EasyJet's Competitive Advantage in Relocating to Austria

EasyJet is a low-cost airline company that aims to offer affordable flights to its customers. The company has been successful in Europe and is now planning to set up its headquarters in Austria. To gain a competitive advantage in the Austrian market, EasyJet will need to focus on reducing fares for short-haul transport, where prices are elastic. The company's resources and competencies include efficient use of resources, low turnaround times, eliminating meals, and offering best customer care services. EasyJet also has a simple vision of becoming the most preferred short-haul airline company in Europe, making travels easy for all by increasing affordability.

Running Head: Strategic Management
Strategic Management

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Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................2
External Environment Analysis and Competition in the Airlines Industry...............................2
Competition among the Companies and Prospects for EasyJet.................................................4
EasyJet’s Resources and Competencies in Gaining Competitive Advantage on Relocation....5
Evaluation of Vision and Mission Statements...........................................................................6
SWOT Analysis of EasyJet and Evaluation of Existing Business Strategy...............................7
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Executive Summary
EasyJet has achieved great success with second largest market share of about 31 % in
the low-cost airline industry by providing low-cost services to the customers in the European
market. Because of Britain exit from the European Union the company is facing problems
that has forced them to shift their business in any one of European countries to continue its
business in these countries. Austria is considered as a very potential market for the business
due to high living standard of the people, if the company follows certain recommendation of
expanding its business to attract the luxurious class of people.
Introduction
The Following report critically examines the external airline industry environment of
Austria for EasyJet to make an entry and setup their headquarters there. In order to achieve
this goal of the report, various existing and future aspects of the company, as well as the
country in gaining the competitive advantage, are studied.
External Environment Analysis and Competition in the Airlines
Industry
In order to analyze the external environment of Austria for airlines industry, PEST
analysis can be used as it is helpful in analyzing political, economic, social, and technological
factors existing in the current markets which are provided below:
Political Environment
The Austrian State Treaty was signed in 1955 which made it possible for the airports
to be developed for civil aviation in Austria. The vibrant growth of airlines in Austria is a
result of continuous development in the strategy for technology, research and innovation

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achieved through government and airlines industry working together. Considering this
strategy in long-terms, it is aimed at strengthening the industry and improving its productivity
and competitiveness by further coordination and development of the sector.
Economic Environment
The demand for aviation services is heavily dependent on the economic situation and
growth of the country. Austria is considered as a nicely developed market with the high living
standard of the people which definitely impacts the industry positively. The economic
activities of aviation are not covered to a great extent in the international trade law of World
Trade Organization. The protagonists of the industry have connections within their respective
countries as well as internationally because of this international component of transport
mode. Consequently, this makes it necessary as well as desirable for the companies to be
attentive towards relevant stakeholders while dealing with aviation issues.
Social Environment
Austria has a rich culture, high living standards, environmental quality, security, and
classic dwellings, and even more while considering the day to day quality of life. Austria is
regarded as one of the best business locations because of its tax system which is very
business-friendly. Such lifestyle and compatible business laws are considered influential in
the cross border expansion and progress of the businesses. Consequently, it has increased the
travel of business managers who want their travel to be the least time consuming and most
comfortable.
Technological Factors
Technology is observed to be impacting the airlines industry in many aspects. With
the advent of ticket booking and tracking services through online websites and mobile apps, it
has become a lot easier and cheap for the customers to travel within the country and across

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borders. This has increased both, the number of travellers for the airline companies as well as
the competition among them based on the ticket prices. Technology has also made it possible
for the industry to develop more fuel-efficient and safe airplanes adding more to cost
reduction and safety for travellers.
Competition among the Companies and Prospects for EasyJet
At present, there are more than 80 existing airlines in the aviation industry of Austria
which support about 30 million passengers every year. The country’s aviation industry on the
basis of passengers is dominated by major players such as Austrian Airlines Group (with its 3
subsidiaries, namely Austrian Airlines, Tyrolean, and Lauda Air) and Fly Niki (took over by
Air Berlin in 2010). With these companies, there are other important companies which
provide regular scheduled and chartered services to its customers. There are 6 important
international airports in Austria which include Innsbruck, Salzburg, Linz, Graz, Klagenfurt,
and the most important one Vienna airport as it is one of ten busiest airports in Europe. The
recent years have remained profitable for Air Berlin/Fly Niki Group with an increased market
share reaching to 17.4 %, while the whole Lufthansa Group (that includes Austrian Airlines
and other important airlines such as Germanwings, Swiss, Brussels Airlines, etc.) had a
decreased market of 62.6 % as compared to previous years.
EasyJet will have to face fierce competition from both Lufthansa Group and Air Berlin
Group in order to set up its headquarters in Austria. Although the market is very competitive,
the market environmental conditions are opportunistic because of the highly compatible
customer base and cooperative practices of the government.

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EasyJet’s Resources and Competencies in Gaining Competitive
Advantage on Relocation
In Europe, EasyJet is one the most prominent company that offers airline services at low-
costs because of Low-Cost Carriers (LCC). EasyJet is recently growing every day with
increasing size of the market and by attracting the passengers from other major airlines. In
order to gain this type of competitive advantage in the market, EasyJet has successfully
managed to utilize their efficient resources and their core competencies are described further.
The primary objective observed by the company is to reduce the fares of flight with short
haul transport in air, where prices are elastic and people can fly more. At present, the
company is offering 500 routes across 27 countries using 114 airports. Currently, EasyJet is
one of the two leading companies with a market share of 31 % in the low-fare airline
industry. Some other competencies include their business model in which lower turnaround
times of the aircraft is achieved by the crew members with lesser airport infrastructure at the
airport in order to ensure the least use of resources in an efficient manner. This objective is
also fulfilled by other practices such as eliminating meals to reduce the usage of paper bags
and cost and operating almost ticketless so that the use of office infrastructure is minimized
with the reduction in the cost of paper and printing. As the people in short haul transport
services do not need meals, the company have saved its staff members from being on board
for food. Cargo services are also absent as complex baggage systems and facilities for
transferring passengers from airport gates to flights are of no use in such services. While such
practices have added to the lower operational cost, the company have also managed to reduce
the compensation costs of employees by controlling it through performance based appraisal
programmes. EasyJet has also maintained healthy relations with all of its vendors to get
aircraft' spare parts on favourable terms. In addition to offering low-cost services to the

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customers, the company has well-trained employees for providing best customer care
services.
There is no doubt that these competencies and such efficient use of resources can
easily attract the customers in any part of the world. Good prospects for the company to set
up and achieve competitive advantage are observable from the above discussed practices.
Currently, LCC services in Austria are neither that popular as they are in other parts of the
Europe nor any major player is offering them efficiently. Just as the previous track record of
EasyJet in the UK for using the resources most efficiently, if the same practices are followed
in Austria, the company can achieve competitive advantage over other.
Evaluation of Vision and Mission Statements
Every company creates its own mission and vision to attain specific goals and
objectives. These statements are influential in the present status of the company and define
company's future plans. EasyJet has kept a very simple vision of becoming the most preferred
short-haul airline company of Europe, obtaining returns that are leading in the market, and
making the travels easy for all by increasing affordability (Careers.easyjet.com, 2017).
This mission can surely help them achieve their goal in Austria because of lesser
competition in short-haul airline services sector in the country. On the contrary, the living
standard of people in the country is very high, the company may not achieve success to that
level using this vision and mission statement as this includes the use of term affordability.
Most of the population having high standard may not like the use of word affordability as
they may perceive accepting such an offer could degrade their status in society. However, the
same idea can be pitched using a different word which does not make them feel that their
status is getting degraded by accepting the cheaply priced flight offers.

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SWOT Analysis of EasyJet and Evaluation of Existing Business
Strategy
Strengths
 Excellent quality of customer service
 Considered as innovative and flexible brand in the market
 Strong internet booking services
 Image differentiation based on price
 Low turnaround time and average age of fleet
 Connects all the main airports of Europe
Weaknesses
 Negligible scope outside Europe Unappealing low-cost model for business class travellers Sensitive to any additional charges Lacking customer retention policies while expanding simultaneously
Opportunities
 Predictable potential for future growth
 Expansion of European Union
 Reduced prices of aircraft
 Chances of full-service airline to withdraw from regional markets as it is less
profitable for them leaving it all for LCCs
Threats
 Business meeting organised using video conferencing Competition from other aviation services

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 Dependence on third party vendors of aircrafts Inability to persuade business class travellers
Business Strategy
Although the existing business strategy of EasyJet have led them to achieve heights of
success and made them popular throughout the Europe. They have differentiated themselves
among all the companies on the basis of low-cost price strategy for the customer by cutting
the costs in various ways such as lower budgets for staff, negligible costs of office
infrastructure, and reducing the various services for customers during transit. These strategies
can surely attract the economy class of population, but considering the living standard of
people in Austria, the company will need to bring in some changes in its business strategy.
Recommendations
In order to sustain in Austrian, EasyJet cannot just focus on cutting the costs of services for
achieving success, they need to focus more on the Austrian market environment, below are
some recommendations made accordingly:
 EasyJet will have to start service for people keeping luxurious demands of Austrians
in mind.
 They will need to increase their staff budget for starting in-transit services such as
serving food in the flight (Morlotti et al., 2017).
 They will need to start making use of more infrastructure at the airports for providing
services to the passengers such as transport facilities for the travellers from the gates
to flights as a part of their business strategy.

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Conclusion
On the basis of above discussion, it can be concluded that EasyJet has strong potential
to make a new entry into the airline industry of Austria. In order to ensure success, the
company will have to make some major amendments in their business strategy to attract
Austrians by most importantly considering the social factors studied in the PEST analysis.

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References
Careers.easyjet.com. (2017). Culture, Vision and Values | easyJet CareerseasyJet Careers.
[online] Available at: https://careers.easyjet.com/why-easyjet/culture-vision-and-value/
[Accessed 6 Aug. 2017].
Koenigsberg, O., Muller, E. and Vilcassim, N.J., 2008. easyJet® pricing strategy: Should
low-fare airlines offer last-minute deals?. QME, 6(3), pp.279-297.
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.
Morlotti, C., Cattaneo, M., Malighetti, P. and Redondi, R., 2017. Multi-dimensional price
elasticity for leisure and business destinations in the low-cost air transport market: Evidence
from easyJet. Tourism Management, 61, pp.23-34.
Borenstein, S. and Rose, N.L., 2014. How airline markets work… or do they? Regulatory
reform in the airline industry. In Economic Regulation and Its Reform: What Have We
Learned? (pp. 63-135). University of Chicago Press.
Gleave, S.D., 2014. The Austrian Aviation Sector in the Context of the Business Location
Austria.
Schwarz, M., 2013. Austrian Aviation Psychology Association, Graz, Austria.