Impact of Brexit and COVID-19 on EasyJet

This article analyzes the market structure in the UK within which EasyJet operates, economic factors affecting the business, and the impacts of Brexit and COVID-19 on the company's operations.

Airline Industry
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Market structure in the UK within which Easy jet operates...................................................3
Economic factors within the UK that affect the business of Easy jet....................................3
Impacts of Brexit on the business operation of the company.................................................3
Impact of COVID-19 on the business of the company..........................................................3
CONCLUSION................................................................................................................................3
RECOMMENDATION...................................................................................................................3
REFERENCES................................................................................................................................3
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INTRODUCTION
Airline industries are the companies which provides air transport services to the
passengers to move from one place to another The first airline commercial was developed by
Ferdinand Graf Von in 1912 it help the economy to reach their location in short period of times.
The airline services are basically provided to cargo and human travellers. These services are
offered mostly via jets but helicopters are also used by some airline services In today's world
airline services are more in demand which helps the business to increase their profit in the
market but to covid situation airlines industries has faced a big loss due to which its demand in
the market has been decreased due to covid people avoid to travel through the airlines services
which affected the growth of the business in the market (Claussen and Peukert, 2018).
EasyJet is the low cost multinational airline group its headquartered is in London Luton Airport.
EasyJet operates international and domestic schedule services on more than 1,000 routes. It was
founded by Stelios Haji-loannou on march 1995This services of airlines saves times and money
of the passengers it helps the people to reach their location easily without any issue. In this report
it will be analysed that how various factors in the economy affects the profit of airlines industry
in the market.
MAIN BODY
Market structure in the UK within which Easy jet operates
Market structure basically refer to the various characteristics of markets that analyse the
relationship between the sellers which helps the business to increase its profit in the market at the
end the main motive of the sellers is to increase their productivity and revenue. In the economy
there are four types of market structures.
 Monopolistic: It is a markets structure in which huge numbers of small firms compete
against each other, firms sell similar products but they are also differentiated from other
firms in the market. under monopolistic competition seller does not sell the perfect
substitute product they sell the differentiated products. In this competition no business in
the market have the control over the prices of the market.
 Oligopoly: In this type of marketing structure competition is limited due to which
entering into this structure is difficult. Few firms exists in this type of structure most
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powerful firms have the control over different resources like patents, physical resources,
raw material etc. which create issue for the new entries.
 Pure monopoly: If the single firm control the entire market then it comes under monopoly
market structure. Entry and exit of the firms are restricted under pure monopoly.
 Pure competition: Under this market structure demand and supply determines the goods
and services which is to produces so that business cannot face any loss. In pure
competition there is no restriction for the firms to enter and exit the market.
Easy jet operated under the oligopoly markets structure because under oligopoly firms imperfect
competition is there due to limited firms operates in the airline industry. These firms have the
power to set the prices for the products by establishing different level of outputs. Competitors in
this market structure can plan strategies to increase their market share such as cutting of prices
which will increase their demand in the market. Under the oligopoly firms are interdependent in
each other. Easyjet is planning to create a data management system which will helps the them to
improve there services if proper management will take place in the organisation it will increase
the demand of firms in the market also it will provide the competitive advantage (Kefallonitis
and Kavoura, 2019). Easy jet is the low price airline services which provides the services to the
customer at the affordable prices due to which its demand and profit is high in the market as
compared to other firms. Under oligopoly various few largest have the control over various
resources which creates a barrier of the other firms to increase its profit in the market but easy jet
has planned various strategies which helps them to increase their revenue and compete
effectively in the market.
Economic factors within the UK that affect the business of Easy jet
The factors which helps in determining the competitiveness of the firms which exists in
the environment is know as economic factors. It helps in analysing the demand and supply of the
business in the markets so that business perform its activities effectively. Below are the factors
which affects the business of Easyjet in the market.
 Demand and supply: It plays an important role in the business to increase its performance
demand of the customer can increase in the economy according to the needs and
requirement of the customers. Airlines industries also enable the access to other services
like business meeting, vacations, foreign-sourced products due to which demand of the
industries increases in the market. if the demand if high but supply of the business is
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limited then it can affect the growth of the business in the market. Demand of airlines
industries is rising day by day due to which company has to maintain supply so that they
cannot face any loss in the business tourism. Its important of the organisation to predicts
its demand in the markets so that business can plan its strategies accordingly without any
delay. Business travellers, freight transport etc. are the main components which affect the
demand of the airlines industries. Airlines industry supply is determined by the number of
frequency, aircraft, airports, availability of routes etc. limited supply of goods and
services can affect the growth of the business in the market (Akram, 2020).
 Inflation rate: if the inflation rate will be high in the economy it will affect the demand of
the business in the market. Inflation is basically increase in the prices in the economy. If
the prices of the goods and services will increased then people will switch to other
companies which are providing the substitute of the goods and services which customers
requires it can affect the demand of the business in the market if the price of the airlines
industries will increase then people will use another way of transportation due to revenue
of the business will decrease. Inflation also affect the employees if the demand of the
business is low in the markets and their profit is also not increasing then organisation
provide the good salary packages to the employees which can also affect the growth of
the economy. If employees will not get the monitory benefit for the work which they are
doing in the organisation then it can also affect the performance of the business in the
market. inflation has raised the prices of the fuel due to which ticket prices has been
increased which affect the demand of the airline industry in the market.
 Employment rate: It helps the business to improve its services so that performance of the
can be enhanced and more profit can be earned business can achieve its profit by the help
of the employees in the given period of time. Organisation should provide healthy
working environment to its employees so that employees can remain motivated which
helps the business to increase its productivity. Unemployment rate can effect the growth
of the economy in the market because if less number of employees will be there in the
organisation then business cannot perform well in the market especially in the airlines
industries. Airlines industries requires proper management to perform its functions proper
management in the organisation can be done by the employees who are working in the
organisation. If the profit of the economy will be increased then it will helps in increasing
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the employment. Due to inflation the prices of the airlines industries increases due to
which its demand in the market got decreased so to avoid the loss companies eliminate
their workforce so that business can maintain its financially stability which increases the
unemployment rate in the economy.
 Income level: Rise in the income level increases the demand of the goods and services in
the markets due to which company can face loss because supply of the goods and
services are limited. If the income of the customer increases there lifestyle also changed
consumers wants the best quality of goods and services. People with low income cannot
afford to travel through airlines but if the income of the customers increases then choose
the services which save their time rise in the income increases the demand of the airlines
industries in the market which help the business to increase it profit in the market but to
maintain its position in the markets company has to maintain its supply also so that
company cannot face any loss. Rise in the income level also increases the inflation rate in
the economy because if the demand of the product will be increased in the market.
Impacts of Brexit on the business operation of the company
Withdrawal of UK(united kingdom) from the EU( European union) UK was the first
country to leave EU after the member for 47 years (Pavlović and Babić, 2018). UK has the
biggest airline market of EU which is measured by the number of passengers. In 2015 138
million passengers were travelled between UK and EU airports which signifies the percentage of
the country's total traffic. Due to Brexit there was an average reduction of 25% in the share
prices which made UK airlines industries down By 33% Some portion of reduction in the value
was due to global jitters easy jet said setting up licence and EU subsidiary will cost the business
approx 10 million this price will worth instead of paying 40% of its traffic to retain. European
commission has stated recently UK will face an negative impact from the EU exit. Brexit has
reduced the national British income by 0.6% also it has reduced the investment of business by 6
percent. It provided the negative impact on the UK financial sectors and on the airline industries.
Due to Brexit airlines services will be restricted as they require bilateral agreements with the
countries which are outside and inside the Europe. Various restriction affects the growth of the
business in the market due to which its profit gets decreased in the markets if the activities of the
business will not be performed effectively then it can affect the profit of the business in the
market due to Brexit various rules and regulation has been established due to which services of
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the business can been effected in the markets. There are various documents and agreements
which airline industry has to provide to activate its services. Due to aviation there is a shortage of
staff due to which like pilots which created a risk factor of airlines industries of UK because if
shortage of pilot will be there then it will affect the demand of the company in the market also it
will affect the growth of economy.
Brexit created various issue for the airlines industries due to which economic growth of the
country also gets affected. Airlines industries helps the passengers of UK to move easily from
one place to another if services will not be provided properly then it can affect the growth of the
business across the world. Reduction in the profit margin of the business affects the demand of
organisation in the market if industries will not have required funds and capital then they cannot
innovate their services due to which attention of the customers will get distracted due to which
company has to bear a loss because customer will not get satisfied by the services of the industry.
Impact of COVID-19 on the business of the company.
Due to COVID-19 airline services has to face a big loss even after the lock down people
refuse to travel through flights which affected the growth of the business in the market. Whole
COVID situation has taken place through the airlines services because tourism in the world takes
place due to airlines industries which affected the countries through COVID (Tesfay, 2021). Due
to this demand of the airlines services has been decreased market this amount of fall in the
demand have never experienced by the airlines industries. As per the observation it has been
observed that there is 6x decline in the seat which are available and massive decrease in the
passenger load by 17x it also affect the profit of the economy. Due to Ben of airlines industries
tourism in the country cannot take place which affect the profit of the country because if tourism
will take place then it will also affect the profit of the hospitality industries because their profit is
dependent of the services which they provide to the tourist. Which can be a big loss for the
country also it can affect the lifestyle of the people because will not be able to travel from one
place to another in the short period of time. Low demand of the business affect the profit of the
business to increase in its demand in the market airlines industries has to adopt various safety
measures so that people cannot face any issue while travelling specially in the airline services if
also reduce the profit margin of the company because airlines industries cannot occupy each and
every available seats as the rules which is provided by the government which effect the overall
revenue of the business.
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Long term impact of the COVID-19 on the business of the EASYJET
COVID has changed the thinking of the people in the economy after the COVID-19 also
airlines industries has to provide full safety measures to their customers so that they life of the
passenger cannot be put into danger. Proper security measures helps the business to build trust
between company and the passengers which in increasing the demand of the business in the
market COVID-19 has changed the lifestyle of the people also it created a fear in the mind of the
customer due to which they avoid to travel through flights once the COVID-19 situation will end
it will give a new life to the airlines industries there will be various rules and regulation provided
by the government which should be followed by the airlines industries which will create an
innovation in the activities of the business. If proper safety measures will be provided on the
airports and flights then it remove the fear of COVID from the mind of the passengers. COVID-
19 will take time get eliminated permanently from the economy due to industries has to face
reduction in their revenues as compared to previous years but if they will follow the rules and
regulation properly then it will helps the business to increase their revenue in the market (Belova,
and Gauthier, 2020).
CONCLUSION
As per the report it has been analysed that various factors affects the growth of the
airlines industries in the market like economic factors, Brexit aviation, market structure and
COVID-19 theses are the different factors which affect the growth of the airline industries in the
market. There are various strategies and plan which are made by the airline industries to
overcome from this situation. Economic factors affects the growth of the business in the market
but if the business will analyse the environmental conditions properly then it help the business to
overcome from the challenges of the economic factors. Brexit also affected the growth of the
business in the market but if the organisation has planned various strategies to avoid this loss
which is caused through. Airlines industries have oligopoly market structure which provides the
various threat and opportunities to the business so that its growth performance in the market can
be improved. COVID-19 has changed the working condition of the airline industries due to
which its demand in the market got decreased but there various measured which has been
adopted by the airline industries which helps them to increase their demand and profit in the
market.
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RECOMMENDATION
In this report there are recommendation which help the business to improve its services in
the market which will help in increasing the demand of the industries in the economy.
 EasyJet should provide various safety measures to the customers so that chances of
COVID-19 can be avoided also business should provide various training programmes to
its employees so that proper services can be provided to the customers if the staff of
airlines services will be trained properly then it will increase the customer loyalty for the
business which will also helps in increasing the market share of the company.
 Airline industries should provide innovative services to the customers so that they can
achieve the competitive advantage in the market. Up gradation in the technology helps
the passengers to reach safely at the destination. Airlines industries should provide
sanitizers to the passengers at the places so that chances of COVID-19 can be avoided
while the food facility in during the travelling companies should ensure proper hygiene
so that people cannot face any issue while having it because after the situation of
COVID-19 people avoid to eat outside.
 Industries should sanitize the flights before the passengers walks in so that flight cannot
get delayed and passengers can reach their locations on time. Proper facilities should be
provided to the airports because passengers first visit the airport instead of the various
facilities and infrastructure of the airport attract the attention of the passengers which also
helps in increasing the demand of the company in the market. Airlines industries should
also develop a software so that passengers can provide the feedback to the company
related to the experience which help the business to improve its services in the markets so
that if passengers have faced any issue during the travelling it can be improved for the
next time.
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