The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. easyJet is building a network of key cities, broadening their presence across Europe. 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. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). But nothing has been normal for EasyJet since March 23, 2020. 8. Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. Lundgrencomplainsthat the British governments travel rules remain too onerous. 2023 Fortune Media IP Limited. 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. Improving CSAT across the whole customer journey. Due to varying update cycles, statistics can display more up-to-date easyJet has refined its strategy to drive our purpose of making low-cost travel easy. 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. Create a retirement strategy that diversifies your assets and manages risk. major banks and insurance companies relocation call centres in Asia. 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. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. 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. 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. Webcomputing risks Let us look at five different types of risks and how they apply or vary by cloud deployment models. The Essay Writing ExpertsUS Essay Experts. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. Thats the day the U.K. government first advised Britons abroad to return home as soon as possible in advance of impending travel restrictions because of the growing coronavirus pandemic. Ryanair and Wizz Air cater almost exclusively to leisure travelers. It was enough to make any airline CEO play the blues. All airline companies within the industry will have similar value chain, which will include activities such as obtaining fuel, designing fare structures, airport facilities, developing co-operative agreements, and providing customer service. A typical approach for risk identification is to map out and assess the value chains of all major products. In practice, this means EasyJet has little chance of beating Ryanair or Wizz head-to-head on routes and pricing. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. 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. (The others are rival budget airlines Ryanair and Wizz Air, as well as Southwest Airlines in the U.S., on which EasyJet originally based its business model. 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. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. data than referenced in the text. Over time, a brand may experience enough negative interactions that its reputation is placed into a vulnerable position. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. Decisions must be made on the trade-offs inherent in development of a strategy. 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. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. 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. Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. 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. Research expert covering mobility and logistics. The globalization is also another factor influencing which build up the air traffic as lifelong. This results in a very strong competitive rivalry in the industry. Are you interested in testing our business solutions? The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. Competitive pressure. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. quick order processing). Market Development. EasyJet denied this dinner took place. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. Weaknesses identified earlier could also offer potential opportunities in terms of development of brand awareness globally. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. 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. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). EasyJet was able to operate at only 18% of its 2019 capacity. 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. The customers of EasyJet have been using the Internet for making bookings. This text provides general information. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. liability for the information given being complete or correct. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. As it turned out, it wouldnt need those flights. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. Ties are banned except for pilots! The linkages with the value chains of channels and customers which are the essence of EasyJets capability and which can protect its market leadership and maintain cost leadership competitive advantage from competitors. It takes up to last extend in the time. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. This is intensified as a result of little or no differentiation in the service offered. It is here that EasyJets pilots practice and maintain their skills. 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. Potential negative outcomes include bad publicity and a Significant investment in assets and managing financing costs. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. 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. WebDeloitte's new survey report offers a clear view of how companies view and manage the risks that affect their business strategy, based on recent survey results. Effective use of digital and data tools to underpin growth and deepen customer relationships. Web1) Economic Risks. This needs to be updated constantly as this will be a live system. 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. Powered and implemented by Interactive Data Managed Solutions. Disappointing your customers. 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. Get in touch with us. 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. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. 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. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. 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. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. Transfer the risk. Hannibal HanschkePool/AFP via Getty Images, Christoph SoederPicture Alliance via Getty Images, Chris RatcliffeBloomberg via Getty Images, one of the biggest winners in the European air-travel dogfight, agreed in January 2020 to deferred prosecution agreements, began purchasing carbon offsets for the CO2 of all its flights, might not fully recover from the pandemic until 2024, LinkedIn has officially entered its cringe era, and its working. 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 third force is the threats from the bargaining power of buyers, is this strong for both EasyJet and the entire airline industry with a large number of alternative suppliers, hence, the aggressive pricing strategy. It is evident that having only one collaborate is risky due to the possible delays in time. easyJet has a cost advantage over its major competitors on the primary network that it operates. )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. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. The fourth force is the bargaining power of buyers. POLITICAL Following the European deregulation of commercial aviation, a fleet of low cost carriers are reshaping the local airline landscape. 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. 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. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. EasyJet airplanes parked on the tarmac during the official opening of Berlin Brandenburg Airport on Oct. 31, 2020. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. Enabling risk management through a 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. 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. 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, 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 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. As funding from operations are clearly a major contributor to value creation. 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. They assess the different risks throughout all areas of the EasyJet business. For the battered airline, 2020 couldnt end soon enough. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. 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. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. 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. 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? Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. We are seeing significant benefits already from operational resilience processes and predictive maintenance. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. 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. 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. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Looking for a flexible role? Procurement and firm infrastructure as a support activity does not add much extra value. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. Step 1: Identify and document risks. 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. 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. 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. Yield management is a form of risk management and therefore, adds value. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. 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.. Balance your retirement plan with your other financial goals. 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 also have a reputation for paying low wages in line with its low cost strategy. 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. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. The greatest dangers, however, may be the market leaders need to manage its evolving Diversification. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. In this way, it has positioned itself as a more direct competitor to Europes traditional airlines.Lundgren says he wants EasyJet to be the No. Please do not hesitate to contact me. Protecting and building brand awareness and consideration. Easy Jet: Company Operation Strategy : Historical-Hall-2840 The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. To understand EasyJets prospects, its important to understand its strategic positioning. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. The U.K. requireseven those returning from green countriestake COVID-19 tests before boarding a plane to return to the U.K. as well as within two days of returning. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. There is national pride, not to mention jobs and pension payments, resting on their wings. 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. 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.. 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. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. 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. 3. 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. 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. 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. 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. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. 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. Our mission to make business better is fueled by readers like you. 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 company carries out The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. Finally, the key to sustaining high levels of growth is the scalability of the operations. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. 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