what are the risks associated with easyjet's strategy

The U.K. requireseven those returning from green countriestake COVID-19 tests before boarding a plane to return to the U.K. as well as within two days of returning. Background Coronavirus disease-19 emerged in December 2019. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. It has been a value-for-money proposition rather than trying to be the cheapest in the market.. Still, the connection was critical for airlines. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. Decisions must be made on the trade-offs inherent in development of a strategy. Therefore, the low cost strategy is the ideal strategic fit to its environment. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the board. Risk 2: Geopolitical instability. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. EasyJets no frills strategy does not only mean a cut in Cabin crew and denial of food, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining fare. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. Such lower costs benefit EasyJet initially as innovation is rewarded. This needs to be updated constantly as this will be a live system. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. Terms & Conditions. Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. The airline cut a deal with a health care company to provide the test at half the normal cost, or 60 per test. The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. Today, a year after Easy Jets announcement, those perils still hang over the airline. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. It hoped these measures allow the public to feel confident flying again. Budget airlines that rely on the leisure market make most of their money from April to August. This will provide an evaluation of the external business environment in which the company operates. Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. A prime example of this was the subsequent takeover of Go by EasyJet. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. To enjoy unlimited access to our journalism, subscribe today. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. Competitive pressure. The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. Significant investment in assets and managing financing costs. And it secured two different term loans totaling$563 million, due for repayment in February 2022. EasyJet, on the other hand, flies fewer routes but operates from many more primary airports, with a heavier focus on Western Europe. The54-year-old Greek-Cypriot entrepreneur hasnt had a formal management role in the airline since he stepped down as chairman in 2002, but he remained a major shareholder, owning more than a third of the company before the pandemic hit. Low price/low added easyJet will maintain its advantageous cost position through continued cost action. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 customers. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. EasyJets competitive advantages via low prices are sustained in a number of ways. We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes. If your specific country is not listed, please select the UK version of the site, as this is best suited to international visitors. Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. 1 Based on share price of 6.62 at 30 September 2021 The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Lundgren, who arrived at EasyJet after leading European package holiday company TUI Group, has also tried to expand the airline into the packaged-tour business. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. To understand EasyJets prospects, its important to understand its strategic positioning. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. Legal and regulatory change. Free resources to assist you with your university studies! We will consider the value chain for EasyJet in more detail later in our discussion. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. The Essay Writing ExpertsUS Essay Experts. Offers may be subject to change without notice. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. 100 per cent direct selling of fares; over 90 per cent of sales are online. Just two EasyJet aircraft were in the air, one en route from Londons Gatwick Airport to Lyon in France; another from Belfast to the English Channel island of Jersey. Potential negative outcomes include bad publicity and a Clicking on the following button will update the content below. Do you have a 2:1 degree or higher? In April 2020, EasyJet announced that it had reached an agreement with Airbus to defer delivery of 24 of the aircraft, meaning it would take on no new aircraft in 2021. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. Some wondered if Lundgren, who has a reputation for being a nice guy, had the stomach for the kind of aggressive cost cutting thatrunning a budget airline, especially during a pandemic, demanded. The risks are Customers reaction to a product Change in market dynamics Providing product differentiation Convincing need for your product/service Many startups/new business ventures fall in this segment. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. A focus strategy can be implemented to resolve these issues as well. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. In this way, it has positioned itself as a more direct competitor to Europes traditional airlines.Lundgren says he wants EasyJet to be the No. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. Value-For-Money proposition rather than trying to be the cheapest in the market direct selling of fares ; 90... Updated constantly as this will provide an evaluation of the external business in... Maintain its advantageous cost position through continued cost action margins and overall efficiency,:! In the market company operates provide an evaluation of the external business environment which... Resources to assist you with Your university studies EasyJet has been a value-for-money rather..., which are at premium prices impact one another as they are interconnected unlimited access to journalism. 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