EasyJet Airline

EasyJet Airline is one of the most successful airlines in the United Kingdom. The company, which was founded in 1995, has experienced fast growth in its operations, owing primarily to its customer-friendly initiatives. Nowadays, the airline corporation has increased its local and international flights and operates on around 500 routes connecting Asia, North Africa, and Europe. The low cost and price elasticity strategy is one of its most successful tactics. This concept of its operations factors in economic changes and other factors to set up flight charges that are quite appealing to the customer base. The management has been keen on the issue of pricing as it believes that price is the primary factor that influences the choice of airline made by the customers (Doganis 2010, p. 23). This means that if the company has the lowest prices in the industry, many people will prefer to use it and that will boost its profitability. The EasyJet Company started its operations in 1995 when the company initiated its first flight from Luton to Glasgow and Edinburgh using a leased plane which had a carrying capacity of 148 people. The company charged $29 for a one-way ticket on its first flight which was way cheaper than what the established airlines were charging. Southern Scotland is one of the largest domestic markets and it requires direct flights to connect it to London. This was the main reason that influenced the choice of the first flights made by EasyJet. The EasyJet Company currently has operations in over 27 countries and has over 175 aircraft (Adeyemi 2013, p. 41). Its low-cost strategy has currently been widely adopted by airline companies all over the world. Later on, towards the end of 1995, the company started its telephone reservation service which enabled people to book and reserve flight seats through the phone. This was a new strategy which was quite appealing played a significant role in increasing the customers for the company. In about two years, the company had become a prominent figure in the airline business, and it launched its website. This further boosted the popularity of the company as web bookings shot up to 26% within a period of one year (Adeyemi 2013, p. 63). EasyJet has continued to make major strides in the airline business which is facilitated by its qualified and experienced management as well as the competent workforce. Its paperless operation is one of the major moves that have seen the company revolutionise air travel (Doganis 2010, p.112). The company bases its operations on a strong electronic infrastructure which facilitates the undertaking of the primary procedures. This electronic platform replaces the paper-based approach which is used by other flight companies (Mayer 2003, p. 26). As a result, the paperless approach has led to the reduction of administration costs, improved management and effective decision-making within the company.

Internal Operations

EasyJet has placed itself in a good position in terms of management and operations which have made it sustain its low-cost strategy and remain profitable. The British airline business is saturated with air flight companies which have adopted similar marketing and pricing strategies. Moreover, this has led to the intensification competition between these firms which have made some become unsustainable. EasyJet, on the other side, has adopted a divergent approach that mainly focuses on cost reduction. This has the effect of reducing operating costs enabling the company to further reduce the charges for its flights (Adeyemi 2013, p. 87). The continued success of the EasyJet Company enabled it to acquire ‘Go’ which was a subsidiary of British Airline. Therefore, this was a major move that increased the popularity of the company in regions where ‘Go’ had operated.
EasyJet which is also known as No-frills airlines has a perfect concept which enables it to provide quality services at relatively low prices compared to other flight companies. By contrast, the other airlines are only able to reduce prices through cutting off some of the services given during a flight. However, the EasyJet Company takes a typical cost leadership strategy that enables low-cost fares and quality services. The business management believes in the philosophy of sales benefits where it emphasises on making more trips across destinations charging low fares (Friederich 2014, p. 74). As a result, this strategic approach results to the company making more money than the airlines that make a single trip charging an inflated fare. The airline company bases its success on the strategy of maintaining a 30-40% cost-based advantage over competitors. The management of the company believes in achieving a competitive advantage through this strategy (Doganis 2010, p. 114). The strategy is based the on two main choices which are; finding segments that competitors are less interested in, and finding a segment that appeals to price sensible customers. For instance, they utilise this by doing the following;
The first factor that enhances the reduced prices charged by the EasyJet Company is the ticketless airline approach. This strategy has all the operations of the company done electronically and all the customers need is just a passport and a confirmation code to fly. The other factor that has enabled the company to maintain the low-cost strategy is an efficient use of the airport. This is enhanced by the rapid turnaround times (Rapp 2010, p. 221). The reduced turnaround times has seen the company reach agreements with airport management to charge significantly reduced charges for airport use. The EasyJet flights do not provide free meals but they give their passengers a variety of food and drinks options which they can purchase (Adeyemi 2013 p. 123). As a result, this generates more income for the company and gives the customers satisfaction.
The EasyJet flights have got no business class segment which is usually charged prices that are significantly higher than the economy class seats. The absence of the business class economises on the space of the aircraft as it creates space for more economy class seats. The company, however, provides a flight that is charged slightly higher than the economy class to cater for those who wish to travel in business class. Punctuality is a major priority for the flight company, and it has minimal delays in its operations. The management has instilled a culture in the workforce that upholds the core policies of the company.
The company has adopted various marketing strategies with the most effective being direct marketing and Internet sales. Web-based sales refer to an approach whereby the company directly engages its customers through various internet-based platforms such as social media (Rapp 2010, pp. 16-18). The company has also integrated its operations into mobile phone platforms that enable customers to directly book planes as well as making inquiries through their phone. In the beginning, the dedicated call centre allowed customers to make reservations over the phone, which is a more familiar communication platform that is available to everyone (Doganis, 2010 p.81). The company initially provided appropriate discounts for internet customers so as to attract more people to the online platform.

External Environment and Competitive Advantage

The airline company faces numerous external challenges that suppress its profitability and success. Fuel cost is one of the greatest challenges facing the EasyJet Company and therefore, it focuses on using fuel as efficiently as possible. In the year 2014, the company saved about 1.2% of the fuel used through the investment in new flight planning system. However, the company is currently aiming at 3% improvement in fuel usage which is expected to translate into $ 30 million by 2018. It is quite important that the company continues to save on fuel as that enables it to charge highly reduced fares (Adeyemi 2013, p. 96). Competitive advantage is derived from the ability of a firm to give its customers value that cannot be attained by the competitors. EasyJet has created a distinct brand which is characterised by the services and low prices that are charged to its customers. This has been one of the basic ways through which the company has attained competitive advantage. Cost leadership and differentiation is a strategy that the company has perfected, and it has made it different, from other frills airline companies thus giving it a competitive advantage (Friederich 2013, p. 48). All the activities that are carried out in the value chain have a significant contribution to the buyer value and the cumulative costs in the chain. EasyJet gets a competitive advantage through its strategies that enable it to carry out strategically important activities in a way that is cheaper or better than what is provided by the competitors (Doganis, 2010 p.132). Competitive advantage can be achieved from any aspect within the value chain and not on the quality of products and services as many believe. To understand how the airline company fits into the value system one has to understand the composition of its suppliers, distribution channels, and buyers. On the issue of competitive advantage, EasyJet concentrates on the reduction of costs as well as the leadership costs. The company has managed to maintain low costs which have made it hard for other companies to successfully compete against it. However, the company faces problems related to sustainability of its cost leadership. Maintaining the low costs standards that the company has set is quite a challenge. This is because there are economic factors such as inflation that have a significant effect on the fare charged. The company, however, has the obligation to show consistency in the fare charged on flights. This at times requires the management to defy the economic logic so as to retain its customer base.

SWOT Analysis

A SWOT analysis of the EasyJet Company reveals that the company is sustainable and has a huge potential which can enable it to expand to regions that it has not yet ventured into.

Strengths

Among the strengths of the company is the successful cost reduction strategy which has been widely adopted by other airline companies all over the world. Besides that, the company has a flexible and innovative administration which has continued to come up with new strategies to further reduce operating costs and enhance customer satisfaction. The company has popularised its brand name which is closely associated with reduced costs (Adeyemi 2013, p. 84). This corporate image that the company has created over time plays a significant role in increasing the customer base for the company. The destinations which the airline flies to are major cities which have made it very popular in Europe and Asia. The airlines’ reduced turnaround times enhance efficiency for the customers who prefer this airline than the other ones that operate on the traditional approach. The company operates on a single model of aircraft which significantly reduces training, maintenance, and supervisory costs (Street, Wilson, and Bruce 2008, p. 32). At last, the airline company has been wisely investing in brand building strategies such as advertising which have ensured high brand recall. The company has already created a brand that people can trust when it comes to cost efficiency and that keeps it ahead of its competitors.

Weaknesses

Despite the apparent strengths, the company has numerous weaknesses which interfere with its operations. One of the weaknesses of the company is the need to sustain its cost leadership in an industry which is very dynamic. The two basic components that enhance growth in the firm are price and convenience. These two components have reached the limits and cannot be further exploited for the benefit of the airline. The company is already running short of alternative strategies that it can apply to attract more customers as it has already exhausted the price and convenience approaches. The ‘EasyJet' brand is not owned by the company but belongs to a third party, and therefore the airline company has no control of the performance of other products and services used the same name (Adeyemi 2013, p. 106). The airline needs to be consistent in innovation so as to ensure that it maintains the current advantage in electronic operations. Increased fleet capacity presents quite a challenge especially during periods of reduced travel and that may affect the profitability of the company.

Opportunities

The EU recently expanded its territories which led to the creation of many new markets for the low-cost carriers. The low fares charged by these carriers will increase the rate of travelling of people seeking jobs across the borders of the EU nations and also promote the tourism industry. This will consequently promote the economic growth of the firm. Vertical and horizontal expansions present yet another important alternative for the EasyJet Company. This will significantly reduce the future threat of increased service provider costs (Doganis, 2010 p.116). The move by many competitor companies to withdraw traffic from routes that are not traffic intense is yet another opportunity for the company as it can expand its operations to these routes.

Threats

One of the biggest threats that the EasyJet Company faces is terrorism and catastrophic loss which can lead to reduced rates of travel and loss of infrastructure that supports its operations. Moreover, war threats and disease outbreaks are other threats which interfere with the operations of the airline. The increased taxes and legal requirements which the air travel industry is currently subjected to are yet another threat that the company faces. The company has currently expanded its operations to most of the emerging regions. This could be a threat to future expansion plans due to the exhaustion potential regions for dissemination. The United States dollar which dominates the airline industry keeps on fluctuating which presents another risk for the airline company. Cost cutting tactics implemented by competitors can have a significant effect on passenger traffic on popular air routes thus reducing the number of passengers served by the airline (Doganis, 2010 p.127). Lastly, the company depends on third parties for many of its operations, and this poses a risk as this contracts may not be renewed by the parties.

PESTEL Analysis

Political Factors

There are numerous political factors that have affected the operations of airline companies. In 1990 the European nations interfered with the regulation of commercial airlines which happened at the same time with the expansion and diversification the low-cost airline industry. The airline companies took advantage and capitalised on that opportunity through expansion of their operations. Besides that, there is the issue of war threat in the East Euro and EU east (Jones 2007, p. 247).

Economic Factors

The issue of mergers and acquisitions in the low-cost airline industry has affected many companies. The EasyJet Company operates in a low-cost external environment. This is sustained by the reduced operating costs like low wages and reduced maintenance costs. These are the characteristics of the economy in which the EasyJet Company thrives.

Social Factors

The EasyJet Company which is a low-cost carrier firm focuses on business and leisure travellers with distinct differentiation. This approach limits its scope as it pays little attention to leisure travel (Adeyemi 2013, p. 92). The competing firms have a focus on both leisure and business and therefore are better placed to appeal to more customers than the EasyJet. The airline management should ensure that its strategy is customised to appeal to wider market scope.

Technological Factors

The low-cost carriers like the EasyJet have the ability to sufficiently serve the increased customer base through the integration of technologies such as the user-friendly web-based reservation processes. These websites have the capability of charging bookings easily and utilising a fare finder function to obtain the cheapest fares (Jones 2007, p. 42). Elimination of the middlemen in the plane reservation exercise is one way which has enabled the reduced flight prices.

Recommendations

From this paper, it is evident that the EasyJet has been successful since its start in 1995.The management of the EasyJet Company has managed to get everything right with respect to the competitive strategy which has enabled the company to remain successful and beat all the competition. Despite the fact that the company has been very successful and rapidly expanded taking over routes dominated by other airlines, it should pay close attention to the moves made by its competitors. Emerging technologies should be carefully integrated into its operations, and a market research should also be conducted to find out the preferences of the customers besides price and convenience (Doganis 2010, p. 140). There are various ways through which the EasyJet can improve its operations as well as enhancing its profitability. To begin with, the company can partner with other companies like taxicab companies to facilitate the picking and dropping off passengers at their destinations. This will increase the efficiency and convenience for the customers who will not have to contact transport companies to provide such services. The other option the company could explore is the provision of financing services for flight fare. This function would allow the customers to have an option to obtain discounts on hotels around the airport. This will not only improve the services provided by the company but will also create new business opportunities (Anderson 2016, p. 128). The EasyJet Company already has operations in over 400 routes. This means that there are many other routes in which the company can introduce its cheap flights. As a result, this would significantly increase its customer base as more people will be able to access its services.

Conclusion

As has been noted, the EasyJet Airline is one of the best performing airlines in, specifically Britain. The company has made use of various strategies which have enabled it to dominate the low-cost carriage airline industry. One of the fundamental strategies that have made it very successful is the low cost and price elasticity strategy. This approach aims at significantly reducing flight fares through cutting down on operating costs. This concept of its operations focuses on economic changes and other factors to set up flight charges that are quite appealing to the customer base. The management at the EasyJet Company has been quite keen on the issue of pricing as that is the main strategy used to give the company competitive advantage. The management operates on the belief that the price charged is the main factor that influences the choice of airline made by the customers. The British airline business is already filled up with companies practising similar marketing and operational strategies which have intensified the competition between these firms leading to the unsustainability of some of them. This influences business moves such as mergers and acquisitions. EasyJet management has, however, been focused on a different approach which has made it distinct from all other players in the industry. The cost reduction strategy entails significant expenditure reduction in all operations of the company so as to maintain the cost leadership. The airline company is faced with many external challenges that have an adverse effect on its profitability and success. The fluctuating Fuel cost is one of the greatest challenges that EasyJet Company. This has seen the management venture into fuel saving strategies such as changing the design of the plane. Notably, the firm has been able to save up to 1.2% of fuel in the past one year. The EasyJet Company is also faced with many threats despite its apparent strengths. The biggest threats that the company faces is the issue of terrorism and catastrophic events. The occurrence of any of the two leads to reduced travel among the people due to the fear of getting caught up in those life-threatening events. There are many alternative options which can increase the profitability of the company. These include establishing partnerships with other companies and integration of new technologies. As a result, the management of the airline company has played a significant role in enhancing the success of the firm through streamlining of the operations and adoption of marketing strategies that stand out.

References

Adeyemi, F.-A., 2013. UK's aviation industry comparative evaluation of BA and easyJet. Saarbrücken, LAP LAMBERT Academic Publishing.
Anderson, T., 2016. easyLand: how easyJet conquered Europe. Grosvenor House Publishing Limited.
Doganis, R., 2010. Flying off course: Airline economics and marketing. London, Routledge.
Friederich, A., 2014. easyJet. Allia.
Jones, L., 2007. EasyJet: the story of England's biggest low-cost airline. London, Aurum.
Mayer, F., 2003. A case study of EasyJet and the airline industry. München, GRIN Verlag. http://sbiproxy.uqac.ca/login?url=http://international.scholarvox.com/book/88824680
Rapp, T., 2010. Lost and sound: Berlin, techno and the Easyjet Set. [Berlin], Innervisions.
Street, R., Wilson, H., and Bruce, L., 2008. The multichannel challenge: integrating customer experiences for profit. Routledge, 1 edition.