EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. Yield management is a form of risk management and therefore, adds value. 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. This is done in order to maximise the yield from a flight, as many of the costs associated with running a flight are fixed relative to the number of passenger on board. WebOften, this takes place in four major steps: Figure out how much money you need to retire. The airline had become Europes equivalent of Southwest in the U.S. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. 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. A lack of real-time reporting makes it easy to miss the signs of an approaching catastrophe. Statista assumes no Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. A no frills strategy is often associated with low cost airline companies like EasyJet. Lundgren had been an industry leader in trying to position EasyJet for this new world. This has the highest risk, but By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. 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. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. Normally there would have been close to 100. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. This will involve retention of best salespeople supported by HR management, engineering support in terms of maintenance of the web page supported by technology development to ensure that web site has the latest prices and route and flight information. Under pressure from airlines, it later lifted this policy for some European destinations, only to reimpose it as infection rates soared again in Spain and France. And finally, service, activities that ensure that customers enjoy their flight by providing friendly on board service and assisting traveller with any special needs requirements. Previously it used telesales and now sales are through e-commerce web site. 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. But the training center is the only part of EasyJets operation at Gatwick still humming. Making it easy, enjoyable and affordable to travel again and again for business and holidays. 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. Looking for a flexible role? Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). This is critical for EasyJet having analysed the competitive rivalry position in the industry. Advantages of Choosing In-House. 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. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. We mentioned the seven most common risk events above, but other project risks could include contractor failure, unexpected life events, data transfer issues, shifting priorities, legal risk, market risk, and project deferral. All office-based employees are encouraged to dress casually. 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. To what extent does EasyJets concentration on 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! This text provides general information. 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. It hoped these measures allow the public to feel confident flying again. 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. The idea of remote working can also result in co-ordination and control weaknesses. 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. Feeling powerless is one of the worst feelings, not just in business.. EasyJet has other advantages over its full-service rivals too. )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. So when the industry was slammed by COVID-19, government was responsive to pleas for help. easyJet has a cost advantage over its major competitors on the primary network that it operates. 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. EasyJets decision to use its aircraft as collateral for loans it needed to get through the pandemic means that its cost base will be higher going forward, once debt service is included in the calculations, says Savanthi Syth, an airline analyst for brokerage Raymond James & Associates: Theyve traded liquidity for today in exchange for their aircraft ownership costs going up in the future.. This analysis will highlight the fundamental changes that the airline industry is undergoing, especially; in defence to the turbulent environment it faces from exogenous forces (terrorism, oil prices, SARS etc) and endogenous forces. Also, only one type of aircraft is used, in order to minimise maintenance costs. On the other hand, risks which produce Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. Significant investment in assets and managing financing costs. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. This needs to be updated constantly as this will be a live system. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. 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. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. And they are relentlessly focused on keeping per-seat costs down. Once a saver, always a saver: Warren Buffett says generational wealth isnt what it used to be in his annual letter Salesforce is paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 CA Notice at Collection and Privacy Notice, Do Not Sell/Share My Personal Information. At the end of March 2020, EasyJet grounded its entire fleet. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. 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. 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. There is national pride, not to mention jobs and pension payments, resting on their wings. 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. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Adjust your investments to All Rights Reserved. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. 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. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. 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. Competitive pressure. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. Also, mainstream airlines are now lowering fares to engage in price competition. 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