Aviation Policy and Strategy

This report discusses how strategies and factors can affect the aviation industry in terms of competition and attraction.

Aviation Policy and Strategy

TABLE OF CONTENT
Introduction......................................................................................................................................1
MAIN BODY..................................................................................................................................1
Pestle model.................................................................................................................................1
Porter’s five forces model............................................................................................................2
Ansoff matrix...............................................................................................................................4
Conclusion.......................................................................................................................................5
REFERENCES................................................................................................................................6

Introduction
Aviation strategy is developed so that the industry can get help to give improvised services
to their passengers. The objective behind framing the strategy is to get sustainable and safe
aviation sector in order to meet the demands of customers. Easy jet is the UK based airline
company. It is known for providing good quality of services at reasonable price. This report will
discuss how strategies and factors can affect aviation industry in terms of competition and
attraction.
MAIN BODY
Pestle model
Pestle framework is used to analyze external environment of the organisation. It has six
factors which are as follows:
Political factors: this factor covers government policies which include trade tariff, new tax
policies etc. Easy jet is doing business in the travel and aviation industry and is also present in
many different countries (Pekar, 2020). So they have to face political risks of different countries.
Brexit is the major uncertainty because ownership have to be transferred from UK AOC to EU
AOC. Company is also affected by French industrial actions. Due to the regulation of
commercial aviation of Europe, low cost carriers are benefiting to local airline. With low pricing
strategy easy jet is fighting for the market share.
Economic factors: the factor is related to economy which can affect the company. It includes
inflation rate, economic growth, foreign exchange rates etc. Covid 19 has negatively impacted
aviation industry and economy of the country. Changes in the macroeconomic factors which
include fluctuation in fuel costs etc impacted the sales and profit margin of easy jet. Recession
can strongly impact aviation organisation but when the economic conditions are stable then
travel industry booms.
Social factors: this factor is related to social environment which includes lifestyle, cultural
trends, demographics etc. Change in the preferences of consumers can impact the sales and
revenue of easy jet. Company is also forced to maintain balance in terms of gender in pilots.
Change in the lifestyle of the consumer can be the threats and opportunities for the aviation
industry. Biggest opportunity is consumers are preferring worldwide destinations for spending
their holidays. Threat is competition in aviation industry is increasing so that can influence profit
of easy jet.
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Technological factors: this factor refers to changes in technology and coming of new technology
can impact the industry. Digital interface is improving continuously and on the easy jet app
company has introduced bag sizer. I phone has also introduced feature of new bag scanning
which is helping in fast scanning. Easy jet has also adopted advanced analytics for doing their
business. With the increasing use of internet consumers are booking tickets online and after
booking they receive email which includes their travel details. As IT evolves paperwork has
reduced and management start doing paperless work.
Legal factors: this factor includes laws which can influence the aviation industry. Easyjet’s
founder is charged by Bribery charges. Air traffic control has also changed supply in the
European airspace. Heavy regulatory environment is also affecting business of airline industry.
Commercial aviation is facing price competition from the discount carriers (Gardiner and Scott,
2018).
Environmental factors: this factor is related to environment which can impact business
operations and it includes changes in climate, weather etc. Fuel which is used in aircraft are
damaging the environment. If due to easy jet aircraft pollution is created in the environment then
company have to pay fines. Due to changes in the environment electric green aircraft are
promoted.
From the above model it can be said that political factors, legal factors etc can influence
company and affect their profit margins but factors like technological or social factors can
contribute in the growth and also helpful in fighting competition.
Porter’s five forces model
This model is used to evaluate the competition for the business and to check attractiveness
of industry in profitability terms. It has five elements which are as follows:
Threats of new entrants: in the aviation industry achieving economies of scale is difficult. Those
companies can get benefit who are producing more so that to gain cost advantage. For new entry
production will be expensive in aviation industry which restricts new entrants. Product
differentiation is appreciated in this industry. So companies in this industry focus on selling
different products then the standardised one (AYDIN, 2017). Easy jet should also focus on
providing good customer service and attractive advertisement to beat the competition. Capital
which is required in this industry is high so it creates hurdles for new entrants. Easy jet can
launch innovative products so that their product looks different from the new entrants.
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Bargaining power of suppliers: suppliers in the aviation industry are more in numbers. So the
bargaining power of suppliers is low and because of this they do not have much control on prices
(Easyjet Plc Porter Five Forces Analysis., 2018). Materials which suppliers are providing is
standardised, which are not different so the switching cost is also low. So easy jet can easily
switch to different supplier. No threat from the supplier in the aviation industry. So easy jet
receives no threat from suppliers. For the suppliers easy jet is the very important and big
customer. So supplier has to provide materials on reasonable price so that company can get more
margins on profits. Company should have more suppliers so that they cannot go out of stock in
terms of raw materials.
Bargaining power of buyers: it is low because number of firms in the aviation industry is less. It
means that customer has less choice and they do not have more control over prices. Product
differentiation is more in this industry so buyers cannot find substitute firms which are
manufacturing particular product. Incomes of buyers are also low so they prefer low prices only.
In order to attract more buyers and beat rival companies easy jet should focus on manufacturing
different products. As good quality of products and innovative products can attract more buyers
towards the company.
Threat of substitutes: it is low as less substitutes are available. Less substitutes which are
available in the industry are produce less profit industry. It indicates that there is no limit on the
profit making in this industry in which easy jet is operating. Less substitutes which are available
in the market provide good quality of services but are costlier then easy jet. Whereas with normal
quality easy jet is providing services at low price. It means that buyers will not easily shift to the
substitute products. To survive in the market for longer period easy jet can provide good quality
of products and services at reasonable price. This will attract those customers also who does not
sacrifice with the quality.
Competitive rivalry: competitors in this industry are low. Out of the few competitors within them
only few companies are there which market share is large. So in few firms competition will be
more so as to become the market leader and dominate the market. The aviation industry is
growing every year and this is the positive sign for the company in terms of future growth (Dash,
2019). This industry has high fixed cost so company have to work with full capacity. So when
demand decrease, company also have to decrease the prices. So in this case rival firms can
dominate the market. Exit option in this industry is also not easy because of high investment and
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assets which are used to run company. Easy jet should target new customers rather than
completely focusing on existing one. Research can also conducted by company in order to
understand demand and supply.
Ansoff matrix
It is the framework which is used to give direction to the business to reach towards growth.
It has four factors.
Market penetration: easy jet should increase the production capacity so that they can attract more
customers of the same market (Moravec and et.al., 2018). When production capacity is increased
then it leads to high efficiency and overhead costs are also controlled. When overhead costs are
less then it will lead to competitive advantage and pricing. With the help of more attractiveness
and competitive pricing company can get benefit of more sales and consumption and that will
increase revenue and penetration in the market. In order to get more penetration company should
focus on advertisement and promotion. Easy jet can carry promotional activities which can be
helpful in attracting more customers.
Market development: easy jet should start doing research so that they can come to know about
new markets and customers who are willing to purchase their products. Research and
development should focus on evaluating market trends, customer behaviour and culture and how
they vary from the customer pattern of the existing markets. Company can also go with local
expansion which includes expansion in different region and cities. If easy jet is going for
regional expansion then company should take care of cultural differences which should be
considered in expansion process and that can be in terms of consumption and marketing
methods.
Product development: it is done when company want to launch new products in the existing
market. Easy jet can make certain changes in the existing products so that company can give new
offerings to the customers. This can help in getting more sales through more consumption. To
fulfil customer demand easy jet can also launch new products by conducting research and
development. Company should also focus more on research in order to understand market trends
and behaviour of the customer.
Diversification: it means when company launch new products in the new market (Radomska and
Kartash, 2019). Easy jet can also opt for vertical diversification which means company can
launch new products in the old product range. Whereas company can also launch complete new
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product which is not familiar with existing product range. For diversifying the business easy jet
can also start different business in order to earn more profit. When easy jet went into new
business then company can explore new business options. Through mergers and acquisitions also
company can expand in new markets.
Conclusion
Through this report it can be concluded that aviation industry have many opportunities to
grow and can attract customers by differentiating the products and services. Innovation is also
helpful in getting more market share and beating the competition. The report has discussed three
models through which attractiveness and competition of aviation organisation is evaluated.
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REFERENCES
Book and Journal
AYDIN, O.T., 2017. Assessing the environmental conditions of higher education: in a theoretical
approach using porter’s five forces model. Journal of Higher Education and Science. 7(2).
pp.378-391.
Dash, M., 2019. Comparison of performance of indian aviation service providers using multi-
criteria decision models. Asian Journal of Pure and Applied Mathematics, pp.16-26.
Gardiner, S. and Scott, N., 2018. Destination Innovation Matrix: A framework for new tourism
experience and market development. Journal of Destination Marketing &
Management. 10. pp.122-131.
Moravec, L. and et.al., 2018. Innovative method of the correction in heat distribution digitized
documentation against the actual status using thermovision. IDIMT-2018. p.137.
Pekar, Y.S., 2020. Strategic management of foreign economic activity of the state enterprise
“Boryspil international airport.
Radomska, M. and Kartash, Y., 2019. The comparative analysis of the environmental and
economic efficiency of the Кyiv city public transport modernization.
Online
Easyjet Plc Porter Five Forces Analysis., 2018. [Online]. Available through: <
https://www.essay48.com/term-paper/8979-Easyjet-Plc-Porter-Five-Forces >
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