No plagiarism, guaranteed! Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the board. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. EasyJet was able to operate at only 18% of its 2019 capacity. 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. British Airways. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. This time, he succeeded in scheduling a showdown vote for May 22, 2020. 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. 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. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. Noting that EasyJet had failed to say exactly how the deferral affected EasyJets cash burn, the founder said that EasyJet might have engaged in market manipulation by failing to disclose such details and by using overly optimistic forecasts for when the companys revenues and profits might recover. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. Decisions must be made on the trade-offs inherent in development of a strategy. But flying to those primary airports in Western Europe is more expensive. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. Product Development. Focusing on improving the control and decision making across operations. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. To enjoy unlimited access to our journalism, subscribe today. 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. Our mission to make business better is fueled by readers like you. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. Value chain analysis can provide important insights into what management need to focus on strategically. As funding from operations are clearly a major contributor to value creation. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. 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. 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. Diversification. (Lundgren declined to comment for this article.). In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. 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.. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). Front and center was the existential risk of the coronavirus. Implications from the strategy chosen. 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. The minute consumers start to make a choice based on this, and I think they will, an emphasis on sustainability will pay off, says BCG consultant Molenaar, and EasyJet has been out front in preparing for this.. Technological Factors. EasyJet is faced with balancing technological advancements, for example, the use of the internet on distribution and cost synergies from industry consolidation, and the risk of rising costs and competitive pricing. 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. We are seeing significant benefits already from operational resilience processes and predictive maintenance. To use the Matrix, plot your options into the appropriate quadrant. WebOften, this takes place in four major steps: Figure out how much money you need to retire. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Balance your retirement plan with your other financial goals. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. 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. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. This level of disruption and deterioration of the operation cannot continue," the email reads. 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. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. 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. Statista assumes no 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. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. Consumers are optimistic and the travel and tourism industry are now booming again. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. None would fly again until June 15. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. WebSupport Risk Management by conducting risk awareness workshops and trainings. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. 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. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. In 2020, it hemorrhaged the same amount. 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. A focus strategy can be implemented to resolve these issues as well. Get in touch with us. Porter explains that there are five forces inherent in a market, which will jointly determine the intensity of competition and profitability of EasyJet and the airline industry. 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. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. This will provide an evaluation of the external business environment in which the company operates. This eliminates the need to any commissions to external sales agency. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. Also, only one type of aircraft is used, in order to minimise maintenance costs. But nothing has been normal for EasyJet since March 23, 2020. Procurement and firm infrastructure as a support activity does not add much extra value. Therefore, capability is strongly related to the way that resources are used and controlled. A prime example of this was the subsequent takeover of Go by EasyJet. Balance your retirement plan with your other financial goals. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Commercial airlines net profit in Europe 2013-2022, Commercial airlines change in passenger traffic in Europe 2013-2022, Number of passengers uplifted by United Kingdom airlines 2013-2021, British Airways - worldwide revenue 2010-2021, Leading airlines in Europe based on passenger numbers 2021, Net profit of commercial airlines in Europe from 2013 to 2022 (in billion U.S. dollars), Commercial airlines EBIT in Europe from 2013-2022, Earnings before interest and taxes (EBIT) margin of commercial airlines in Europe from 2013 to 2022, Year-on-year passenger traffic change of commercial airlines in Europe from 2013 to 2022*, Turnover of the air transport industry in the United Kingdom 2008-2018, Annual turnover of the air transport industry in the United Kingdom (UK) from 2008 to 2018 (in million euros), Total number of passengers uplifted by airlines based in the United Kingdom (UK) from 2013 to 2021 (in millions), Worldwide employment by registered airlines in the United Kingdom 2002-2020, Number of people employed worldwide by UK-based airlines between 2002 and 2020, Volume of turbine fuel consumed in aviation in the United Kingdom (UK) 2000-2020, Amount of aviation turbine fuel consumed annually in the operation of aircraft in the United Kingdom (UK) between 2000 and 2020 (in million metric tons), Annual revenue of easyJet plc from 2009 to 2021 (in million GBP), EasyJet plc: annual revenue by region 2018-2021, Annual revenue of easyJet plc from 2018 to 2021, by region (in million GBP), Annual operating expenses of easyJet plc from 2009 to 2021 (in million GBP)*, Annual earnings before interest, taxes, depreciation, amortization and rentals (EBITDAR) of easyJet plc from 2009 to 2021 (in million GBP), Annual operating profit of easyJet plc from 2009 to 2021 (in million GBP), Annual net profit of easyJet plc from 2009 to 2021 (in million GBP), Number of passengers carried by easyJet 2009-2021, Number of passengers traveling with easyJet from 2009 to 2021 (in millions), Passengers uplifted by EasyJet in UK 2008-2020, Number of passengers uplifted by EasyJet Airline Company Ltd in the UK from 2008 to 2020 (in millions)*, Number of seats flown on easyJet flights between 2011 and 2021 (in millions), Easyjet passenger transport volume 2013-2021, Passenger transport volume of Easyjet from 2013 to 2021 (in million revenue passenger-kilometers), EasyJet's passenger load factor 2009-2021, Passenger load factor of EasyJet between 2009 and 2021, Distance flown by EasyJet's passenger aircraft worldwide 2008-2020, EasyJet Airline Company Ltd's passenger aircraft kilometers flown worldwide from 2008 to 2020 (in million kilometers), Leading airlines in Europe in 2021, based on passenger traffic (in millions), Leading European airlines based on revenue 2021, Leading airline groups in Europe in 2021, based on revenue (in billion U.S. dollars)*, Liquidity balances of leading European airline groups 2019, European airlines with best liquidity as a share of 2019 revenue*, Liquidity equivalent days of revenue of the leading European airline groups 2020, Liquidity equivalent days of revenue of the leading European airline groups in 2020*, Number of passengers uplifted by United Kingdom airlines 2021, Leading airlines in the United Kingdom in 2021, by number of passengers uplifted (in millions), British Airways Plc's worldwide revenue from FY 2010 to FY 2021 (in million GBP), British Airways and subsidiaries: number of passengers carried 2011-2021, Number of passengers traveling with British Airways and its subsidiaries from 2011 to 2021 (in 1,000), Annual revenue of Ryanair from 2010 to 2022 (in million euros), Number of passengers carried by Ryanair 2011-2022, Number of passengers traveling with Ryanair from 2011 to 2022 (in millions). 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