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. Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. 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. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, 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. No plagiarism, guaranteed! These risks may include: Shifts in consumer demand and preferences. 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. Legal and regulatory change. 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. 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 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. 3. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. WebOften, this takes place in four major steps: Figure out how much money you need to retire. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. 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. When the risks are specific to a certain activity the risks will be managed, and maintained This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. WebeasyJet is aiming to become the worlds most data-driven airline. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. Focusing on improving the control and decision making across operations. 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 Thats better, but still a big burden on, say, a family of four. Balance your retirement plan with your other financial goals. All office-based employees are encouraged to dress casually. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. All Rights Reserved. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. Therefore, demand led with proprietary yield management system. 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. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! 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. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). We will consider the value chain for EasyJet in more detail later in our discussion. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. Are you interested in testing our business solutions? All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. Making it easy, enjoyable and affordable to travel again and again for business and holidays. Protecting and building brand awareness and consideration. POLITICAL Following the European deregulation of commercial aviation, a fleet of low cost carriers are reshaping the local airline landscape. Therefore, the low cost strategy is the ideal strategic fit to its environment. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. As opposed to cost leadership, in which businesses rely on reducing costs to gain a significant market share, a differentiation strategy is typically It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. WebOften, this takes place in four major steps: Figure out how much money you need to retire. 8. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. Our mission to make business better is fueled by readers like you. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. 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. But the training center is the only part of EasyJets operation at Gatwick still humming. It takes up to last extend in the time. To accomplish that, Lundgren has taken drastic steps. Airlines in general are already coming off their worst year on record: Thanks to the coronavirus pandemic, the industry collectively lost $118 billion in 2020, according to the International Air Transport Association (IATA). Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. FORTUNE may receive compensation for some links to products and services on this website. 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. Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. 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. EasyJet is an international example, The introduction of Airbus A319 aircraft, combined with the retirement of old generation Boeing 737 aircraft, will result in a two-type new technology fleet, which will commonality and lessen complexity and deliver high level of asset utilisation and reduce unit costs. Market Development. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. In 2020, it transported a Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. Consumers are optimistic and the travel and tourism industry are now booming again. easyJet will maintain its advantageous cost position through continued cost action. 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. 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. When rival European budget carrier Air Berlin went belly up in 2017, Lundgren spent$48 millionto buy its operations at several German airports and take on 25 of its airplanes. This eliminates the need to any commissions to external sales agency. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. Increasing automation driving self-service capabilities for customers. Clicking on the following button will update the content below. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. Looking for a flexible role? liability for the information given being complete or correct. 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 airline had become Europes equivalent of Southwest in the U.S. 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. 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. 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. We're here to answer any questions you have about our services. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. 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. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. Not that he was going away. In mid-May 2020, the company revealed it had been hacked. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. Given the fact that the company offers Objectives To assess the psychological distress, anxiety, depression, coping strategies, 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 also faces potential threats in terms of unprecedented tragic events like September 11th. 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. The pandemic, of course, wiped out business and leisure travel alike. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Potential negative outcomes include bad publicity and a 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. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. Finally, the key to sustaining high levels of growth is the scalability of the operations. Its also hard to monitor the performance of each individual. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. We are seeing significant benefits already from operational resilience processes and predictive maintenance. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. 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