Effective use of digital and data tools to underpin growth and deepen customer relationships. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Advantages of Choosing In-House. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. It hoped these measures allow the public to feel confident flying again. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Supported by innovative and effective advertising. A prime example of this was the subsequent takeover of Go by EasyJet. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. 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. 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. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. EasyJet denied this dinner took place. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. Making it easy, enjoyable and affordable to travel again and again for business and holidays. 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 was able to operate at only 18% of its 2019 capacity. The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. Increasing automation driving self-service capabilities for customers. None would fly again until June 15. 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. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. 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. To use the Matrix, plot your options into the appropriate quadrant. Take it up as a as a proactive exercise embedding it into the organizations strategy instead of merely keeping it a reactive one Periodically monitor, review and update the digital risk framework. Potential negative outcomes include bad publicity and a 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. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. 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. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. 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. 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. The same figure for Ryanair was 2.25 pennies, while it was about 5 for British Airways and 5.37 for Air France and KLM. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. In fact, Haji-Ioannou continued to press his allegations that corruption underpinned the Airbus contract, raising the matter at EasyJets general meetings in July and December. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. Its not clear what role Haji-Ioannous pressure played in this decision. Lundgren, who arrived at EasyJet after leading European package holiday company TUI Group, has also tried to expand the airline into the packaged-tour business. 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. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. 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. Free resources to assist you with your university studies! This will provide an evaluation of the external business environment in which the company operates. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. 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. 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. But what are the internal weaknesses suffered by EasyJet? If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. 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. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. It takes up to last extend in the time. 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. EasyJet, on the other hand, flies fewer routes but operates from many more primary airports, with a heavier focus on Western Europe. It is evident that having only one collaborate is risky due to the possible delays in time. Standardisation in its activities as an airline leads to both economies of scale and a simpler product, which is cheaper and easier to distribute. And, finally threats of any takeover bids from national airlines. 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. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. At the same time, it was wooing at least some business travelers by differentiating itself from no-frills rivals like Ryanair and Wizz, offering some perks and serving first-tier airports. It renegotiated contracts with ground handling firms at several airports helping to lower costs. Remote working and hot-desking have been characteristics of easyJet since the beginning. When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. Background Coronavirus disease-19 emerged in December 2019. Front and center was the existential risk of the coronavirus. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. 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.. 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. For the battered airline, 2020 couldnt end soon enough. 1 or No. 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. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. This level of disruption and deterioration of the operation cannot continue," the email reads. Value chain analysis can provide important insights into what management need to focus on strategically. Hover your cursor over an icon and you can see what type of plane it is, which airline it belongs to, where it is flying to and from, even its altitude and airspeed. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. This eliminates the need to any commissions to external sales agency. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. 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. Its also hard to monitor the performance of each individual. To what extent does EasyJets concentration on Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. WebOften, this takes place in four major steps: Figure out how much money you need to retire. This time, he succeeded in scheduling a showdown vote for May 22, 2020. To accomplish that, Lundgren has taken drastic steps. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. easyJet will maintain its advantageous cost position through continued cost action. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Do you have a 2:1 degree or higher? The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. Adjust your investments to In the long term, this is concerned with the extent to which the organisation is operating profitably. 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. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. The existing competition also have strong brand image globally, EasyJet is recognised nationally and within the European markets, however, national airlines like British Airways is recognised worldwide and has stronger brand awareness. The idea of remote working can also In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. easyJet is building a network of key cities, broadening their presence across Europe. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Procurement and firm infrastructure as a support activity does not add much extra value. Implications from the strategy chosen. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. 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. Clicking on the following button will update the content below. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Step 1: Identify and document risks. Diversification. All work is written to order. Finally, the key to sustaining high levels of growth is the scalability of the operations. And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. 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. 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. liability for the information given being complete or correct. Weaknesses identified earlier could also offer potential opportunities in terms of development of brand awareness globally. This results in a very strong competitive rivalry in the industry. Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. 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. When the risks are specific to a certain activity the risks will be managed, and maintained Of popular holiday destinations, only Portugal and Gibraltar were put on the initial green list, with no requirement to self-isolate upon return. Objectives To assess the psychological distress, anxiety, depression, coping strategies, The customers of EasyJet have been using the Internet for making bookings. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. 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. 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. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJet is forever trying to attain a cost level that is low relative to its competitors. 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. 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. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. On the other hand, risks which produce The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. 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. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain 100 per cent direct selling of fares; over 90 per cent of sales are online. As it turned out, it wouldnt need those flights. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. 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. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Yet Lundgren says his strategy is still valid, telling trade publication Travel Weekly that holidays are going to lead the recovery. Liberum analyst Khoo says the move into packaged holidays made strategic sense. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). WebeasyJet is aiming to become the worlds most data-driven airline. 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. Most of Europe was in the yellow category, requiring 10 days of self-isolation when coming back, and with the U.K. government still advising against leisure travel. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. e-commerce) and support activities such as fir infrastructure (e.g. Given EasyJets cash burn, it needed to raise more moneyand quickly. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. 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. Our mission to make business better is fueled by readers like you. EasyJet came into the pandemic in better shape than many airlines: It was profitable and had a strong balance sheet, with relatively low levels of debt. 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. 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. 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. A focus strategy can be implemented to resolve these issues as well. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. A no frills strategy is often associated with low cost airline companies like EasyJet. 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? EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. 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. Easy Jet: Company Operation Strategy : Historical-Hall-2840 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. But nothing has been normal for EasyJet since March 23, 2020. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. FORTUNE may receive compensation for some links to products and services on this website. WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. 1 Based on share price of 6.62 at 30 September 2021 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)). These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. EasyJet is known for its low-cost competitive pricing. 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. 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. In mid-May 2020, the company revealed it had been hacked. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. 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. The primary weakness is the perception of low quality low cost can also be seen as low quality service than that offered by the established national airline i.e. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. 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. *You can also browse our support articles here >. Competitive pressure. 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? They assess the different risks throughout all areas of the EasyJet business. And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. 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. 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. Focus on seasonality improvements such as season contracts and bases. 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. The worlds most data-driven airline Glass Lewis, and getting access to liquidity, has... 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