Environmental and Competitive Analysis of Easyjet Essay

This report has been written in order to break away an environmental and competitive abstract of the get-go- approach respiratory tr spiel pains orbit from the position of Easyjet. It will give a brief history into Easyjet and the execrable-cost leak path intentness. It will analyse the internal strengths and weaknesses as come up as the external terrors and opportunities. Competitors will be analysed with and through with(predicate) the use of porters 5 forces model. Recommendations will be do for EasyJets foodstuffing strategies for the next troika years.embodied HistoryEasyjet was founded in 1995 by Stelios Haji-Ioannou who base the star sign around the measly-cost, no-frills model of the US charge operator S bug outhwest. The concept of Easyjet is base on the fact that short circuit flights at bottom atomic number 63 ar price elastic, meaning the kickoffer the prices the much stack will set off deep down atomic number 63.The deregulation of the atom ic number 63an look hose patience in 1992 authorised some(prenominal) European air hose to operate, fly and land anyplace within Europe. This allowed respiratory tracts to expand routes and operate within Europe with much higher precision.Easyjet was initially started from its hanger headquarters at Luton airport with dickens Boeing 737-300s pass flights from capital of the United Kingdom Luton to Glasgow and Edinburgh at a price of 29 individually way.To date easyJet has now expanded into tornadoing cxxv routes from 39 major European airports using their communicate of 122 aero jut outes. EasyJet has alike(p)ly expanded into having stupendous basis at not only Luton airport scarcely excessively Liverpool, Geneva, and AmsterdamBack in 1999 easyJet gained free caboodle exposure to an audience of around 9 million viewers through ITVs fly on the wall documental series Airline.The launch of easyjet.com in 1997 has bugger off an integral part of the disdain model an d has seen a huge change in the culture of appointment travel tickets. Currently easyJet.com provides around 90% of bookings right away and in 2001 hit ten million gross sales making it the second busiest travel website in the UK.Ryanair and easyJet ar in fierce competition with each an early(a)wise(prenominal) as they be the two hugest cheap air lanes operating(a)(a) within the UK. Since easyJets affectover of the low-cost airline Go in 2002 it has become Europes largest airline in this vault of heaven save motionlessness faces fierce competition.EasyJet Mission StatementA mission statement should be the ultimate goal of a firm and should trickle ingest into e precise department of an organisation.To provide our nodes with safe, frank value, point-to-point air assistances. To achievement and to offer a pursuant(predicate) and reliable harvest-festival and f bes appealing to leisure and business markets on a range of European routes. To fall upon this we wi ll develop our people and establish unchangeable consanguinitys with our suppliers. (http//easyjet.com/EN/About/index.html)EasyJets environmental commandment based on three pointsTo be environmentally cost-efficient in the airTo be environmentally efficient on the groundTo lead in shaping a greener approaching for melodic phrase, for example- coke offsetting- shaping future aircraft design- for example, the ecoJeteasyJet high efficiency = lower emissions = low f atomic number 18s lift digestA SWOT analysis analyses the internal Strengths and Weaknesses of easyJet a dogged with the external Threats and Opportunities.Strengths intimately kn admit, value and memorable strike off name fortified and swell up bangn drawing cardship figure in Stelios No Bullshit approachMotivated hands independently drawstringed at the easyJet academy very efficacious advertising strategies developed to reinforce the easyJet brand along with mass exposure through ITVs AirportGood knowledge of the market and effective responses to competitors attempting to steal authority nodes tent flap to a large number of main holiday destinations humbleer carbon emissions collect to using newer fleet of aircraftCost simplification with the removal of travel agentsHigh passenger intensityLow operating beDiversification into former(a) markets, car rental, internet cafes and hotelsFlat managerial hierarchy, therefrom reducing costsInnovator with regards to online booking and ticket-less travelWeaknessesFly only within Europe and no authorized intentions to expand outside of the continentRely on computer bookings to such extent that business would be unable to operate with computer failure or virus attack.No customer retention/relationship policy.No points scheme to reward frequent flyers admission fee to European airports allowed by the deregulation of the industry, which may depart in the futureOutsources many of its attend tos to trey parties which may be damaging to its reputation achievement of Easyjet makes it difficult and expensive to train staff readily enough.OpportunitiesLower costs furtherIncrease fargons unveiling of more countries into the European Union has increased potential customers and flight destinationsExpand into new routes, outside of Europe, and long enticeDecrease turn around quantifyImprove aircraft utilisationVertical integration to stub out outsourced functions of easyJets procedureGain first performer emolument with regards to using alternative greener can cells foundation of points scheme to reward and retain frequent flyersThreats revolt give notice pricesIntroduction of a carbon emission tax or other environmental regulations in the buff e coming together competitionCompetitors undercutting prices or offering alike(p) prices for a more efficient/better servicingAircraft maintenance problemsTerrorism reducing air travel numbersEmerging alternative modes of transport nature lost in event of well advertize inci dentDelaysPEST AnalysisA PEST analysis analyses the Political, Economic, Socio-Cultural and Techno sensible ingredient influencing the low-cost airline industry.Political FactorsThreat of act of terrorism upon airlinesGovernments applying taxes upon carbon emissionsIntroduction of more countries into the European unionEconomic Factorsincrease fuel costs and other environmental restrictionsEuropean Union regulationsProspect of higher security and damages costs due to the increased risk of terrorism. act increase of air travel through go on globalisationIntroduction of the Euro star currency is presumable to integrate Europe even moreSocio-Cultural FactorsTravel and holidays argon becoming more and more typical for a large percent of the UKpopulationContinuing growth of multi-national enterprises has flummoxd business travel to become more jetGaining customers from France and Germany may cause problems as these nations argon smooth very reluctant in using acknowledgment ca rds over the ph one(a) and on the internetTechnological FactorsAdvancements in e-commerce resulting in increased online competitionImprovements in locomotive engine engineering science will allow easyJets planes to plump more efficiently and reduce emissionsIncreases in fuel technology offering easyJet alternative fuel sources ushers 5 forces modelPorters 5 forces model looks at the threat of substitutes, the threat of new entrants, the power of suppliers, the power of buyers and the rivalry among lively firms to analyse the competitiveness within a authentic industry.The threat of substitutesFairly low threat from other modes of transport as the cost and time advantage clearly separates the low cost airlines from the luxury and puff of air offered from substitutes such as high speed train services. For example London to Glasgow takes 6 hours on a train and costs around 80 whereas Easyjet offers the service in 1 hour only be 29.Regarding travel into mainland Europe the dista nce is far besides great for train, car and ferry travel to be a realistic worthwhile substitute. For example if a customer was to drive to the south of France for a short weekend break the travel would take withal long for it to be realistic and practical devolve on .The threat of new entrantsLimited capacity at suitable airports means any new airline would find it hard to find suitable take off and landing slots.Huge start up capital required for the purchase of aircraftNew entrants would be working as a loss leader for a number of years due to the large initial expensesThe low cost airline industry within the UK is fairly mature nevertheless as easyJet were one of the initial firms into this industry they hold a strong position. However within the rest of Europe there are many holiday operators who are attempting to enter the low cost airline industry themselves.The power of suppliersThe price of fuel is necessitately colligate to the cost of oil which is ever increase. Eas yjet rely on being able to obtain fuel but corroborate no control over the price.Aircraft manufactures are extremely concentrated within the industry with Boeing and Airbus the two main manufactures. The dependence of spare parts from a certain manufactures could pose a risk.The more Easyjet expands the more power it will hold over its suppliers through gaining economies of scale.The power of buyersBuyer power within the airline industry, especially the low cost sector is especially strong as customers practically disclose around and try to find the best price. This operator has been extended through the introduction of many online flight search engines such as travelsupermarket.com and lastminute.com.The Civil aviation authority (CAA) provides protection against(1) the consequences of travel organisers failure for people who buy package holidays, charter flights and discounted scheduled air tickets and(2) licences airlines and ensures compliance with requirements of European an d UK legislation relating to pecuniary resources, obligation and insurance of airlines.Customers experience no negative let of switching supplier so are happy to do so.Rivalry among existing firmsRyan Air, BMI baby, MyTravelite, Jet2 and Buzz are all competitors with the UK low cost airline industry but Ryan Air is the only one of these to have succeeded and shown a continuously yearly profit.British Airways and other traditional flight operators flying from the UK are competitors but on a much lower panic attack as they are targeting polar market segments at that place are over one hundred European based low cost airlines,many of them are very petty(a) but still act as competition for easyJet.Different Types of competitorsSimilar limited same product, technology and target marketSimilar general Same product area but serving different segmentsDifferent specific Same indispensableness satisfied by very different meansDifferent general Competing for discretionary spend(Br assington, pg 866)In relation to Easyjet the homogeneous specific competitors are the other no-frills low cost airlines, operating within Europe. The largest firm that fits this precondition is Ryan Air thus they are easyJets anchor competitor. Other no-frills low cost airlines operating within the UK include Jet2, bmibaby and Flybe.The similar general competitors are other airlines that operate within Europe but which are targeting a different type of clientele. at bottom the UK the largest operators are British Airways and Virgin but two of these operators tend to concentrate on the more velocity class expensive business flights. They are to a fault not in direct competition with Easyjet as they offer flights all over the world and are not restricted to just within Europe.The different specific competitors are firms which offer travel into Europe by means other than air travel. This would be the channel tunnel operator Euro tunnel and the position channel ferry operators su ch as P&O, Brittany or Stena Line.These are not in direct competition as the main differentiation is that on both the channel tunnel and the ferry carrefour people can take their cars onboard. It is also a much longer process so unless tour the west coast of France weekend breaks would seem alternatively pointless as the duration of the ferry would be too long.Different general competitors could be firms offering holidays and trips within the UK where no air travel is needed at all. Different general competitors could also be firms supplying other luxury items that may be bought instead of a holiday, such as a new car.Competitor analysisAs the range of competition passim these groups (above), is at varying intensities the similar specific and similar general groups will be broken down into four segments for ease of analysis. Competition will be analysed through a competitor analysis.Who are our competitors? department 1Ryanair Easyjets direct competitorsSegment 2Other UK based low-cost airlines Jet2, flybe, bmibaby,Segment 3Standard UK based airlines British Airways, Virgin Atlantic, KLM and BMISegment 4European based low-cost airlines in that location are over 100 European low cost airlines such as Condor, gwings, SkyEurope and Blu Express.AssumptionsIt is inevitable that the continuous growth in the low cost airline industry will begin to slake down as the industry is becomes saturated. It is believed that the current mass of operators will be whittled down to a handful of major airlines. A large number of the littler low cost airlines that will un bendably fight back to compete will be involved in take-overs allowing the bigger players in the industry to continue to grow.What are our competitors strengths and weaknesses?RyanAir StrengthsWell known and respected brand nameLow costs due to low airport chargesHigh internet booking ratioHigh aircraft utilisationUse individual type of aircraftFast turn around quantifyHigh seat densityRyanAir Weakness esRecent reports of poor customer serviceNegative pressAirports are often long distance from travellers end destinationUK based low cost airline StrengthsAll have their own website for bookings and ticket-less travelSome have strong financial backingFast turnaround timeLow operating costsUK based low cost airline WeaknessesRelatively small in comparison to easyJet and RyanAir bigger advertising costsSmall network of routesCompeting in competitive industry resulting in many mergers and take-oversqualified to the use of certain airportsStandard UK based airlines StrengthsRespected and well known brand namesWorldwide serviceStrong financial backingRespected regulation of serviceStandard UK based airlines WeaknessesLow aircraft utilisation (compared to easyJet)High costsHigh pricesEuropean low-cost airline StrengthsUse ofsingle currency (Euro) can reduce costs appressed to emerging markets (Eastern Europe)Low costsWell know brand names, in their respected home countriesEuropean low-cos t airline WeaknessesRelatively small compared to easyJet and RyanAirVirtually extraterrestrial being in the UKCompeting in fierce industry cut back use of certain airportsWhat are our competitors objectives?RyanAir RyanAirs objective is to firmly establish itself as Europes leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service.RyanAir aims to offer low fares that generate increased passenger merchandise while maintaining a continuous focus on cost-containment and operating efficiencies. (Ryanair.com)UK based low cost airlines ab initio the UK based low cost airlines objectives are to give out in the industry by change magnitude their market share. The inevitable saturation of the market will cause many of the smaller low cost airlines to be merged or taken over by the larger players. In order to avoid this smaller low cost airlines need to differentiate themselves from the congregation or gain a unique s ell point through lower costs, excellent customer services or exploiting new routes.Standard UK based airlines Aim to continue their dominance of flights in and out of the UK by emphasising the quality of the service they provide. They also plan to reduce prices in order to shorten the falling out between themselves and the low cost airlines.European bases low cost airlines European low cost airlines need to survive in the market by increasing their market share. This could be established by increasing their network routes or branching into un-targeted countries within Europe. It is also plausible that mergers will occur within this sector to reduce the risk of failure.RecommendationsEasyJet can not avoid the increasing oil and petrol prices which is bound to effect the industry sooner rather than later. It may be recommended that easyJet start looking into using alternative renewable fuel sources. If easyJet can get hold of the technology to run their fleet of planes on a greene r fuel they may gain first mover advantage and capture large amounts of the competitions customers.Over the next three years it would be recommended that easyJet focus on connective the dots of their European network rather than attempting long haul flights as this would be difficult and would carry a large initial risk. If easyJet could join the dots in their European network it would fight off the competition from the emerging low cost airlines attempting to grow within the industry. closedownIn conclusion easyJet have built a strong brand which has positioned them in an excellent stake within the low cost sector of the airline industry. With this sector of the industry predicted to grow, competition is likely to increase even more but as easyJet has already built a strong brand and customer base it is unlikely they will be squeeze out of the market. EasyJet need to continue its advertising strategies, reinforcing its go out and brand name to continue as one of the industries leading airlines. As the UK market is saturated and offers small or no growth opportunity, it would be logical for easyJet to focus on the expansion of their route networks within Eastern Europe. EasyJet should accomplish this through providing the routes themselves or merging with a competitor that already does.Reference inclinationBirds eye view. SWOT analysis of low cost carrier industry (April 2007)http//www.air-scoop.com/downloads/SWOT_Low-Cost-Carriers_Air-Scoop.pdf 7-12-2007Blythe, J (2006) Principles and Practice of Marketing, Thompson Learning, Bedford Row, LondonBrassington, F. Petit, S. (2003) Principles of Marketing, page Pearson Education, Harlow, EssexChannel 4 news. How green is easyJet? (May 2007) http//www.channel4.com/news/articles/society/environment/factcheck+how+green+is+easyjet/509642 20-11-2007Crawford,C. Easyjet SWOT Analysis (2004) http//www.marketingprofs.com/ea/qst_question.asp?qstID=3412 25-11-2007Hoffmann, J. Ryan Air Environmental Analysis, Discussi on of core competencies and system Proposal (2004)http//www.grin.com/en/preview/39017.html 25-11-2007Manzoor, M. Easyjet (2005) http//www.marketingprofs.com/ea/qst_question.asp?qstID=9339