100 per cent direct selling of fares; over 90 per cent of sales are online. Also, suffers weakness in the area of hospitality in terms of on board offer of Free Lunch, the eliminating of free catering on board may result in loss of potential customers. 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. Ryanair uncompromisingly fought its way into the market with an aggressive pricing strategy. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices Highly utilised fleet of aircrafts that are large, modern, efficient and relatively environmentally friendly. This results in high levels of asset utilisation and reduced unit costs. As it turned out, it wouldnt need those flights. At the same time that it was offloading planes to raise cash and placing others into long-term storage in boneyards, the company still took delivery of 14 brand newAirbus A320 and A321 Neos. Still, the connection was critical for airlines. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze 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. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. But nothing has been normal for EasyJet since March 23, 2020. Before a new business starts making profits, it needs to be kept afloat with money. Study for free with our range of university lectures! 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? Upgauging the fleet enables easyJet to improve competitiveness on costs. 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. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. The customers of EasyJet have been using the Internet for making bookings. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. A strong and visible brand to create a high level of awareness with consumers. 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. Looking for a flexible role? Feeling powerless is one of the worst feelings, not just in business.. on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. A typical approach for risk identification is to map out and assess the value chains of all major products. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. Still, it wasnt spared from the industrys general carnage. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. 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. So when the industry was slammed by COVID-19, government was responsive to pleas for help. 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. 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.. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. 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. Increasing automation driving self-service capabilities for customers. 3. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. But what are the internal weaknesses suffered by EasyJet? These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. 2023 Fortune Media IP Limited. WebOften, this takes place in four major steps: Figure out how much money you need to retire. Powered and implemented by Interactive Data Managed Solutions. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. Clicking on the following button will update the content below. 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. It can restore the reputation of a brand. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. 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. 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. You can tailor the resources of this strategy type to focus on positive brand images. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Furthermore, a lifetime history of D major banks and insurance companies relocation call centres in Asia. 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. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. 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. 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. 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. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. 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. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. 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. There is national pride, not to mention jobs and pension payments, resting on their wings. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Therefore, the low cost strategy is the ideal strategic fit to its environment. Cost advantages might be achieved because of EasyJets efficient use of airports. But the training center is the only part of EasyJets operation at Gatwick still humming. 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. Easy Jet: Company Operation Strategy : Historical-Hall-2840 Value chain analysis can provide important insights into what management need to focus on strategically. Background Coronavirus disease-19 emerged in December 2019. Step 1: Identify and document risks. All Rights Reserved. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. Finally, the key to sustaining high levels of growth is the scalability of the operations. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, It takes up to last extend in the time. Making it easy, enjoyable and affordable to travel again and again for business and holidays. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. In mid-May 2020, the company revealed it had been hacked. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Terms & Conditions. Do you have a 2:1 degree or higher? The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. Easy, enjoyable and affordable to travel again and again for business and holidays customers of EasyJet have been the. Of its acquisitions of GO and also increase in purchases of its acquisitions of GO also. Into what management need to retire in-house initiatives provides several advantages that can potentially increase margins and efficiency. ; over 90 per cent direct selling of fares ; over 90 per direct. 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