Easy Jet Airline Analysis

Easy Jet Airline is one of the most successful airlines in the United Kingdom. The company, which was founded in 1995, has experienced fast growth in its operations, owing primarily to its customer-friendly initiatives. Nowadays, the airline corporation has increased its local and international flights and operates on around 500 routes connecting Asia, North Africa, and Europe. The low cost and price elasticity strategy is one of its most successful tactics. This operation approach takes into account economic fluctuations and other elements to set up flight rates that are desirable to the consumer base. The management has been keen on the issue of pricing as it believes that price is the primary factor that influences the choice of airline made by the customers (Doganis, 2010). This means that I the company has the lowest prices in the industry, many people will prefer to use it and that will boost its profitability. The Easy jet Company started its operations in 1995 when the company initiated its first flight from Luton to Glasgow and Edinburgh using a leased plane which had a carrying capacity of 148 people. The company charged $29 for a one-way ticket on its first flight which was way cheaper than what the established airlines were charging. The choice for this route on its first flight was made due to the fact that southern Scotland was the largest domestic market and required direct flights connecting it to London to ease the pressure on rail and road transport. The easy jet company currently has operations in over 27 countries and has over 175 aircraft (Adeyemi, 2013). Its low-cost strategy has currently been widely adopted by airline companies all over the world.

Later on, towards the end of 1995, the company started its telephone reservation service which enabled people to book and reserve flight seats through the phone. This was a new strategy which was quite appealing to the customers and played a significant role in increasing the customers for the company. In about two years, the company had become a prominent figure in the airline business, and it launched its website. This further boosted the popularity of the company as web bookings shot up to 26% within a period of one year (Adeyemi, 2013). Easyjet has continued to make major strides in the airline business which are facilitated by its able and experienced management as well as the competent workforce. Its paperless operation is one of the major moves that have seen the company revolutionize air travel (Doganis, 2010). The company bases its operations on a strong electronic infrastructure which facilitates the undertaking of all procedures and replaces the paper-based approach that is used by other flight companies (Mayer, 2003). The paperless approach has brought about lower administration costs, better management information and more responsive decision-making.

Internal Operations

EasyJet has placed itself in a good position in terms of management and operations which have made it sustain its low-cost strategy and remain profitable. The British airline business is saturated with air flight companies which have adopted similar marketing and pricing strategies. This has led to the intensification competition between these firms which has made some become unsustainable. Easyjet on the other side has adopted a divergent approach that mainly focuses on cost reduction. This has the effect of reducing operating costs enabling the company to further reduce the charges for its flights (Adeyemi, 2013). The continued success of the Easyjet Company enabled it to acquire ‘Go’ which was a subsidiary of British Airline

Easy jet which is also known as No-frills airlines has a perfect concept which enables it to provide quality services at relatively low prices compared to other flight companies. The other airlines are only able to reduce prices through cutting off some of the services given during a flight. However, the Easyjet Company takes a typical cost leadership strategy that enables low-cost fares and quality services. The business management believes in the philosophy of sales benefits where it emphasizes on making more trips across destinations charging low fares (Friederich, 2014). At the end of the day, the company would have made more money the company that made a single flight charging a high fare. The airline company bases its success on the strategy of maintaining a 30-40% cost advantage over established airlines. The management of the company believes in achieving a competitive advantage through this strategy (Doganis, 2010). The strategy is based the on two main choices which are finding segments that competitors are less interested in and capitalizing on them. The second choice is finding a segment that appeals to price sensible customers. They utilize this by doing the following;

The first factor that enhances the reduced prices charged by the Easyjet Company is the ticketless airline approach. This strategy has all the operations of the company done electronically and all the customers need is just a passport and a confirmation code to fly. The other factor that has benefited the company is the efficient use of airport which is enhanced by the rapid turnaround times (Rapp, 2010). The reduced turnaround times has seen the company reach agreements with airport managements to charge significantly reduced charges for airport use. The company also has its planes optimally utilized as no plane stays idle waiting for all seats to be occupied. The Easyjet flights do not provide free meals but they give their passengers a variety of food and drinks options which they can purchase (Adeyemi, 2013). This generates more income for the company and gives the customers satisfaction.

The Easyjet flights have got no business class segment which is usually charged prices that are significantly higher than the economy class seats. The absence of the business class economizes on the space of the aircraft as it creates space for more economy class seats. The company however provides a flight that is charged slightly higher than the economy class to cater for those who wish to travel in business class. Punctuality is a major priority for the flight company, and it is on rare occasions that there is a delay in arrival or departure of its planes.

The company has adopted various marketing strategies with the most effective being direct marketing and Internet sales. Internet sales refer to an approach whereby the company directly engages its customers through various internet-based platforms such as social media (Rapp, 2010). The company has also integrated its operations into mobile phone platforms that enable customers to directly book planes as well as making inquiries through their phone. At first, a call center allowed customers to book over the phone, a more familiar communication channel available to all (Doganis, 2010). The company initially provided appropriate discounts for internet customers so as to attract more people to the online platform.

External Environment and Competitive Advantage

The airline company faces numerous external challenges that suppress its profitability and success. Fuel cost is one of the greatest challenges that Easy Jet Company and therefore it focuses on using fuel as efficiently as possible. In the year 2014, the company saved about 1.2% of the fuel used through the investment in new flight planning system. The company is currently aiming at 3% improvement in fuel usage which is expected to translate into $ 30million by 2018. It is quite important that the company continues to save on fuel as that enables it to charge highly reduced fares (Adeyemi, 2013).

Competitive advantage is derived from the ability of a firm to give its customers value that cannot be attained from the competitors. Easy jet has created a distinct brand which is characterized by the services and low prices that are charged to its customers. This has been one of the basic ways through which the company has attained competitive advantage. Cost leadership and differentiation is a strategy that the company has perfected, and it has made it different, from other frills airline companies thus giving it a competitive advantage.

All the activities that are carried out in the value chain have a significant contribution to the buyer value and the cumulative costs in the chain. Easy jet gets a competitive advantage through its strategies that enable it to carry out strategically important activities in a way that is cheaper or better than what is provided by the competitors (Doganis, 2010). Competitive advantage can be achieved from any aspect within the value chain and not on the quality of products and services as many believe. To understand how a firm fits into the overall value system includes the value chains of its suppliers, channels, and buyers. Generic strategies are useful because they characterize strategic positions at the simplest and broadest level.

On the issue of competitive advantage, Easy jet concentrates on the reduction of costs as well as the leadership costs. The company has managed to have low costs which have made it for other companies to successfully compete against it. However, there are problems associated with the idea of sustainable cost leadership as this entails that Easyjet has the lowest cost compared to competitors over time. Maintaining the low costs standards that the company has set is quite a challenge as there are many factors that are changing and which are likely to have an effect on the fare charged. The company, however, has the obligation to show consistency in the fare charged on flights (Adeyemi, 2013). This at times requires the management to defy the economic logic so as to retain its customer base.

SWOT Analysis

A SWOT analysis of the Easy jet company reveals that the company is sustainable and has a huge potential which can enable it to expand to regions that it has not yet ventured into.

Strengths

Among the strengths of the company is the successful cost reduction strategy which has been widely adopted by other airline companies all over the world. Besides that, the company has a flexible and innovative administration which has continued to come up with new strategies to further reduce operation costs and enhance customer satisfaction. The company has popularized its brand name which is closely associated with reduced costs (Adeyemi, 2013). This corporate image that the company has created over time plays a significant role in increasing the customer base for the company. The destinations which the airline flies to are major cities which has made it very popular in Europe and Asia. Its reduced turnaround times enhance efficiency for the customers who would prefer the airline than other airlines which operate on the traditional approach (Doganis, 2010). The company operates on a single model of aircraft which significantly reduces training, maintenance, and supervisory costs. At last, the airline company has been wisely investing in brand building strategies such as advertising which have ensured high brand recall.

Weaknesses

Despite the apparent strengths, the company has numerous weaknesses which interfere with its operations. One of the weaknesses of the company is the need to sustain its cost leadership in an industry which is very dynamic. The two basic drivers of growth which are price and convenience seem to have reached their natural limits and differentiation from there could become difficult. The company is already running short of alternative strategies that it can apply to attract more customers as it has already exhausted the price and convenience approaches. The ‘EasyJet’ brand is not owned by the company but belongs to a third party, and therefore the airline company has no control of the performance of other products and services used the same name (Adeyemi, 2013). The airline must be continuously innovative to maintain its current advantage in e-tailing. Increased fleet capacity could be difficult to fill during lean periods and in the face of growing competition in a matured market.

Opportunities

The EU recently expanded its territories which led to the creation of many new markets for the low-cost carriers. The low fares charged by these carriers will increase the rate of traveling of people seeking jobs across the borders of the EU nations and also promote the tourism industry and consequently enhance economic growth. Vertical and horizontal is an important alternative for growth in the mature markets for the Easy jet company. This will significantly reduce the future threat of increased service provider costs (Doganis, 2010). The move by many competitor companies to withdraw traffic from routes that are not traffic intense is yet another opportunity for the company as it can expand its operations to these routes.

Threats

One of the biggest threats that the Easy jet company faces is terrorism and catastrophic loss which can lead to reduced rates of travel and loss of infrastructure that supports its operations. War threats and disease outbreaks are other threats which interfere with the operations of the airline. The increased taxes and legal requirements which the air travel industry is currently subjected to are yet another threat that the company faces. The company has currently expanded its operations to many regions, and this could be a hurdle in future expansion plans due to the exhaustion of all potential regions for expansion. The United States dollar which dominates the airline industry keeps on fluctuating which presents another risk for the airline company. Cost cutting tactics implemented by competitors can have a significant effect on passenger traffic on popular air routes thus reducing the number of passengers served by the airline (Doganis, 2010). Lastly, the company depends on third parties for many of its operations, and this poses a risk as this contracts may not be renewed by the parties.

PESTEL Analysis

Political Factors

There are numerous political factors that have affected the operations of airline companies. In 1990 the European nations interfered with the regulation of commercial airlines which coincided with the expansion and diversification the low-cost airline industry. The low-cost carrier companies took advantage and capitalized on that opportunity through expansion of their operations. Besides that, there is the issue of war threat in the East Euro and EU east (Jones, 2007).

Economic Factors

The issue of mergers and acquisitions in the low-cost airline industry has affected many companies. The expansion of some of the companies has led to the acquisition of other companies. The industry operates a low-cost external environment, which is sustained by high sales, high productivity of resources, low maintenance costs and low wages (Datamonitor, 2013). These are the characteristics of the economy in which the easy jet company thrives.

Social Factors

The Easy jet company which is a low-cost carrier firm focuses on business and leisure travelers with distinct differentiation. This means that the firm limits its scope with regards to service to customers as it lays little emphasis on leisure travel (Adeyemi, 2013). The competing firms have a focus on both leisure and business and therefore are better placed to appeal to more customers that the EasyJet. EasyJet must ensure that its strategy is tailored to a wider market.

Technological Factors

The low-cost carriers like the easy jet have the ability to sufficiently serve the increased customer base through the integration of technologies such as the user-friendly online booking processes. These websites have the capability of charging bookings with greater ease and utilizing an easy to use fare finder to obtain the cheapest fares (Jones, 2007). Selling tickets via the technological medium of websites and hence by having no travel agents, they avoid paying agency commissions.

Recommendations

From this paper, it is evident that the easy jet has been successful since its start in 1995.The management of the Easyjet Company has managed to get everything right with respect to the competitive strategy which has enabled the company to remain successful and beat all the competition. Despite the fact that the company has been very successful and rapidly expanded taking over routes dominated by other airlines, it should pay close attention to the moves made by its competitors. Emerging technologies should be carefully integrated into its operations, and a market research should also be conducted to find out the preferences of the customers besides price and convenience (Doganis, 2010). There are various ways through which the Easyjet can improve its operations as well as enhancing its profitability. To begin with, the company can partner with other companies like taxi cab companies to facilitate the picking and dropping off passengers at their destinations. This will increase the efficiency and convenience for the customers who will not have to contact transport companies to provide such services. The other option the company could explore is the provision of financing services for flight fare whereby the customers will have an option to obtain discounts on hotels around the airport. This will not only improve the services provided by the company but will also create new business opportunities (Anderson, 2016). The Easyjet Company has operations in over 400 routes which means there are many other routes in which the company can introduce its cheap flights. This would significantly increase its customer base as more customers will be able to access its services.

Conclusion

Easy Jet Airline is one of the most successful airline companies in Britain. One of its strategies that have made it very successful is the low cost and price elasticity strategy. This concept of its operations factors in economic changes and other factors to set up flight charges that are quite appealing to the customer base. The management has been keen on the issue of pricing as it believes that price is the main factor that influences the choice of airline made by the customers. The British airline business is saturated with air flight companies which have adopted similar marketing and pricing strategies. This has led to the intensification competition between these firms which have made some become unsustainable. Easyjet on the other side has adopted a divergent approach that mainly focuses on cost reduction. The airline company faces numerous external challenges that suppress its profitability and success. Fuel cost is one of the greatest challenges that Easy Jet Company and therefore it focuses on reducing all operational costs as possible. The EasyJet Company faces numerous threats despite its apparent strengths. The biggest threats that the company faces is terrorism and catastrophic loss which can lead to reduced rates of travel and loss of infrastructure that supports its operations. There are many alternative options which can increase profitability of the company. These include establishing partnerships with other companies and integration of new technologies.

Bibliography

ADEYEMI, F.-A. (2013). UK’s Aviation Industry Comparative Evaluation of BA and easyJet. Saarbrücken, LAP LAMBERT Academic Publishing. http://nbn-resolving.de/urn:nbn:de:101:1-201311063060.

ANDERSON, T. (2016). easyLand: how easyJet conquered Europe.

DATAMONITOR (2013). EasyJet plc SWOT Analysis. London, Datamonitor.

DOGANIS, R. (2010). Flying off course: Airline economics and marketing. London, Routledge.

FRIEDERICH, A. (2014). easyJet.

JONES, L. (2007). EasyJet: the story of England’s biggest low-cost airline. London, Aurum.

MAYER, F. (2003). A case study of EasyJet and the airline industry. München, GRIN Verlag.

http://sbiproxy.uqac.ca/login?url=http://international.scholarvox.com/book/88824680

RAPP, T. (2010). Lost and sound: Berlin, techno and the Easyjet Set. [Berlin], Innervisions.

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