Low-Cost Airlines and Network Strategies

This assignment delves into the world of low-cost airlines, examining their distinctive business models, network strategies, and the influence of online technology. It explores topics such as fare bundling, connecting flights, and the use of technology for cost optimization. The analysis considers the impact of these factors on airport systems planning, the relationships between low-cost carriers and airports, and the overall evolution of the low-cost airline industry.

Running head: STRATEGIC MANAGEMENT
Student ID number-
Module name- Strategic Management PM 303
Module Code- PM 303
Name of the university
Deadline
Author Note:

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Executive Summary
The main aims of the following report are to analyze the strategic management of Easy Jet
Airlines Company. The mentioned company is one of the largest low cost carriers of Europe
based in Luton, England. Because of the pullout of Great Britain from European Union the
company is in a crisis as the EU has warned that the companies based in England will not enjoy
the advantages that they enjoy in the European zone. The management of the company has taken
the decision to shift its base in Germany. The report has discussed in detail about the micro and
macro environment of the company.

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Table of Contents
Task 1...............................................................................................................................................5
PESTLE ANALYSIS......................................................................................................................5
Figure 1- PESTEL Analysis............................................................................................................5
Porter’s five forces analysis.............................................................................................................7
Figure No 2 – Porter’s Five Forces Analysis...................................................................................8
SWOT ANALYSIS.........................................................................................................................9
Figure No 3 –SWOT......................................................................................................................10
Table No 1- SWOT Table..............................................................................................................10
TASK 2..........................................................................................................................................12
Physical Resources........................................................................................................................12
Financial Resources.......................................................................................................................13
Human Resources..........................................................................................................................13
Competencies Analysis of the company........................................................................................14
Core Competencies........................................................................................................................14
Threshold competencies................................................................................................................14
Task 3.............................................................................................................................................15
Current Strategic Statements of the Company...............................................................................15
Vision Statement............................................................................................................................15

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Figure No 4 – Vision Statement....................................................................................................15
Figure No 5– Vision Statement.....................................................................................................16
Mission Statement.........................................................................................................................17
Figure No 6– Mission Statement...................................................................................................17
Recommendations..........................................................................................................................17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

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Task 1
PESTLE ANALYSIS
Figure 1- PESTEL Analysis
Source- (Cattaneo et al. 2016)
Political aspects- The Government of Germany is parliamentary and the country has a
democratic constitution. The chancellor is the one who heads the executive branch of the Federal
government. The well designed political structure of the country enables smooth business
operations. The presence of an independent Judiciary system protects the fundamental rights of
the people and the business (Cattaneo et al. 2016). Overall it can be said that Germany is a
politically stable country. The sophisticated business sector and a proper infrastructure help the
country to innovate and stay competitive. Easyjet will find it easy to carry on its plans for
expansion as because Germany is gradually increasing its presence within the European Union

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and NATO. However there are also some problems in the political structure of the country as tax
regulations and tax rates in Germany is one of the main hurdles for Easyjet to carry on its
business.
Economic factors- Germany is the fifth largest economy of the world in terms of PPP and is the
largest economic power of Europe. The presence of a large number of manufacturing and
innovative industries which are technological advanced helps the country to be one of the leading
exporters of different items live machinery, Chemicals and vehicles. Financing for different
companies are also very cheap due to very low interest rates. The gross domestic production of
the country is one of the highest in the world indicating the purchasing power parity of the
citizens.
Social Factors- Germany ranks 9th in the world in terms of human capital Development. As
mentioned earlier the technology of the country is of world class. A considerable amount of
budget is allocated for health care and education (Malighetti et al. 2015). The labor productivity
is very much high since the year 2011. There are also some problems that exist in the German
society (Cumming and Zahra 2016). There is a lack of Higher Education and Training in the
country the growing social divide is also a cause of concern while the ethical discrimination is
still followed out largely in the country.
Technological factors- Germany is famous for its most innovative and technologically
advanced manufacturing companies especially cars. Local competition is very high in the market
which paves the way for the companies to innovate new and challenging products. Government
policies support the use of large scale Technology to gain an unprecedented advantage over the
other products in global market. However Germany has been facing shortfall of skilled labor for

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the last few years which will be a cause of concern for aviation companies like Easyjet. The
growing ICT sector in Germany is another technological advantage for new business entities.
Legal factors- The Judiciary system is independent with a branch of courts at state and central
levels. Apart from German laws the legal structure of the country is influenced by European
Union and international laws. Freedom of trade helps the foreign companies to invest freely.
Easyjet has to comply by all the strict rules policies and procedures of German government to
start its operations from Germany (Moreno et al. 2015).
Environmental factors- Study have revealed a decrease in greenhouse gas emissions in the
country in the year 2008. According to (Dobruszkes 2013) the country has stressed on the
importance of renewable energy sources and has incorporated some strict environmental laws
and regulations. Easyjet has to comply by the rules of the host country so that it can easily start
its operations.
Porter’s five forces analysis

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Figure No 2 – Porter’s Five Forces Analysis
Source- (Malighetti et al. 2015)
Bargaining power of suppliers- The airline industry is supplied with Essential elements by the
employee airport staff, Oil Companies and the manufacturers of the aircraft. The absence of
control over rising prices of the aviation fuel affects the aviation industry badly. Presence of
strong Union is a main threat to the airline business. Safety and environmental regulations is one
of the main concerns of the German airline industry (Stevenson 2015). Easyjet has to comply
with all the safety regulations of Germany. Switching from one supplier to another is not allowed
in this country as because it will change the structure of the costs involved. The absence of
airline and engine suppliers apart from Boeing and airbus is a cause of concern for the aviation
companies. The presence of strong labor laws in Germany constitutes 40% of the airlines total
tax (Hill et al. 2014).
Competitive rivalry within the industry- Rivalry among existing aviation companies is high
because the industry growth is stagnant. The service users can easily switch from one user to
another user because of the low cost of transition (Escobar and Carvajal 2014). The presence of
companies like Lufthansa and Ryanair has ensured intense rivalry in the market. Market share is
more or less equally distributed. The presence of low cost airline Ryanair will pose a serious
threat to Easyjet’s survival in Germany as because it is one of the best and most preferred low
cost Airlines in the mentioned country (Williams 2017).
Bargaining power of buyers- The buyers are segmented into budget traveler’s business travelers
and pleasure travelers as mentioned earlier service users can easily switch from one airline to
other Airlines because of the presence of a large number of Aviation companies offering services

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in the same routes. Providing customers with complimentary meals and on what facilities can be
an added advantage for easy jet. Apart from being a low cost carrier Ryanair also provides
discount to its flyers. Therefore offering additional discounts on ticket prices can be another
strategic option of Easy jet (De Neufville 2016).
Threat of substitutes- Road and rail Infrastructures across Europe is quite good do users can also
prefer private cars, intercity buses and Marine transport to travel from one area to another area.
High speed trains are also available for long distance travel (Garg 2016). However Airlines
remain the only option to travel to International destinations to save time.
Threat of New Entrants-The presence of brands like Lufthansa and air Berlin decreases the
chance of new airlines company to sustain in the market. Easy jet will find it tough to prepare
strategic operations in Germany has all the routes from Germany have a high amount of traffic.
The regularization and opening market to foreign investors and companies have helped the
country to attract large scale Investments.
SWOT ANALYSIS

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Figure No 3 –SWOT
Source- (Stevenson 2015)
Strengths Weakness
 Reputation for cheap flights
 Popular among young travelers
 Customer Loyalty
 Corporate Social Responsibility
 New routes
 Friendly Customer Service
 No frills airlines
 Huge Competition
 Legacy airlines are reducing the price
of air travel
 Absence of complimentary meals in
long flights
 Absence of Expansion outside Europe
Opportunities Threats
 Offering New Routes
 Exclusive Discounts
 Strategic Tie ups
 Brexit is a cause of concern
 Legacy Airlines are a threat to the
survival
 Rising cost of fuel and environmental
concerns
Table No 1- SWOT Table
Source-(Stevenson 2015)

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Strengths
 Easy jet has developed a brand reputation for operating own of the cheapest flights in UK
and Europe.
 It is quite popular among young people and the people who travel for business purposes.
 The mentioned airline company has been adding new plans to ensure safety and reduce
carbon emissions.
 Customer loyalty is one of the greatest strengths of Easy jet.
 The mentioned airlines company as a clear corporate social responsibility the rails to
achieve its environmental targets.
 The airlines company has started operating in new routes throughout Europe.
 The mentioned airlines company is known for friendly customer service.
 It is a no frills airline.
Weakness
 Presence of a large number of local and international brands leads to huge competition.
 Old carriers which offered high costs have now changed the Strategies and offering low
cost air services.
 Absence of no food service in longer flights is one of the most important weaknesses of
the mentioned airline company.
 Absence of expansion ideas outside Europe is a main weakness of the mentioned Airlines
Company.
Opportunities

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 The airline can expand into new routes both regional and international.
 Easy jet can also offer exclusive travel packages that can attract travelers who want new
kinds of travel experience.
 The mentioned airlines company can tie up with different other companies to expand its
routes. Easy jet can also create a new niche markets and focus on particular customers.
Threats
 Exit of Britain from European Union is considered to be the present threat of the airlines
company. Increase the secondary fees to Easy jet as airline is struggling to offer lower
prices to the customers for air services.
 As mentioned earlier Legacy Airlines are becoming a greater competitive Force for Easy
jet to carry on its operations smoothly.
 Rising cost of oil and environmental concerns are a threat to the airlines company.
TASK 2
Physical Resources
The physical resources of the company include the different aircrafts, installations, office space
and many more such tangible assets. As of 2016 the Aircraft Company has a fleet strength of 254
aircrafts and operates in 124 destinations (Fageda et al. 2015). The large number of computer
networks also forms a main physical asset of the mentioned aviation company. The computer
network helps the company to operate the ticketing facilities and the boarding facilities easily.
The company has its headquarters in Luton Airport where its main office is termed as Hanger 89.

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The hangars, the aircrafts, the computer network system are collectively termed as the physical
resources (Graham 2013).
Financial Resources
Financial resources of Airjet include the monetary asset of the company that are used by
them for spending in the form of cash, securities and lines of credit. The company had been one
of the leading low cost carriers of Europe (Lück and Gross 2016). The company has achieved
such a topmost position by means of sound financial resources acquired from different financial
institutions. The in hand capital, brand reputation has been one of the main causes behind the
company’s easy loan approval process. According to the financial report of the company as of
the fiscal 2016-17 it has seen a steady rise in the profit percentage (Kleymann and Seristö 2017).
Human Resources
Easy jet has a well trained, friendly and efficient staff force in its ranks. The training
program of the aviation major is one of the best in the industry (Wu and Lee 2014). The
employees are trained with the latest methods and technologies to help them serve the passengers
in a better way (Budd et al. 2014). The HR management of the company has implemented the
best HR policies like rewards, schemes and other benefits, Loyalty bonus, Pension scheme
through ‘Your Benefit’.

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Competencies Analysis of the company
Core Competencies
The mentioned Airlines Company has seen a gradual increase in the load factor from
83.7% to 87.3% in between the last couple of years (De Neufville 2016). The UK based
company slowly exceeded another major Low Cost carrier, Ryan air which used to possess a
higher load factor. The high load factor of the Airlines helps the organization to manage the costs
of the services easily. The number of vacant seats in the company is very much low which helps
Easy Jet to attract more and more customers to use their services. The increase in the amount of
the load factor has helped the organization to earn both ancillary revenue as well as total revenue
(Morecroft 2015).
Threshold competencies
Some of the threshold competencies of the mentioned group of Airlines are;
a. Achieving the number one position in both the primary airports as well as the present
routes of Easy Jet
b. Large scale investment
c. Investment should be made with a certain purpose
d. Maintaining its position in France, UK and Switzerland.

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Task 3
Current Strategic Statements of the Company
Vision Statement
Figure No 4 – Vision Statement
Source- (www.easyjet.com)

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Figure No 5– Vision Statement
Source- (www.easyjet.com)
The above figures have highlighted the mission and the vision statements of Easy jet.

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Mission Statement
Figure No 6– Mission Statement
Source- (www.easyjet.com)
The figure above has described the mission statement of Easy jet.
Recommendations
The researcher has recommended some of the solutions which if implemented by the
organization can improve its operational performance.
a. The airlines must take green initiatives and reduce the amount of pollution
b. It can also take initiatives to reuse the products and services

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c. The aviation company can improve its brand position by means of better advertising and
marketing campaigns
d. Lowering the cost of operation can be one of the best way to achieve profits
e. Using energy efficient and environment friendly engines
Conclusion
The report that is based on the strategic management of Easy Jet has been successful in
determining the micro and the macro environment of the company in its new base. The
emergence of the Brexit has created a problem for the organization and thus its decision to shift
its headquarters to Germany is the need of the hour. The aim of the researcher to carry on a
detailed analysis has been successful. A thorough study of the report will help the readers to get
an idea about the broader strategy of the mentioned brand of Airline Company. Easy Jet must not
solely retain customer loyalty and should better concentrate on creating the best values for the
customers.

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References
"Home | Easyjet.Com." Easyjet.com. N.p., 2017. Web. 8 Sept. 2017.
Budd, L., Francis, G., Humphreys, I. and Ison, S., 2014. Grounded: Characterising the market
exit of European low cost airlines. Journal of Air Transport Management, 34, pp.78-85.
Cattaneo, M., Malighetti, P., Morlotti, C. and Redondi, R., 2016. Quantity price discrimination in
the air transport industry: The easyJet case. Journal of Air Transport Management, 54, pp.1-8.
Cumming, D.J. and Zahra, S.A., 2016. International Business and Entrepreneurship Implications
of Brexit. British Journal of Management, 27(4), pp.687-692.
De Neufville, R., 2016. Airport systems planning and design. Air Transport Management: An
International Perspective, p.61.
Dobruszkes, F., 2013. The geography of European low-cost airline networks: a contemporary
analysis. Journal of Transport Geography, 28, pp.75-88.
Escobar-Rodríguez, T. and Carvajal-Trujillo, E., 2014. Online purchasing tickets for low cost
carriers: An application of the unified theory of acceptance and use of technology (UTAUT)
model. Tourism Management, 43, pp.70-88.
Fageda, X., Suau-Sanchez, P. and Mason, K.J., 2015. The evolving low-cost business model:
Network implications of fare bundling and connecting flights in Europe. Journal of Air
Transport Management, 42, pp.289-296.
Garg, C.P., 2016. A robust hybrid decision model for evaluation and selection of the strategic
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Graham, A., 2013. Understanding the low cost carrier and airport relationship: A critical analysis
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Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
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Kleymann, B. and Seristö, H., 2017. Managing strategic airline alliances. Routledge.
Lawton, T.C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
Lück, M. and Gross, S. eds., 2016. The low cost carrier worldwide. Routledge.
Malighetti, P., Paleari, S. and Redondi, R., 2015. EasyJet pricing strategy: determinants and
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Morecroft, J.D., 2015. Strategic modelling and business dynamics: a feedback systems approach.
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Moreno-Izquierdo, L., Ramón-Rodríguez, A. and Ribes, J.P., 2015. The impact of the internet on
the pricing strategies of the European low cost airlines. European Journal of Operational
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prognostics tools among initiatives carrier is pursuing to maintain its market edge. Flight
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Williams, G., 2017. The airline industry and the impact of deregulation. Routledge.

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Wu, C.L. and Lee, A., 2014. The impact of airline alliance terminal co-location on airport
operations and terminal development. Journal of Air Transport Management, 36, pp.69-77.