Executive Summary
In this report, the analysis closely looks at EasyJet and the industry in which it competes. To achieve this, the paper has looked into background information on EasyJet. The company was founded in 1995 by Stelios Haji-Ioannou and has gained rapid recognition in the airline industry. The idea behind EasyJet is predicated on the premise that there is a price elasticity of demand for relatively brief air transport, meaning that if ticket costs were to drop, more people would take advantage of the opportunity to travel. Similarly, the report has described in detail the size, scope, and type of EasyJet. EasyJet uses a Hierarchical system with centralized power and a chain of command. The company features 308 aircraft, 13,000 employees, 153 airports, and 927 interconnected routes in 34 countries. Similarly, a close analysis of the departments and the management of EasyJet has been done. From the SWOT analysis, the airline has several qualities that make it stand out from the competition. Competition from companies such as Tegel Ram-up and Berlin Airport Ram-up represents one of the airline’s biggest challenges. The company is investigating the feasibility of creating a hybrid aircraft as part of a current project. The report also includes the PESTLE analysis to identify the external factors that affect the viability of EasyJet. To determine the effect of globalization on EasyJet, the report first identifies the strategic plans the company has put in place. Several recommendations have been made at the end of the paper, which primarily focus on the areas EasyJet could focus on to maintain its competitive edge.
Introduction
The air industry provides an essential input in a country’s economic, political, and social aspects and global economy. Companies increased global reach, as seen by the explosive rise of international commerce and investment, fueled the demand for air transportation (Mrňa & Badánik, 2021). As a low-cost airline that has gained popularity throughout the globe, Easyjet Airline Company, Limited is a good case study for this report’s research since it is a publicly traded business in the UK. Besides, its sales income has increased steadily over the years. easyJet’s primary goal is to increase its market share in Europe, particularly in nations expected to expand rapidly soon. The company was founded in 1995 by Stelios Haji-Ioannou and has gained rapid recognition in the airline industry (Barqueira et al., 2022). The idea behind EasyJet is predicated on the premise that there is a price elasticity of demand for relatively brief air transport. This means that if ticket costs were to drop, more people would take advantage of the opportunity to travel. The conventional wisdom in the airline industry is that demand for flights rises in tandem with GDP and that lowering fares has no positive effect on the company’s bottom line.
Discussion and Analysis
The Type, Size, and Scope of EasyJet
EasyJet is a multinational low-cost airline group operating international and domestic scheduled services in over 34 countries on about 927 routes (Barqueira et al., 2022). It is essentially described as a short-haul airline making it quite unique. It uses a Hierarchical system with centralized power and a chain of command. There is a transparent chain of command at EasyJet, beginning with the CEO and working its way down to the ground personnel and flight attendants (Barqueira et al., 2022). The business choices of EasyJet are decided at the company’s headquarters and then trickle down to lower levels of management (Mrňa & Badánik, 2021). When making decisions and giving orders, branch and department managers at EasyJet are restricted to a specific group of authority and jurisdiction, regardless of the location.
Accessible jet features in the list of one of the biggest airlines in Europe. Easy jet has a reported size of over 308 aircraft. Currently, these aircraft operate in more than 927 routes which comprise 34 nations (Mrňa & Badánik, 2021). In these countries, EasyJet is said to have constructed 153 airports, which ease the airline’s transportation of cargo and travelers. The airline has a total of over 13000 employees all over the world, with most of the employees residing in the United Kingdom (EasyJet, 2023). Of all the bases that are in EasyJet’s possession, Gatwick is the largest one. As per the company’s market cap report, the airline enjoys a market cap of over 3.95 billion US dollars (EasyJet, 2023). The company is ranked 2754th in the list of most valuable companies.
Many of EasyJet’s business and industrial operations partner with essential suppliers. EasyJet runs a contemporary fleet of aircraft belonging to the Airbus A320 series, of which the company holds about 59% (Barqueira et al., 2022). The corporation is investing in aircraft of a newer generation, which is more aerodynamic and use less fuel, which will ultimately result in cheaper operating expenses and fewer carbon emissions, to manage the carbon footprint. The organization carefully selects its business associates and maintains these partnerships to encourage newer technologies and success. easyJet’s current and long-term goal is to develop into the airline industry’s most data-driven company (Mrňa & Badánik, 2021). Consequently, the firm is gaining a significant competitive advantage due to the implementation of operational resilience procedures and condition monitoring. The data projects that late yield efforts and the asymmetrical seat sales prices have benefited the airline’s revenues.
Interrelation of Function in EasyJet
Six sub-companies work independently but collectively to meet the day-to-day activities of EasyJet met. easyJet is the parent corporation of the six companies that conduct the business under its trademark (Kassem et al., 2022). EasyJet Airline Ltd., a wholly-owned company headquartered in Luton, manages all day-to-day operations. 49%-owned EuroAirport Basel-Mulhouse-Freiburg and Geneva Airport are served by all commercial airlines EasyJet Switzerland operates (Barqueira et al., 2022). The company’s aircraft renting and commerce firms are located on Cayman Island. The two companies are EasyJet Sterling lLimited and EasyJet Leasing Limited. Similarly, there are also companies such as Dawn Licensing Limited Company, and Dawn Licensing Holdings Limited company are, respectively, graphic design and holding businesses.
The company comprises nine departments: human resources, finance and procurement, legal, operations, Information Technology, data and digital, communications, brand, public affairs, customer, product, and sales, and pricing, strategy, and networking (Kassem et al., 2022). These departments work hand in hand to ensure that Easyjet maintains its competitive edge, satisfies customers, and retains and attracts top talents.
The company’s structure consists of the board of directors, airline executive management, and employees. The airline management board is chaired by Johan Lundgren, who joined the company in 2017 (Kassem et al., 2022). The company has the position of chief financial officer, which Kenton Jarvis heads. Ella Bennett, the group people director, leads the hiring and talent management department (Kassem et al., 2022). Similarly, the company has a customer and marketing department, which Robert Birge heads with the chief customer and marketing officer position. This particular department ensures that the customers get good services and that their inquiries, complaints, and feedback are responded to accordingly.
The company has independent directors headed by the non-executive chair and the senior independent director, who are comprised of a total of 12 individuals. Directors from inside the corporation are considered valuable because of their familiarity with the business and the sector and because they act on behalf of the firm’s significant shareholders, executives, and workers. Non-executive directors, often known as independent directors, are not engaged in the firm’s day-to-day operations but are nonetheless expected to provide insightful ideas from the outside. Additionally, the board presently divided into six committees with responsibilities for safety oversight, compensation policy determination, accounting policy alignment, director nominations, treasury, finance policy oversight, and information technology project consulting.
Analysis of the Business Environment
Internal Business Analysis (SWOT) of EasyJet
More of the airline’s strategic moves to outpace rivals and get an edge in the market may be revealed using SWOT analysis. EasyJet can capitalize on its strengths thanks to the information gleaned from the SWOT analysis (Falconi, 2022). The report identifies internal flaws and external risks that might be remedied by capitalizing on upcoming opportunities.
Strengths
According to the findings, the airline has several qualities that make it stand out from the competition. This environmentally conscious airline is the first primary international carrier to offset its carbon footprint (Falconi, 2022). Moreover, greater resilience against external influences is seen to keep margins stable. In addition, the corporation operates a fleet of cutting-edge aircraft that meets or exceeds industry standards and is supported by a robust infrastructure. This contributes to the company’s high standing in the eyes of its patrons, resulting in increased brand loyalty and positive word of mouth. The tremendous operational efficiency resulting in a cheap model proves this.
Weaknesses
Competition from companies such as Tegel ram-up and Berlin Airport Ram-up represents one of the airline’s biggest challenges. Therefore, it may be challenging to maintain present successes compared to the rivals’ profitability (Falconi, 2022). Similarly, the risks associated with managing a capital-intensive firm are susceptible to interest rate fluctuations and a strictly controlled market.
Opportunities
The company is investigating the feasibility of creating a hybrid aircraft as part of a current project. Since launching EasyJet Holidays, the corporation has increased its profit potential while expanding its service offerings (Falconi, 2022). There is a sophisticated pricing structure in place, and the expansion of the business is possible thanks to the inclusion of non-seat income and the business’s appeal to price-conscious passengers, like how customer and service effectiveness boosts customer happiness while cutting down on interruption costs so that it can provide excellent service to the airline’s customers.
Threats
The aviation business and other sectors might be hit hard by the COVID-19 epidemic, which is one of the biggest dangers. Uncertainty among buyers is also affecting Brexit. Similarly, data suggests that the European aviation sector is also experiencing declining growth (Falconi, 2022). Strikes and economic sabotage are examples of other political issues impacting the organization.
External Analysis Business Analysis (PESTLE) of EasyJet
Political
One major external factor that affects businesses is the political atmosphere in which they operate. In the case of EasyJet Airlines, one of the major political decisions that affected its operation was when the United Kingdom parted ways with the European Union (Permana et al., 2020). European Union law requires that the majority shareholder of any company with substantial operations in Europe, like this one, be an EU citizen (Ameur & Louhichi, 2022).The company’s current majority stake in the United Kingdom must be changed if EasyJet is to continue operating profitably; this shareholding must be moved to the European Union (Ben et al., 2022). The company is looking for viable ways to mitigate this significant challenge.
Economic
COVID-19 is a critical danger to the survival of airports, airlines, and their associated businesses. However, despite widespread vaccination campaigns, the international tourism industry has not yet recovered to pre-COVD-19 levels (Sobieralski, 2020). The rate of recovery is very sensitive to the activities of several groups and the level of international collaboration performed by governments throughout the world (Sobieralski, 2020). While the global tourism business as a whole remains mostly depressed, more and more nations are taking baby steps toward reopening their borders to vaccinated tourists, inspiring some hope and an actual possible route to recovery. Already well-known is the fact that the airport industry and the whole air transport ecosystem have been devastated by the global COVID-19 outbreak and the associated travel restrictions (Kassem et al., 2022). The pandemic also impacted the fuel sector, and extremely high gasoline costs significantly contributed to the company’s first-half 2019 loss; fuel is a crucial part of any airplane.
Socio-cultural
Every one of the newest economic powerhouses is located in a country with a concise aviation history. European and North American standards and values provide the basis for the whole culture around airport and airplane behavior. Each emerging economy has diverse cultural norms and values (Falconi, 2022). This results in misunderstandings, tension, and complaints from passengers of all backgrounds, as well as increased expenses and stress for the airlines and airports. On the other issue, the aviation industry is male-dominated, and EasyJet is one of the airlines experiencing the same challenge.
Technology
EasyJet has a mobile application designed to help visually impaired people see the time of departure and flight. The application is user-friendly and has a voice command option that aids people of a certain age and disability (Falconi, 2022). In addition, they are developing state-of-the-art virtual reality (VR) technology, in particular for their off-site locations, where it might be difficult to get the engineers they need to address more extensive and complicated issues. It is time-consuming to transmit pictures of the plane’s cabin to the proper engineers. Real-time data transfer will be possible with VR eyewear.
Legal
EasyJet gained notoriety in 2020 when a huge breach revealed the personal information of at least 9 million customers (Kamal et al., 2020). About 2,000 consumers have stolen sensitive information, including credit card details, phone numbers, mailing addresses, and flight timings (Kamal et al., 2020). In 2020, EasyJet’s owner made allegations that several airline workers, including members of the company’s executive team, had accepted bribes from Airbus, one of the airline’s suppliers. The revelation of corruption among the owner’s highest-ranking employees was a black eye for the business.
Environmental
The global aviation sector is expanding quickly for several reasons, including the increase in transcontinental commerce and the increasing desire of people to travel. More than two-thirds of the world’s aviation traffic has surged in the previous 15 years, with over 39 million flights expected to be completed in 2019 (Wallace et al., 2020). Over 900 million metric tons of carbon dioxide were released by commercial aviation companies in 2019, up from 627 million metric tons of CO2 released that year (Wallace et al., 2020). As part of the new UK and EU sustainability policies, EasyJet has pledged to reduce carbon emissions by 50% from their current levels (Wallace et al., 2020). Airbus aircraft, which are now in use, are more economical in that regard. In October of 2020, it was announced that EasyJet and Wright Electric will collaborate on creating the world’s first carbon-free airplane.
Impact of Globalization on Strategic Planning of EasyJet
Simply put, globalization is the process through which events that formerly only occurred in one place become applicable everywhere. It may be thought of as a process that permits all people to become part of the same society and cooperate. (Kyove et al., 2021). Nonetheless, “globalization” is also frequently used in the more specific context of economic globalization, which refers to integrating national financial systems into the global market, capital flows, foreign direct investment, movement, and technology diffusion (Mbaiwa et al., 2019). Although the broader social, cultural, and political implications of greater mobility and interpersonal contacts made possible by air travel were obvious, this perspective gives more weight to the former.
One of Easyjet’s strategic plans is to make low-cost travel accessible and easy. There are implications that globalization will have on this strategic plan laid out by EasyJet. Policies such as Open Sky have several consequences for fare rates since the policy dictates the coproduction of international airlines (Permana et al., 2020). Fares are set to recoup costs under the Open Skies environment; in simpler terms, competitiveness and acquisitions policy can successfully perform the job of regulation. This raises questions about the marketplace’s nature, which is often supplied by a comparatively small number of big network providers, sometimes through alliances (Mbaiwa et al., 2019). There is some competition for air travelers in the overlapping feeder and provenance traffic to global hub airports among the numerous partnerships for the air cargo transports industry (Kyove et al., 2021). There is also competitive pressure at either end of airlines with several others, comprising low-cost airlines competing for travelers in the overlapping distribution system and origin-destination traffic to regional and global hub airports.
EasyJet’s strategic plan is also to transform revenue, which will also be impacted by globalization. Globalization contributes to more consumption and income in each nation due to increased total economic activity (Gozgor et al., 2020). However, prosperity is not distributed fairly. Some of this expenditure is facilitated by air travel (Kyove et al., 2021). Again, when earnings grow in larger nations, individuals spend more on domestic holidays and pay more for trips to friends and family. This domestic engagement, like trade-generated local air movement, may be commercially and organizationally isolated from globalization, but it is still a product of them.
EasyJet also has one of its strategic plans to create the most incredible network in Europe. Given the essentially commercial character of modern air travel, the rising need for transporting people and goods between countries that results from globalization is inevitable (Kyove et al., 2021). Given the efficiencies in air transportation, particularly the falling costs associated with infrastructure utilization, this can lead to additional pricing reductions. Furthermore, international trade raises global revenue, which leads to increased foreign visitors’ travel and the transportation of higher-value items, such as exotics, where air transport has a multiplier effect. Finally, globalization increases factor mobility, resulting in more permanent and temporary migration (Gozgor et al., 2020). Over more considerable distances, international flight travel is usually the most cost-effective option.
Conclusion and Recommendations for EasyJet
Conclusion
To conclude, this paper has identified SWOT and the PESTLE analysis, which affect the company’s internal and external environment. EasyJet being in a competitive market, strives to provide affordable airline services. There is also a discussion of the impact of globalization on the company’s strategic plans of making low-cost travel accessible and manageable, transforming revenue, and creating the most incredible network in Europe. Because of this, it is crucial to analyze EasyJet’s business models and tactics to comprehend and evaluate the company’s unique strategy, performance, and competitive advantage. There is much rivalry in the airline industry, and as a result, there is pressure on ticket pricing. However, EasyJet also takes a different approach, emphasizing innovation to increase and stabilize its income.
Recommendations
Based on the research conducted, the following suggestions are provided for EasyJet to help them improve on their strategic plans and deal with the effects of globalization and competition. First, EasyJet has to advertise and make the most of its advantageous partner offerings like EasyHotels. The research also suggests booking a reduced all-inclusive vacation package that includes amenities like airport taxi service and minibus transportation from the airport to the hotel and resort. The company should consider a loyalty card system whereby points may be accumulated toward the acquisition of various discounts and other prizes. To reach a wider audience, easyJet may also promote the fact that it is a carbon-neutral airline. They may, for instance, redesign their logo to include an environmentally friendly label. EasyJet needs to strengthen its position as a middleman. This would appeal to those looking for inexpensive tickets and those who wish for more extraordinary amenities and are willing to spend for them.
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