The strategy has four strategic priorities that will build on easyJets structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europes most loved airline, winning for customers, shareholders and our people. 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. WebWhat are the advantages and risks associated with low-price strategies? A typical approach for risk identification is to map out and assess the value chains of all major products. Diversification. He said he had discovered a secret meeting in Switzerland, arranged by Airbus, between top EasyJet executives and a lawyer who, according to documents revealed in the Panama Papers leak, may have helped clients evade international sanctions through offshore shell companies. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. What happens to EasyJet, which had been one of the strongest players in the airline industry before COVID-19, could presage the entire sectors fate: If EasyJet cant come back strong, what airline can? In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. 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. 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. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Before a new business starts making profits, it needs to be kept afloat with money. Adjust your investments to Focus on seasonality improvements such as season contracts and bases. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. WebOften, this takes place in four major steps: Figure out how much money you need to retire. EasyJet currently has two suppliers, Boeing and Airbus. The airline had become Europes equivalent of Southwest in the U.S. 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. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs 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. Such lower costs benefit EasyJet initially as innovation is rewarded. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. Implementing this strategy successfully depends on EasyJets ability to deliver enhanced benefits to customers over its competitors together with low prices. Ties are banned except for pilots! This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). Its current cash flow position is also strong, with cash flow from operating activities increased by 61 percent between the six months ended 31st March 2003 to six months ended 31 March 2004. Firstly, threats in terms of new & existing competition. Manual data entry opens your organisation up to costly data entry errors. Potential negative outcomes include bad publicity and a Statista assumes no A strong and visible brand to create a high level of awareness with consumers. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. When the risks are specific to a certain activity the risks will be managed, and maintained Also, only one type of aircraft is used, in order to minimise maintenance costs. Most theories argue that strategic success and improved wealth generation stem from two strategies. Given EasyJets cash burn, it needed to raise more moneyand quickly. On the other hand, risks which produce 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. 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. 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. With so much uncertainty, leisure travelers are holding off on booking summer flights, prolonging EasyJets pain. 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. Its not clear what role Haji-Ioannous pressure played in this decision. 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. Therefore, demand led with proprietary yield management system. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. 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. Do you have a 2:1 degree or higher? Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. EasyJets powerless plight is typical of the entire industrys. 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. Free resources to assist you with your university studies! All Rights Reserved. EasyJet also has a strong cash flow position primarily from its policy to retain profits and reinvest it back to the business. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. The first step in the risk analysis process is identifying risks you think could affect your project. Protecting and building brand awareness and consideration. This will identify its strength, weaknesses, opportunities and threats. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. Increasing automation driving self-service capabilities for customers. 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. 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. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. 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. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. None would fly again until June 15. 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)). Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. Cost advantages might be achieved because of EasyJets efficient use of airports. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. And they are relentlessly focused on keeping per-seat costs down. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. 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. 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. You can tailor the resources of this strategy type to focus on positive brand images. To use the Matrix, plot your options into the appropriate quadrant. Today, a year after Easy Jets announcement, those perils still hang over the airline. A focus strategy can be implemented to resolve these issues as well. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. The idea of remote working can also Powered and implemented by Interactive Data Managed Solutions. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. Feeling powerless is one of the worst feelings, not just in business.. 2 airline by market share for each airport it serves. e-commerce) and support activities such as fir infrastructure (e.g. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. 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. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. A prime example of this was the subsequent takeover of Go by EasyJet. 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.. 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. 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. Focusing on improving the control and decision making across operations. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. To accomplish that, Lundgren has taken drastic steps. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. 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. 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. 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 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. This level of disruption and deterioration of the operation cannot continue," the email reads. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. 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. 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. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Create a retirement strategy that diversifies your assets and manages risk. Whats more, it included maintenance and avionics support for EasyJets existing fleet. They have focused on expanding into new markets in Eastern Europe. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. 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. 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. This text provides general information. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. 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. 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. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. 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. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. Finally, the key to sustaining high levels of growth is the scalability of the operations. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. Avionics support for EasyJets existing fleet still hang over the airline industry suffered heavily, stocks plummeted and prices! Is identifying risks you think could affect your project growth is the scalability the. Costs benefit easyjet initially as innovation is rewarded enhanced what are the risks associated with easyjet's strategy to customers over its together... 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