Environmental and Competitive Analysis of Easyjet Essay

This report has been writ cristal in order to provide an environmental and competitive abstract of the low- comprise production lineline attention heavens from the position of Easyjet. It entrust give a brief history into Easyjet and the low- be airline industry. It will analyse the inhering strengths and weaknesses as well as the external threats and opportunities. Competitors will be analysed through the use of porters 5 forces model. Recommendations will be made for EasyJets marketing strategies for the contiguous triplet long time.Corporate HistoryEasyjet was founded in 1995 by Stelios Haji-Ioannou who found the firm around the low- court, no-frills model of the US flight operator Southwest. The pattern of Easyjet is found on the fact that short flights at heart Europe are legal injury elastic, meaning the lower the prices the to a greater extent people will perish at heart Europe.The deregulation of the European airline industry in 1992 authorised any European ai rline to lam, fly and land anywhere within Europe. This allowed airlines to expand routes and operate within Europe with much higher precision.Easyjet was initially started from its hanger headquarters at Luton airport with two Boeing 737-300s aiming flights from London Luton to Glasgow and Edinburgh at a price of 29 each way.To date easyJet has now expanded into dourering 125 routes from 39 major European airports use their exit of 122 aeroplanes. EasyJet has also expanded into having liberal basis at not only Luton airport only if also Liverpool, Geneva, and AmsterdamBack in 1999 easyJet gained free mass exposure to an audience of around 9 wiz thousand thousand viewers through ITVs fly on the wall documentary series Airline.The launch of easyjet.com in 1997 has become an integral part of the business concern model and has seen a huge change in the culture of booking motivity tickets. Currently easyJet.com provides around 90% of bookings today and in 2001 hit ten million sales making it the second busiest travel website in the UK.Ryanair and easyJet are in approximate contention with each new(prenominal)(a) as they are the two largest low- approach airlines operating within the UK. Since easyJets takeover of the low-cost airline Go in 2002 it has become Europes largest airline in this sector but still faces fierce competition.EasyJet Mission StatementA mission statement should be the ultimate goal of a firm and should filter down into every segment of an organisation.To provide our guests with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a be adrift of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers. (http//easyjet.com/EN/About/index.html)EasyJets environmental code based on three pointsTo be environmentally efficient in the airTo be environmentally efficient on th e groundTo lead in shaping a greener future for aviation, for example- one C offsetting- shaping future aircraft design- for example, the ecoJeteasyJet high efficiency = lower emissions = low faresSWOT AnalysisA SWOT abstract analyses the internal Strengths and Weaknesses of easyJet along with the external Threats and Opportunities.Strengths salubrious known, respected and memorable deformity nameStrong and well known leadership figure in Stelios No Bullshit approachMotivated workforce independently trained at the easyJet academyVery effective advertising strategies developed to reinforce the easyJet brand along with mass exposure through ITVs AirportGood association of the market and effective responses to competitors attempting to steal potential customersFly to a large number of main holiday destinationsLower carbon emissions due to using newer fleet of aircraftCost reduction with the removal of travel agentsHigh passenger volumeLow operating beDiversification into other mar kets, car rental, internet cafes and hotels categorical managerial hierarchy, thus simplification costsInnovator with regards to online booking and ticket-less travelWeaknessesFly only within Europe and no current intentions to expand outside of the stainlessRely on computer bookings to such(prenominal)(prenominal) 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 flyersAccess to European airports allowed by the deregulation of the industry, which may vary in the futureOutsources many an(prenominal) of its services to third parties which may be damaging to its reputationSuccess of Easyjet makes it difficult and expensive to train staff quickly enough.OpportunitiesLower costs hike upIncrease faresIntroduction of more countries into the European Union has increased potential customers and flight destinationsExpand into new routes, outside of Europe, and long haulDecreas e caper around timesImprove aircraft workVertical integration to eliminate outsourced functions of easyJets procedureGain offshoot mover advantage with regards to using substitute(a) greener fuel cellsIntroduction of points scheme to reward and retain frequent flyersThreatsRising fuel pricesIntroduction of a carbon emission tax or other environmental regulationsNew emerging competitionCompetitors undercutting prices or offering correspondent prices for a more efficient/better serviceAircraft maintenance problemsTerrorism reducing air travel numbersEmerging alternative modes of transportReputation lost in event of well publicised incidentDelaysPEST AnalysisA PEST analysis analyses the Political, Economic, Socio-Cultural and Technological factor influencing the low-cost airline industry.Political FactorsThreat of terrorism upon airlinesGovernments applying taxes upon carbon emissionsIntroduction of more countries into the European unionEconomic FactorsIncreasing fuel costs and o ther environmental restrictionsEuropean Union regulationsProspect of higher security and insurance costs due to the increased risk of terrorism.Continuing growth of air travel through continuing globalisationIntroduction of the Euro single currency is likely to integrate Europe even moreSocio-Cultural FactorsTravel and holidays are becoming more and more typical for a large percent of the UKpopulationContinuing growth of multi-national enterprises has caused business travel to become more commonGaining customers from France and Germany may cause problems as these nations are still very reluctant in using credit cards over the phone and on the internetTechnological FactorsAdvancements in e-commerce resulting in increased online competitionImprovements in engine technology will allow easyJets planes to run more efficiently and reduce emissionsIncreases in fuel technology offering easyJet alternative fuel sourcesPorters 5 forces modelPorters 5 forces model looks at the threat of subst itutes, the threat of new entrants, the mightiness of suppliers, the power of buyers and the rivalry among existing firms to analyse the competitiveness within a certain 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 comfort 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 costing 29.Regarding travel into mainland Europe the outdo is far too great for train, car and ferry travel to be a realistic worthwhile substitute. For example if a customer was to drive to the southernmost of France for a short spend break the travel would take too long for it to be realistic and practical trip .The threat of new entrants ex insisting mail capacity at suitable airports means any new airline would start it hard to find suitable take o ff and landing slots. broad 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 but 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 considerly related to the cost of oil which is ever increasing. Easyjet rely on being able to discover fuel but prevail no control over the price.Aircraft manufactures are extremely concentrated within the industry with Boeing and Airbus the two main manufactures. The dependence of stark 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 buyers purchase r power within the airline industry, especially the low cost sector is especially strong as customers often shop around and try to find the best price. This factor 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 and UK legislation relating to financial resources, liability and insurance of airlines.Customers experience no negative feature 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 constantly yearly profit.British Airways and othe r traditional flight operators trajectory from the UK are competitors but on a much lower scare as they are targeting different market segmentsThere are over one hundred European based low cost airlines,many of them are very small but still act as competition for easyJet. polar Types of competitorsSimilar specific same product, technology and target marketSimilar general Same product area but serving different segmentsDifferent specific Same need satisfactory by very different meansDifferent general Competing for discretionary spend(Brassington, pg 866)In relation to Easyjet the similar specific competitors are the other no-frills low cost airlines, operating within Europe. The largest firm that fits this specification is Ryan Air thus they are easyJets prime 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. Within the UK the largest operators are British Airways and thoroughgoing(a) but both of these operators tend to concentrate on the more upper class expensive business flights. They are also 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 turn over operator Euro tunnel and the English channel ferry operators such 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 crossing people heap take their cars onboard. It is also a much longer process so unless visiting the west coast of France weekend breaks would seem quite 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 a ir 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 throughout 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?Segment 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 There 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 slow 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 smaller low cost airlines that will unavoidably struggle to compete will be involved in take-overs allowing the bigger players in the industry to sustain 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 engagementUse single type of aircraftFast turn around timesHigh seat densityRyanAir WeaknessesRecent 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 RyanAirLarge advertising costsSmall network of routesCompeting in competitive industry resulting in many mergers and take- oversRestricted to the use of certain airportsStandard UK based airlines StrengthsRespected and well known brand namesWorldwide serviceStrong financial backingRespected standard of serviceStandard UK based airlines WeaknessesLow aircraft utilisation (compared to easyJet)High costsHigh pricesEuropean low-cost airline StrengthsUse ofsingle currency (Euro) can reduce costsCloser to emerging markets (Eastern Europe)Low costsWell know brand names, in their respected home countriesEuropean low-cost airline WeaknessesRelatively small compared to easyJet and RyanAirVirtually unknown in the UKCompeting in fierce industryRestricted use of certain airportsWhat are our competitors objectives?RyanAir RyanAirs objective is to firmly establish itself as Europes pencil lead 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 traffic while maintaining a continuous focu s on cost-containment and operating efficiencies. (Ryanair.com)UK based low cost airlines Initially the UK based low cost airlines objectives are to survive in the industry by increasing their market share. The inevitable saturation of the market will cause many of the smaller low cost airlines to be merged or interpreted over by the larger players. In order to avoid this smaller low cost airlines need to differentiate themselves from the crowd or gain a unique selling point through lower costs, excellent customer services or exploiting new routes.Standard UK based airlines Aim to continue their pronouncement 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 gap 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 naturalized by increasing their network rout es 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 greener 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 joining 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.ConclusionIn conclusion easyJet have built a strong brand which has positioned them in an excellent spot within the low cost sector of the airline industry. With this sector of the industry predicted to grow, competition is likely to intensify even more but as easyJet has already built a strong brand and customer base it is unlikely they will be forced out of the market. EasyJet need to continue its advertising strategies, reinforcing its image 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 ListBirds 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, Thom pson 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, Discussion of core competencies and Strategy Proposal (2004)http//www.grin.com/en/ take in/39017.html 25-11-2007Manzoor, M. Easyjet (2005) http//www.marketingprofs.com/ea/qst_question.asp?qstID=9339