Business Strategy for Easyjet
Easyjet Airline Company is a British airline headquartered at London Luton Airport which operating domestic and international scheduled services on 500 routes between 118 European, North African, and West Asian airports. The company was founded in 1995 by Stelios Haji-Ioannou. And currently, the management of Easyjet is formed by Andrew Harrison as CEO, Cor Vrieswijk as COO, and Jeff Carr as CFO. Up to 2009, Easyjet had nearly 7000 employees throughout Europe. Apart from low-cost tickets, Easyjet has improved in network quality, lower-cost deals with key suppliers, and enhancements to Easyjet. com and so on.
Mission statement, Aim & Objectives Mission statement of EasyJet is “to provide customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes”. The company will develop its people and establish lasting relationships with its suppliers. Vision| Easyjet’s vision of the future is built on developing its strength to be the largest and best low-cost airline in Europe. The aim & objectives of Easyjet are similar to its mission statement. The company underpins its long-term prospects matter its business with safety, customer satisfaction, future financial performance, people, and environment.
Political The political environment includes tax policy such as Air Passenger Duty and carbon tax. “APD tax is raised about? 2. 4bn for the government every year. The airline Easyjet also supported a green tax on air travel based on carbon produced. Increasing tax is not effective for customers to pay more but “Easyjet has realized it and apologized to customers”. Cheap first and expensive later is what Easyjet always does. According to appendix 1, more immigrants coming to the UK give Easyjet more marketing opportunities. However, national insurance puts employees wage up so that increases the company’s costs (Telegraph, 2010).
Economic According to appendix 2, “some experts predict that the UK interest rate will increase to 3% in 2010 and 2011”. Customers may pay higher for tickets if they borrow money. Meantime, according to appendix 3, it is bad for Easyjet because “some experts assert that Euro may depreciate in the next 6 months from January 2010”. People maybe fail to choose Easyjet up to this viewpoint. Additionally, it gives a burden to the company as fuel prices may go up year by year (see appendix 4).
Social Attitude of customers’ impact on EasyJet’s business. According to appendix 5, more customers prefer to travel by air these years and it hits 2000 million in 2004. The phenomenon makes EasyJet arrange more flights. Meantime, “nearly 28% of people choose to search for tickets information online every day so that the company’s business online can be developed quickly”.
Technological. There are nearly 200 airplanes in the company and Easyjet is working closely with all the relevant airframe and engine. The safety can be guaranteed. The company also offers an online check-in system for baggage with codes and buying tickets which are pretty convenient to customers.
Legal The company follows mostly European law such as safety law. But there is a piece of bad news recently that Easyjet needs to pay 1. 4m euros in damages for violating French labor laws. It is not only negative to financial condition but also to reputation. At the same time, the company supports carbon laws that cut carbon emissions.
Environmental. The global standards for aircraft that can lead to carbon emissions of aviation being cut by 40%, Easyjet seeks the legislation for cleaner aircraft is demanded by his firm to stop the flight of old and inefficient planes. It is good for passengers’ health. Meantime, the average aircraft age is 2. 2 years which makes up the youngest, cleanest and quietest fleets in the world.
Internal Analysis Strengths. Being seen as an innovative and flexible organization and has a strong e-business that offers a full and fast price plan to customers.
External analysis. Opportunities: Low-cost airline industry has a promising future. If Easyjet can establish itself as the low-cost number 1 airline, Easyjet will continue its success with its strong position and prove takeover opportunities. Threats: Economic downturn may lead to a decrease in casual flyers. Increased competition leads to greater difficulties in demanding incentives from communities such as low fees Easyjet received at Luton. To enter new markets like Germany and France, Easyjet also ends to spend much money than in the UK. The cost is pretty higher.
Porter’s five forces The threat of substitutes = Low The threat of substitutes for Easyjet comes from other transport tools such as trains, cars, boats, and so on. Minimal threat from train and car on domestic routes. Easyjet does not need to worry too much about other transports tools if Easyjet improves the online system continually. The threat of entry = low It is difficult for a new company to enter the low-cost airline industry. Easyjet has quite a comfortable position in the UK’s low-cost market as the biggest operator. High capital requirements also negate the threat to some extent for Easyjet”. The threat of buyers = Moderate Customers will often choose a better price, particularly with the online tickets system. Investors are really into Easyjet’s service and its growth markets, and they also have the power to buy shares to make its share price up. For shareholders, Stelios Haji-Ioannou owns 22% of the whole company. He gets big power.
Ansoff Matrix Market Penetration: Easyjet can make the most of its existing products to achieve growth of market share such as “put ticket prices to some domestic destination down continually and add more seats in planes”. Market Development: Easyjet hopes to get growth by using its existing product into new markets. The company is launching new flights to Australia, Romania, and Germany which have been travel spotlights with its low-cost tickets and frequent flights. Product Development: Easyjet is adding flights and developing new flight routes to more places across the European even northern Africa. Therefore, it develops the product range. Diversification: Easyjet is not only operating airline service but also does other related transportation services such as easycar, airport parking. Apart from the transportation field, the company is also responsible for hotel booking, travel guide,s and so on. Diversification makes EasyJet consolidate the existing market and accumulating experience for new fields.
An enhanced version of its fast boarding service attracts more customers. It is a high growth market. Question Marks: There is a baggage allowance that Easyjet offers to speed its market up. Cash Cows: Customers get club cards of Easyjet so that they can get savings for credit purchasing of tickets. The interest rate generally affects this so that there is not any growth. Dogs: Easyjet gets little money in catering according to the annual report.
Strategic position and selected strategy The strategic position of Easyjet is similar to the aim & objectives. “Turn Europe Orange” that Easyjet expands its employer presence across Europe. The company aims to cut more carbon emissions and add more seats in the planes so that improving the quality of its service. This strategy meets Easyjet’s customer’s proposition for building appeal to business travelers. By the way, it is also a kind of marketing campaign to offer more speedy boarding to customers. It covers suitability, feasibility, and acceptability well. The strategy meets Easyjet safety requirements to improve pilot training. It covers suitability, feasibility well but not acceptability. Suitability| Providing customers with well-trained pilots and a good safety system. CAE helps with qualified training simulators so that the quality and service can be guaranteed. Easyjet spends money to make agreements with CAE.
Select one strategy and describe the implementation & monitoring plans. In my opinion, it is appropriate for Easyjet to develop new routes to Romania. There are only two routes which depart from Madrid and Milan to Romania. It is not enough. Firstly, Easyjet is the UK’s largest airline measured by the number of passengers flown. But in Europe, there are several competitors such as Ryanair, BMI, and so on. More people choose to go on holiday to Romania which is known as the “Paris of the East”. Developing new routes gives rise to more marketing opportunities. Secondly, choosing low-fare airports such as Bucharest meets the organizational objectives. The company is able to make good use of its resources of new aircraft and employees. Thirdly, developing new routes that depart from native airports in the UK gives local people opportunities to go on holiday to Romania directly. Thus, it helps Easyjet to consolidate its UK largest airline. Implementation The route starts from a UK airport such as Liverpool, Bristol, Stansted, it is necessary for Easyjet to make a good deal with the airports.
The company needs to pay a sum of money for airport fees which involves aircraft parking, administration fees, and airport parking, airport lounges for passengers. The native airports in the UK offer low-cost parking such as 4 per day at Bristol. The airports in other European cities such as Milan, Paris will cost a little more for these fees. Then Easyjet may prepare how many flights will depart from each route with arranged pilots, in-flight staff, and the first departure date. The company needs to publicize the new routes to passengers in time online with detailed ticket price include or exclude tax. For example, many people are attracted to Bucharest’s architecture. The company can develop a route from Liverpool in summer vacation or winter vacation, 2011. Thus, there will be more customers who would like to have a view of Romania during the holidays. Monitoring Plan In order to operate these new routes better, the company is able to monitor the routes carefully. To ensure every flight should be arrived at the airports on time, using global online service to anticipate weather-related delays at departure and destination airports.
Work out optimizing schedules and scan customers’ feedback carefully so that if there is someone who feels bad for EasyJet’s service, the company can improve immediately. If the new routes are operated well with lots of numbers of passengers and minimizing the level of delay times, Easyjet can consider opening more new routes across Europe. It is appropriate for Easyjet to operate 70 new routes in 2010. The company can add more routes departure from different local airports such as Luton, Bristol to Romania, and then add some routes that depart in other countries such as Paris to Romania. Therefore for customers at any place, there will be more choices.
Conclusion. In order to become the largest low-cost airline in Europe, Easyjet also needs to enhance its online system and “fly outside Europe” strategy. This may give rise to more marketing opportunities. However, up to now, Easyjet operates successfully and gets profit up to 80 million pounds with 9% up of market shares in 2009.
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