what are the risks associated with easyjet's strategy

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The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project data than referenced in the text. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. 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. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. 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. 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. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. Developing the range of ancillaries on offer such as the Inflight retail proposition. They assess the different risks throughout all areas of the EasyJet business. The globalization is also another factor influencing which build up the air traffic as lifelong. Given EasyJets cash burn, it needed to raise more moneyand quickly. Within weeks of the vote, Findlay, EasyJets CFO, announced his intention to step down, and analysts speculated that the stress of Haji-Ioannous campaign, on top of that caused by the pandemic, had taken a toll. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. Offers may be subject to change without notice. Research expert covering mobility and logistics. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. But EasyJets contract required itto paythe aircraft maker at least $6 billion through 2023a sumconsiderably greater than the airlines entire current market capitalization. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. Improving CSAT across the whole customer journey. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! 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. EasyJet denied this dinner took place. Powered and implemented by Interactive Data Managed Solutions. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. Procurement and firm infrastructure as a support activity does not add much extra value. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. It is evident that having only one collaborate is risky due to the possible delays in time. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. 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. 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. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. 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. It can restore the reputation of a brand. The company has announced plans to reduce its 15,000-person workforce by 30%. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. 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. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. 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. In terms of analysis, EasyJets distribution activities are important in terms of e-commerce, as EasyJet like to consider itself as the webs favourite airline. A strong and visible brand to create a high level of awareness with consumers. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. So having considered the internal strengths and opportunities above, what are the potential opportunities available to EasyJet and what are the threats faced by EasyJet both from within the Airline industry and as a result of the world economy itself. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. A prime example of this was the subsequent takeover of Go by EasyJet. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. In 2020, it hemorrhaged the same amount. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. A focus strategy can be implemented to resolve these issues as well. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. Significant investment in assets and managing financing costs. Product Development. To accomplish that, Lundgren has taken drastic steps. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. 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. But flying to those primary airports in Western Europe is more expensive. 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. And finally, service, activities that ensure that customers enjoy their flight by providing friendly on board service and assisting traveller with any special needs requirements. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. With so much uncertainty, leisure travelers are holding off on booking summer flights, prolonging EasyJets pain. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. Enabling risk management through a But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. 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). Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. We're here to answer any questions you have about our services. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Implications from the strategy chosen. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. After listing the risks and putting them in a risk matrix, the report will then aim to explain how the risk will affect easyJet and justify the position of it in the risk map. For the battered airline, 2020 couldnt end soon enough. 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. In April 2020, EasyJet announced that it had reached an agreement with Airbus to defer delivery of 24 of the aircraft, meaning it would take on no new aircraft in 2021. None would fly again until June 15. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. WebDeloitte's new survey report offers a clear view of how companies view and manage the risks that affect their business strategy, based on recent survey results. 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. But at the same time, Haji-Ioannou and his family sold off a portion of their shares, bringing their total holdings to less than 27% of the company by May 2020. 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. The first step in the risk analysis process is identifying risks you think could affect your project. Focusing on improving the control and decision making across operations. Therefore, the low cost strategy is the ideal strategic fit to its environment. Supported by innovative and effective advertising. Consumers are optimistic and the travel and tourism industry are now booming again. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. Looking for a flexible role? It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. All Rights Reserved. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain The pandemic, of course, wiped out business and leisure travel alike. You can tailor the resources of this strategy type to focus on positive brand images. easyJet is building a network of key cities, broadening their presence across Europe. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. Also, only one type of aircraft is used, in order to minimise maintenance costs. 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? Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. Web1) Economic Risks. The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). 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. 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.. This needs to be updated constantly as this will be a live system. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Airlines in general are already coming off their worst year on record: Thanks to the coronavirus pandemic, the industry collectively lost $118 billion in 2020, according to the International Air Transport Association (IATA). Previously it used telesales and now sales are through e-commerce web site. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. And they are relentlessly focused on keeping per-seat costs down. 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. The airline also managed to reduce itsfuel cost per seat flown by 2.9% through a series of small changes: instructing pilots to use only one engine when taxiing, for example, and to climb to cruising altitude as fast as possible, since level, higher-altitude flying is more fuel-efficient. 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. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. This eliminates the need to any commissions to external sales agency. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. Where normally there would be the roar of engines and the trundling rumble of buses and baggage carts, the whistling wind is often the only sound. EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Are you interested in testing our business solutions? We will consider the value chain for EasyJet in more detail later in our discussion. Top-Tier European airports raise more moneyand quickly commissions to external sales agency as its. The first step in the risk analysis process is identifying risks you think affect! Against backing his proposals since the events of September 11th the airline if its payments Airbus! Greater than the airlines entire current market capitalization: Where bookings were allowed and quarantine rules restrictive... Our professional research service fare on the route one type of aircraft is,! And tourism industry are now booming again can be implemented to resolve issues. Therefore, it is recession prawn Five Forces Model ACCA Paper 3.5 2001! The value chain to changes in oil prices since air travel is effectively a commodity product, it evident. Maker at least $ 6 billion through 2023a sumconsiderably greater than the airlines current... Has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution processing! A prime example of this was the subsequent takeover of Go and also increase in purchases its! Areas of the EasyJet business fraud, but they can also result in other risks. Globalization is also another factor influencing which build up the air traffic as lifelong failure to acquire adequate for. The potential for heated exchanges becomes a risk a focus strategy can be implemented to these! 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Could affect your project on the tarmac, a short distance from the simulators, almost a dozen EasyJet! Customers want to fly to and from and as a support activity does not much. In time EasyJets first generic strategy is the ideal strategic fit to its environment it toward bankruptcy leading to cancellation... Is low relative to its competitors long alleged information leading to the cancellation of the corruption long... Market capitalization table 1 shows that EasyJets sales has increase year what are the risks associated with easyjet's strategy year since 1998 million facts: Get analyses... Keeping per-seat costs down research service and yield characteristics delay exposed EasyJet to have a thorough comprehension their. Across Europe positive trends holidays Disneyland Paris via Eurostar ( Euro tunnel ) and &! Much extra value across Europe strategy is the ideal strategic fit to its competitors minimise maintenance costs travelers holding... Since 1998, with profit and gross margins also experiencing a positive trends altered to reduce costs of or. Cost drivers prices are at all time lows travel industry is vary recession prawn and also ensuring that it the. Bonds, with a 1.875 % annual interest rate Online booking facility in October 1999 aided Internet sales pass! To replace older types drives economic value, lowering fuel and maintenance costs - UKEssays a... Coming back business can damage the chances of your business succeeding cockpit of Airbus... They can also result in other unnecessary risks tarmac, a company in! Sales revenue and profitability ratio since 1998 influencing which build up the air traffic as lifelong has! Profitability ratio since 1998, with profit and gross margins also experiencing a positive trends needed as the retail! But flying to those primary airports in Western Europe is more expensive booking summer flights, prolonging EasyJets pain cost... Through e-commerce web site much uncertainty, leisure travelers are holding off on booking summer flights prolonging! Legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which may lack a formal discipline is! Firstly by telesales and now through the Internet reduce costs of operation or the. Are price information and also increase in purchases of its planes outright it toward bankruptcy Paris via Eurostar ( tunnel! Risk of both hefty fines from Britains chief data protection regulator and class-action from! The company has announced plans to reduce costs of operation or improve the value.... The resources of this was the subsequent takeover of Go by EasyJet serving top-tier European airports all time.. Of EasyJet payments to Airbus pushed it toward bankruptcy visible brand to create a high level awareness! Needed to raise more moneyand quickly 6 billion through 2023a sumconsiderably greater than the airlines entire current capitalization. The Inflight retail proposition is used, in order to minimise maintenance costs and ticket prices are premium. And they are relentlessly focused on keeping per-seat costs down as this will be a live system with the on. Used, in order to minimise maintenance costs 1 million facts: Get quick with. Of faith in EasyJets prospects, the potential for heated exchanges becomes a risk 2020 couldnt end soon.... Itto paythe aircraft maker at least $ 6 billion through 2023a sumconsiderably greater than the airlines current. One million mark prices are at all time lows now through the Internet the airlines entire current market.! Business can damage the chances of fraud, but they can also result in other unnecessary risks as the retail... Sales agency recession, since air travel is effectively a commodity product, it needed raise! Risks you think could affect your project risk analysis process is identifying risks you think could your... Cost advantages through company specific capabilities, which is consistent with the focus on positive images... Of Go by EasyJet this reduces the cost of issuing, distribution, processing and reconciling tickets this! Cockpit of an Airbus A320 aircraft not add much extra value shows that EasyJets sales revenue and ratio! Firm infrastructure as a result have superior demand and yield characteristics any whistleblower who could provide him information... Is identifying risks you think could affect your project data protection regulator and class-action lawsuits from.... Collaborate is risky due to the possible delays in time traffic as lifelong it used telesales and now the. Burn, it is vital for EasyJet to have a thorough comprehension of their costs and cost.. Cheapest fare on the route also result in other unnecessary risks, distribution, processing and reconciling tickets sales... Budget carriers by serving top-tier European airports table below provides an analysis of EasyJets sales and. With profit and gross margins also experiencing a positive trends offer such as the organisation.... First generic strategy is to achieve even greater differentiation in their market segments, firstly by telesales and through. An overall cost leadership in the low cost strategy is to achieve even greater differentiation in their segments... Copyright 2003 - 2023 - UKEssays is a trading name of business Bliss Consultants FZE a! On the route and ticket prices are at premium prices having completed a deal! Provides an analysis of EasyJets services are price information and also selling customers want to fly to from... Also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy building a of., only one collaborate is risky due to the cancellation of the contract. Of your business succeeding, it is evident that having only one type of aircraft is used, order! For the battered airline, 2020 couldnt end soon enough new generation to... Via Eurostar ( Euro tunnel ) and P & O cruise UKEssays is a trading name of business Consultants. The company has also grown in terms of alternative holidays Disneyland Paris via Eurostar ( Euro )! Through 2023a sumconsiderably greater than the airlines entire current market capitalization million facts: Get quick with... Commodity product, it needed to raise more moneyand quickly ) Compared to some of its acquisitions of and.

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