This kind of report have been written to supply an environmental and competitive analysis with the low-cost airline industry sector from the situation of Easyjet. It will give a brief history into Easyjet and the cheap airline sector. It will examine the internal pros and cons as well as the exterior threats and opportunities. Competitors will be analysed through the use of protégers 5 pushes model. Recommendations will be generated for EasyJet’s marketing strategies for the next 3 years.
Corporate Record
Easyjet begun in 1995 by Stelios Haji-Ioannou whom based the firm surrounding the low-cost, no-frills model of the US flight user ‘Southwest’.
The concept of Easyjet is founded on the fact that short travel arrangements within European countries are value elastic, which means the lower the amount paid the more persons will travelling within European countries.
The deregulation of the Western airline industry in 1992 authorised virtually any European aircarrier to operate, soar and land anywhere within Europe. This kind of allowed airlines to grow routes and operate inside Europe with much higher precision.
Easyjet was initially started from its ‘hanger’ hq at Luton airport airport with two Boeing 737-300’s supplying flights via London Luton to Glasgow and Edinburgh at an amount of 29 each approach.
To date easyJet has now broadened into providing 125 ways from 39 major Western european airports using their fleet of 122 aeroplanes. EasyJet has also extended into having large basis at not simply Luton airport terminal but likewise Liverpool, Geneva, and AmsterdamBack in 1999 easyJet gained free of charge mass exposure to an audience of around being unfaithful million visitors through ITV’s ‘fly around the wall’ documentary series ‘Airline’.
The kick off of easyjet. com in 1997 is becoming an integral part of the organization model and has viewed a huge enhancements made on the traditions of booking travel seats. Currently easyJet. com provides around 90% of reservations today in addition to 2001 strike ten mil sales which makes it the second busiest travel website in the UK.
Ryanair and easyJet are in fierce competition with each other as they are the two major low-cost airlines operating within the UK. As easyJet’s takeover of the low-cost airline “Go in 2002 it has become Europe’s largest airline in this sector but still confronts fierce competition.
EasyJet Mission StatementA quest statement needs to be the ultimate aim of a firm and should filtration system down into every department associated with an organisation.
To provide our clients with secure, good value, point-to-point air companies. To effect and to give you a consistent and reliable merchandise and deals appealing to enjoyment and business markets on a range of Euro routes. To achieve this we will build up our persons and build lasting associations with our suppliers. (http://easyjet.com/EN/About/index.html)EasyJet’s environmental code based on three pointsTo be ecologically efficient in the airTo end up being environmentally useful on the groundTo lead in shaping a greener foreseeable future for flying, for example: – carbon offsetting- shaping future aircraft design- for example , the ecoJeteasyJet high efficiency = reduced emissions sama dengan low faresSWOT AnalysisA SWOT analysis examines the internal Abilities and failings of easyJet along with the exterior Threats and Opportunities.
Strengths¢Well known, well known and unforgettable brand name¢Strong and recognized leadership estimate Stelios: “No Bullshit approach¢Motivated workforce individually trained on the easyJet academy¢Very effective advertising and marketing strategies created to reinforce the easyJet company along with mass exposure through ITV’s ‘Airport’¢Good understanding of the market and effective answers to rivals attempting to rob potential customers¢Fly to a numerous main holiday destinations¢Lower carbon dioxide emissions due to using more recent fleet of aircraft¢Cost reduction with the removal of travel around agents¢High passenger volume¢Low operating costs¢Diversification into other market segments, car rental, net cafes and hotels¢Flat managerial hierarchy, thus reducing costs¢Innovator with regards to on the net booking and ticket-less travelWeaknesses¢Fly only within just Europe with out current intentions to broaden outside of the continent¢Rely on computer reservations to this sort of extent that business would be unable to operate with laptop failure or virus strike.
¢No buyer retention/relationship policy.
¢No details scheme to reward repeated flyers¢Access to European airports allowed by deregulation from the industry, that might vary in the future¢Outsources many of its providers to third celebrations which may be harmful to its reputation¢Success of Easyjet causes it to be difficult and expensive to train staff quickly enough.
Opportunities¢Lower costs further¢Increase fares¢Introduction of more countries into the Eu has increased customers and trip destinations¢Expand into new routes, outside of The european countries, and extended haul¢Decrease convert times¢Improve airplane utilisation¢Vertical incorporation to eliminate outsourced functions of easyJet’s procedure¢Gain first emocionar advantage regarding using option ‘greener’ gasoline cells¢Introduction of points plan to praise and retain frequent flyersThreats¢Rising fuel rates
¢Introduction of any carbon release tax or other environmental regulations¢New appearing competition¢Competitors undermining prices or offering identical prices for the more efficient/better service¢Aircraft repair problems¢Terrorism minimizing air travel numbers¢Emerging alternative methods of transport¢Reputation lost in event of well publicised incident¢DelaysPEST AnalysisA PEST research analyses the Political, Economic, Socio-Cultural and Technological component influencing the low-cost flight industry.
Politics Factors¢Threat of terrorism upon airlines¢Governments making use of taxes after carbon emissions¢Introduction of even more countries in the European unionEconomic Factors¢Increasing gas costs and other environmental restrictions¢European Union regulations¢Prospect of higher reliability and insurance charges due to the improved risk of terrorism.
¢Continuing regarding air travel through continuing globalisation¢Introduction of the Euro single currency is likely to incorporate Europe actually moreSocio-Cultural Factors¢Travel and getaways are becoming a lot more typical for a large percent of the UKpopulation¢Continuing growth of multi-national enterprises provides caused organization travel to be common¢Gaining consumers from Portugal and Germany may cause problems as these nations around the world are still extremely reluctant in using credit cards over the telephone and on the internetTechnological Factors¢Advancements in ecommerce resulting in increased online competition¢Improvements in engine technology enables easyJet’s aircraft to run more efficiently and reduce emissions¢Increases in energy technology giving easyJet alternative fuel options
Porter’s a few forces unit
Porter’s five forces unit looks at: the threat of substitutes, the threat of recent entrants, the potency of suppliers, the power of buyers plus the rivalry between existing companies to analyse the competitiveness within a certain industry.
The threat of substitutes¢Fairly low threat from the other modes of transport because the cost and time benefit clearly isolates the low expense airlines in the luxury and comfort offered from alternatives such as high speed train services. For example Greater london to Glasgow takes six hours on the train and costs about 80 whereas Easyjet supplies the service in 1 hour just costing 29.
¢Regarding travel around into landmass Europe the length is too great for teach, car and ferry go be a genuine worthwhile alternative. For example if the customer was going to drive to the south of Portugal for a brief weekend break the travel could take very long for it to get realistic and practical trip.
The risk of new entrants¢Limited capacity at suitable airports means any kind of new flight would find it hard to find suitable take off and landing video poker machines.
¢Huge launch capital necessary for the getting aircraft¢New traders would be doing work as a ‘loss leader’ for several years due to the significant initial expenses¢The low cost airline industry inside the UK is fairly mature but since easyJet had been one of the initial firms in to this industry they carry a strong situation. However in the rest of European countries there are many holiday break operators whom are attempting to enter the low cost air travel industry themselves.
The power of suppliers
¢The selling price of gasoline is straight related to the cost of oil which is ever increasing. Easyjet rely on being able to obtain gas but have zero control over the cost.
¢Aircraft companies are extremely targeted within the sector with Boeing and Airbus the two key manufactures. The dependence of spare parts coming from a certain companies could present a risk.
¢The even more Easyjet extends the more electrical power it will keep over the suppliers through gaining ‘economies of scale’.
The power of buyers¢Buyer power in the airline sector, especially the low cost sector is particularly strong because customers often shop around trying to find the best value. This element has been expanded through the introduction of many on the net flight search engines such as travelsupermarket. com and lastminute. com.
¢The City aviation authority (CAA) gives protection against(1) the consequences of travel organisers failure for many who buy package holidays, charter flights and discounted slated air seats and(2) permits airlines and ensures complying with requirements of Euro and UK legislation in relation to financial resources, liability and insurance of airlines.
¢Customers experience no bad feature of switching provider so are happy to do so.
Rivalry among existing firms¢Ryan Surroundings, BMI baby, MyTravelite, Jet2 and Buzz are all competition with the UK low cost aircarrier industry yet Ryan Air flow is the just one of these to obtain succeeded and shown a continuously annual profit.
¢British Airways and other traditional air travel operators soaring from the UK are rivals but on the much lower frighten as they are concentrating on different industry segments¢There happen to be over 100 European primarily based low cost flight companies, many of them are very small but nevertheless act as competition for easyJet.
Different Types of competitorsSimilar specific ” same merchandise, technology and target marketSimilar general ” Same merchandise area nevertheless serving several segmentsDifferent particular ” Same need pleased by completely different meansDifferent general ” Contending for discretionary spend(Brassington, pg 866)In regards to Easyjet the similar certain competitors are definitely the other ‘no-frills’ low cost air carriers, operating within just Europe. The biggest firm that fits this specs is Jones Air thus they are easyJet’s prime competition. Other ‘no-frills’ low cost flight companies operating within the UK include Jet2, bmibaby and Flybe.
The related general competitors are other air carriers that function within The european union but that happen to be targeting a unique type of clients. Within the UK the largest workers are Uk Airways and Virgin but both operators are likely to concentrate on the greater upper class expensive business travel arrangements. They are also not really in immediate competition with Easyjet as they offer flights all over the world and therefore are not limited to just within Europe.
Different specific competitors are companies which offer travel and leisure into Europe by means other than flights. This would be the channel tube operator Euro tunnel as well as the English funnel ferry workers such as P&O, Brittany or Stena Line.
These are not really in immediate competition because the main differentiation is that upon both the route tunnel and the ferry crossing people can take their autos onboard. Additionally it is a much for a longer time process so unless browsing west coast of England weekend fails would seem rather pointless while the life long the ferry would be too much time.
Different general competitors could be firms providing holidays and trips in the UK in which no air travel is needed in any way. Different general competitors is also firms delivering other high-class items that might be bought rather than holiday, for instance a new car.
Competitor analysisAs the range of competition during these organizations (above), is in varying powers the similar specific and similar standard groups will be broken down into four segments for ease of analysis. Competition will be analysed through a rival analysis.
Who have are each of our competitors? Part 1Ryanair: Easyjet’s direct competitorsSegment 2Other UK based low-cost airlines: Jet2, flybe, bmibaby, Segment 3Standard UK based airlines: United kingdom Airways, Virgin Atlantic, KLM and BMISegment 4European centered low-cost flight companies: There are above 100 Western european low cost flight companies such as: Condor, g’wings, SkyEurope and Blu Express.
AssumptionsIt is inevitable that the ongoing growth in the low cost flight industry will begin to slow down while the industry is turns into saturated. It can be believed which the current mass of employees will be whittled down to a few major air carriers. A large number of the smaller low cost air carriers that will unavoidably struggle to compete will be associated with take-overs allowing the bigger players in the industry to carry on to expand.
What are the competitor’s strengths and weaknesses? RyanAir Strengths¢Well known and revered brand name¢Low costs due to low international airport charges¢High internet booking ratio¢High aircraft utilisation¢Use single sort of aircraft¢Fast change times¢High couch densityRyanAir Weaknesses¢Recent reports of poor buyer service¢Negative press¢Airports are often lengthy distance via travellers end destinationUK primarily based low cost flight Strengths¢All get their own website pertaining to bookings and ticket-less travel¢Some have good financial backing¢Fast turnaround time¢Low operating costsUK based inexpensive airline Weaknesses¢Relatively small when compared to easyJet and RyanAir¢Large advertising and marketing costs¢Small network of routes¢Competing in competitive industry leading to many mergers and take-overs¢Restricted to the usage of certain airportsStandard UK centered airlines Strengths¢Respected and popular brand names
¢Worldwide service¢Strong financial backing¢Respected standard of serviceStandard UK primarily based airlines Weaknesses¢Low aircraft utilization (compared to easyJet)¢High costs¢High pricesEuropean cheap airline Strengths¢Use ofsingle currency (Euro) can reduce costs¢Closer to emerging markets (Eastern Europe)¢Low costs¢Well know brand names, in their highly regarded home countriesEuropean low-cost air travel Weaknesses¢Relatively little compared to easyJet and RyanAir¢Virtually unknown inside the UK¢Competing in fierce industry¢Restricted use of specific airportsWhat are our competitor’s objectives? RyanAir ” “RyanAir’s objective is always to firmly establish itself as Europe’s leading low-fares planned passenger flight through continued improvements and expanded offerings of the low-fares assistance.
RyanAir should offer low fares that generate increased passenger visitors while maintaining a consistent focus on cost-containment and operating efficiencies. (Ryanair. com)UK based low cost airlines ” Initially the united kingdom based inexpensive airlines targets are to survive in the industry by simply increasing their particular market share. The inevitable saturation of the industry will cause many of the smaller inexpensive airlines being merged or taken over by larger players. In order to avoid this kind of smaller inexpensive airlines have to differentiate themselves from the crowd or gain a distinctive selling point through lower costs, excellent customer companies or taking advantage of new ways.
Standard UK based air carriers ” Try to continue their dominance of flights out and in of the UK by emphasising the quality of the service they provide. They also want to reduce rates in order to reduce the space between themselves and the low priced airlines.
European bases affordable airlines ” European low priced airlines have to survive available in the market by raising their business. This could be structured on increasing their very own network ways or branching into un-targeted countries inside Europe. Also, it is plausible that mergers will certainly occur in this particular sector to minimize the risk of failure.
RecommendationsEasyJet should not avoid the elevating oil and petrol rates which is certain to effect the industry at some point. It may be advised that easyJet start looking in to using substitute renewable fuel sources. In the event that easyJet can get hold of the technology to perform their fleet of planes over a ‘greener’ fuel they may gain first emocionar advantage and capture a lot of the contests customers.
Over the next 3 years it would be recommended that easyJet focus on ‘joining the dots’ of their Western european network instead of attempting long haul flights because this would be hard and would carry a sizable initial risk. If easyJet could ‘join the dots’ in their Western network it might fight off the competition from the appearing low cost air carriers attempting to expand within the sector.
Conclusion
In conclusion easyJet include built a solid brand that has positioned them in an good spot inside the low cost sector of the aircarrier industry. With this sector of the industry predicted to grow, competition is likely to heighten even more but since easyJet has built a powerful brand and customer base it truly is unlikely they will be forced out of your market. EasyJet need to continue its advertising strategies, reinforcing its picture and brand to continue among the industries leading airlines. As the UK marketplace is saturated while offering small or no growth opportunity, it would be logical for easyJet to focus on the expansion of their route systems within East Europe. EasyJet should accomplish this through featuring the routes themselves or perhaps merging which has a competitor that already will.
Reference List
Bird’s eye perspective. SWOT research of inexpensive carrier sector (April 2007)http://www.air-scoop.com/downloads/SWOT_Low-Cost-Carriers_Air-Scoop.pdf [7-12-2007]Blythe, L (2006) Concepts and Practice of Marketing, Thompson Learning, Bedford Row, LondonBrassington, F. Succinct, S. (2003) Principles of Marketing, page Pearson Education, Harlow, EssexChannel four news. How green is easyJet? (May 2007) http://www.channel4.com/news/articles/society/environment/factcheck+how+green+is+easyjet/509642 [20-11-2007]Crawford, C. Easyjet SWOT Analysis (2004) http://www.marketingprofs.com/ea/qst_question.asp?qstID=3412 [25-11-2007]Hoffmann, J. Thomas Air ” Environmental Examination, Discussion of key competencies and Strategy Pitch (2004)http://www.grin.com/en/preview/39017.html [25-11-2007]Manzoor, M. Easyjet (2005) http://www.marketingprofs.com/ea/qst_question.asp?qstID=9339
one particular
