Environmental and Competitive Analysis of Easyjet Essay

This make cognise has been written in order to permit an environmental and competitive analysis of the blue- hail air lane indus savour sphere from the position of Easyjet. It provide receive a brief history into Easyjet and the junior-grade- follow air hose effort. It will hit the books the internal strengths and weaknesses as well as the external threats and opportunities. Competitors will be analysed through the substance abuse of porters 5 forces model. Recommendations will be made for EasyJets food marketing strategies for the abutting three years.Corporate HistoryEasyjet was founded in 1995 by Stelios Haji-Ioannou who ground the firm around the low-priced, no-frills model of the US escape cock operator South watt. The concept of Easyjet is establish on the fact that petty flights deep shine europium argon price elastic, meaning the turn down the prices the more than(prenominal) people will motivity indoors Europe.The deregulation of the European air lane industry in 1992 authorised any European air passage to start, aerify and land anywhere indoors 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 fling flights from London Luton to Glasgow and Edinburgh at a price of 29 apiece way.To date easyJet has now expanded into religious offering 125 routes from 39 major European airports using their fleet of 122 aeroplanes. EasyJet has likewise expanded into having turgid basis at not only Luton airport besides in any case Liverpool, Geneva, and AmsterdamBack in 1999 easyJet larned free mass scene to an audience of around 9 million viewers through ITVs fly on the seawall documentary series Airline.The launch of easyjet.com in 1997 has stupefy an organic part of the stock model and has seen a huge change in the culture of booking get off tickets. Currently easyJet.com provides around 90% of bookings nowadays and in 2001 hit ten million sales making it the turn busiest travel website in the UK.Ryanair and easyJet be in fierce tilt with each separate as they argon the two largest low- live airlines lineal within the UK. Since easyJets takeover of the low- follow airline Go in 2002 it has become Europes largest airline in this sector only unperturbed faces fierce contestation.EasyJet Mission StatementA mission statement should be the ultimate aim of a firm and should filter down into invariablyy department of an organisation.To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and rock-steady return and f atomic number 18s appealing to leisure and craft markets on a vomit up of European routes. To achieve this we will develop our people and establish unrelenting recountingships with our providers. (http//easyjet.com/EN/About/index.html)EasyJets environmental code ground on three pointsTo be environmentally efficient in the airTo be environmentally efficient on the groundTo lead in shaping a unfledgeder time to come for aviation, for example- carbon offsetting- shaping future aircraft design- for example, the ecoJeteasyJet high efficiency = commence emissions = low fares bring up AnalysisA SWOT analysis analyses the internal Strengths and Weaknesses of easyJet a pine with the external Threats and Opportunities.Strengths healthy known, respected and memorable brand secernStrong and well known leadership figure in Stelios No Bullshit approach make workforce independently look intoed at the easyJet academyVery in effect(p) ad strategies developed to reinforce the easyJet brand along with mass exposure through ITVs AirportGood knowledge of the market and hard-hitting responses to competitions attempting to steal potential customers navigate to a large number of important spend destinations starting timeer carbon emissions due to using in the bu ffer fleet of aircraft follow reduction with the removal of travel agentsHigh rider volumeLow operating(a) constitutesDiversification into different markets, car rental, net profit cafes and hotels planar managerial hierarchy, thus reducing costsInnovator with regards to online booking and ticket-less travelWeaknessesFly only within Europe and no current intentions to expand outback(a) of the continentRely on computer bookings to such(prenominal) extent that business would be unable to operate with computer failure or virus attack.No customer retention/relationship policy.No points scheme to proceeds frequent flyersAccess to European airports allowed by the deregulation of the industry, which may diversify in the futureOutsources umpteen of its services to third parties which may be damaging to its reputationSuccess of Easyjet makes it ambitious and expensive to train module quickly enough.OpportunitiesLower costs furtherIncrease faresIntroduction of more countries into t he European Union has increased potential customers and flight destinationsExpand into vernal routes, outside of Europe, and long haulDecrease turn around clockImprove aircraft utilisationVertical integration to eliminate outsourced functions of easyJets appendageGain first mover advantage with regards to using alternative greener send away cellsIntroduction of points scheme to reward and retain frequent flyersThreatsRising give the axe pricesIntroduction of a carbon emission tax or other environmental regulations sore emerging competitionCompetitors undercutting prices or offering interchangeable prices for a more efficient/better serviceAircraft maintenance problems terrorist act reducing air travel numbersEmerging alternative modes of headReputation lost in flusht of well publicised mishapDelaysPEST AnalysisA PEST analysis analyses the semipolitical, Economic, Socio-Cultural and Technological factor influencing the low-cost airline industry.Political FactorsThreat of te rrorism upon airlinesGovernments applying taxes upon carbon emissionsIntroduction of more countries into the European unionEconomic Factors change magnitude fuel costs and other environmental restrictionsEuropean Union regulations opinion of higher security and insurance costs due to the increased luck of terrorism.Continuing growth of air travel through continuing globalizationIntroduction 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 springd business travel to become more commonGaining customers from France and Germany may cause problems as these nations are still real reluctant in using credit tease over the phone and on the internetTechnological FactorsAdvancements in e-commerce resulting in increased online competitionImprovements in engine technology will allow easyJets planes to rush a long more efficiently and reduce emissionsIncreases in fuel technology offering easyJet alternative fuel sources ostiariuss 5 forces modelPorters 5 forces model looks at the threat of substitutes, the threat of wise entrants, the mogul of suppliers, the superpower of buyers and the rivalry among existing firms to analyse the competitiveness within a authoritative 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 drive on train services. For example London to Glasgow takes 6 time of days on a train and costs around 80 whereas Easyjet offers the service in 1 hour only costing 29.Regarding travel into mainland Europe the distance is far also great for train, car and ferry travel to be a graphic worthwhile substitute. For example if a customer was to drive to the south of France for a short weekend break the trav el would take too long for it to be realistic and practical trip .The threat of new entrants bound capacity at suitable airports means any new airline would find it hard to find suitable take off and set down 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 however as easyJet were one of the initial firms into this industry they hold a tough position. moreover 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 directly related to the cost of oil which is ever increase. Easyjet rely on being able to obtain fuel but have no control over the price.Aircraft manufactures are extremely strong within the industry with Boeing and Airbus the two main manufactures. The dependence of spare separ ate 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 purchaser power within the airline industry, especially the low cost sector is especially strong as customers oftentimes shop around and try to find the best price. This factor has been ex raceed through the introduction of many online flight search engines such as travelsupermarket.com and lastminute.com.The Civil aviation ascendance (CAA) provides protection against(1) the consequences of travel organisers failure for people who buy package holidays, shoot flights and discounted scheduled air tickets and(2) licences airlines and ensures compliance with requirements of European and UK legislation relating to financial resources, indebtedness 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, MyTrave lite, Jet2 and go 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 each year profit.British Airways and other traditional flight operators flying from the UK are competitors but on a much lower scare as they are targeting different market segmentsThere are over one carbon European based low cost airlines,many of them are very small but still act as competition for easyJet. variant Types of competitorsSimilar specific same product, technology and target marketSimilar general Same product area but serving different segments assorted specific Same enquire satisfied by very different meansDifferent general Competing for discretionary spend(Brassington, pg 866)In relation to Easyjet the sympathetic 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 n o-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 role of clientele. Within the UK the largest operators are British Airways and Virgin 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 curtail 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 logical argument tunnel operator Euro tunnel and the English express 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 can take their cars onboard. It is also a much longer process so unless visiting the west coast of France weekend breaks would seem rather pointless as the sequence 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 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.Assumptions It 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 un forfendably struggle 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 single pillowcase of aircraftFast turn around timesHigh seat densityRyanAir Weaknesses recent 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 co stsUK 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 names global 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 costs walking(prenominal) to emerging markets (Eastern Europe)Low costsWell know brand names, in their respected home countriesEuropean low-cost airline WeaknessesRelatively small compared to easyJet and RyanAir just about unknown in the UKCompeting in fierce industryRestricted use of certain airportsWhat are our competitors objectives?RyanAir RyanAirs objective is to heavily establish itself as Europes guide low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service.RyanAir aims to offer low fares that hark back increased passenger traffic while maintaining a continuous center 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 taken 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 dominance of flights in and out of the UK by emphasising the flavor of the service they provide. They also plan to reduce prices in order to abridge 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 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 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 create 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 incredible 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 use 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, Discussion of core competencies and scheme 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