EasyJet: Market Structure, Economic Factors, Brexit, and Covid-19 Impact

This report provides an analysis of EasyJet's market structure in the UK, economic factors affecting the business, the likely impacts of Brexit, and the impact of Covid-19 on the company. It discusses the different market structures, such as perfect competition, monopoly, monopolistic, oligopoly, and monopsony. It also examines the economic factors within the UK, including demand and supply, income level, inflation rate, and forex rate. Furthermore, it explores the negative impacts of Brexit on EasyJet's business operations, such as new regulations, reduced market share price, and fewer passengers. Lastly, it analyzes the impact of Covid-19 on the company, including job cuts, reduced fleet size, and lower productivity and profitability.

19 easy jet report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Explain the market structure in UK within which Easy Jet operates ..........................................1
What are the Economic factors within the UK that affects the business of EasyJet?..................2
What are likely impacts of Brexit on the business operations of the company?.........................5
Analyse the impact Covid-19 is likely to have on the business of the company?.......................6
CONCLUSION................................................................................................................................7
Recommendation.............................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Airline is defined as an industry which offers air transport services to paying customers
and make feel them good. The business of transporting paying passengers and freight by air
along regularly is considered as airline services. In the environment, different types of people are
living who use air line services to go and visit somewhere. This is important for individual to
analyse their needs and select best organisation which can provide the airline services to their
customers (Farboodi, Jarosch and Shimer, 2017). The report is about EasyJet Plc that is British
multinational low cost airline group headquarter at London Luton Airport. In this organization,
number of employees are working collectively and deliver the good experience to their
customers which can help to operate the business regularly. Before Pandemic, organization
delivered best quality of airline services that make higher performance in changing environment.
The report covers market structure in the UK within which EasyJet operates, economic factors
that affects business, impacts of Brexit on business operation and impact of Covid-19 on
organization.
MAIN BODY
Explain the market structure in UK within which Easy Jet operates
Market structure is defined as nature and degree of competition in the market that
understand the needs of customers and provide the products as well as services. This is most
important for organization to know what their their customers wants and how they can be
satisfied that can help to increase the market image and productivity. Market structure entails
how companies are differentiated and categorised based on types of goods which they sells. This
also helps to know hoe their operations are affected by external factors and elements as it make
easier to know the characteristics of diverse markets (Auer and Schoenle, 2016). The various
market structure are described below:
Perfect competition: This can be explained as market structure where having many
buyers and selling that creates situation of perfect competition. Without having so many market
players it become impossible to prevailing the price in market (Collin‐Dufresne, Junge and
Trolle, 2020).
Monopoly: This is opposite of perfect competition where only one producer of particular
good and services is having and it charge the prices as they wants. In other words, where there is
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having only one producer and number of buyers is called as monopoly market structure which
affected the business negatively (Hovenkamp and Shapiro, 2017).
Monopolistic: This market structure consider element of monopoly and perfect
competition where having numerous sellers. The competitors is sufficiently differentiated from
the others where it can charge higher prices. Moreover, in this one company offer products and
services to the public as per decided prices that helps to attain higher profitability (Nadtochy and
et.al., 2016).
Oligopoly: This is similar kind of monopoly where having handful of producers that
make a dominant majority of the production in market structure. In oligopoly there is not having
same prices of products and services (De Quidt, Fetzer and Ghatak, 2018).
Monopsony: This structure is not only differentiated according to the number of
suppliers in market. It may also different according to number of buyers where as perfect
competitive market focuses on infinite number of buyers and sellers. Herein, only one buyer is
having for particular good or service that give power in determining the prices of products
produced (Davies and Studnicka, 2018).
The Market Structure of the UK’s Airline Industry
The Market structure of UK's Airline is oligopoly as limited number of airline industry in
UK. Easy Jet is operating business in oligopoly market structure of UK, because there are limited
airline industry who are providing air line services to their customers by deciding the prices.
Ryanair, Loganair, British Airways, Jet2 and others are main competitor of EasyJet that are
creating the situation of perfect market structure (Wilkerson and et.al., 2018). To deal with this
issue selected organization is operating their business by leading European low cost carrier. This
helps to attracts the large number of customers as they get low cost of airline services.
What are the Economic factors within the UK that affects the business of EasyJet?
Economic factor defined as forces which uses by individual to generate the money by
running a business effectively. This is important for all to analyse the economic environment and
bring the changes that can reduce the negative impacts. In environment there ate many factors
which is important to focus as it could impacts on running business. The management is a person
who is responsible for all activities so it important to analyse the functions and make right
decision (Saleem, 2017). There are many factors which might be affects the business of Easy Jet
that are as explained below:
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Demand and supply: This is economic model of price determination in relation to
market that depends on demand and supply. There is close relation between demand and supply
such as when demand exceeds supply, price tend to rise and vice versa. This is important for
business concern to analyse the demand and decide the price of products which can help to
maintain supply chain. In other words, the capacity and willingness of paying of buyer at specific
price is demand while quantity that is offered by manufacturer of goods to consumer at decided
price is supply. If price are less then demand and supply of products might be increase that helps
to increase the brand image (Demand and supply that affects businesses 2021). This might be
affect the EasyJet business as organisation is providing their airline services at low fare which
helps to attracts the large number of customers by increasing demand and supply. This can help
to operate the business regularly by managing demand and supply effectively.
Illustration 1: Demand and supply that affects businesses 2021
Source: Demand and supply that affects businesses 2021
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Income level: This means money or fund having to a person which can be use after
paying taxes, contributions, pension and other expenses. In changing environment people
demand various products and services which are require to complete if money is available. In
UK, employment rate is increasing which impacts positively Easy Jet business as it people
booking airline services and enjoy it that supports to operate a business efficiently. This factor
affects the business positively and negatively as having money encourage people to buy the
products where as lack of income can reduce the buying capacity of customers. This reduce the
selling and profitability of business organization (Olah and et.al., 2016).
Inflation rate: This can be explained as economical factor where increase or decrease in
inflation happens on the month and year. This states how quickly prices rises during the period.
In any country inflation rate is considered as vital factor that affects the lives of people who are
residing. In relation to UK economy, continuously up and down in inflation rate might be affects
the all businesses as their resources, capital and other activities reduces. The major role of
government and market structure that decide the inflation rate change. This factor affects Easy
Jet positively as inflation rate of UK is decreasing which increases the buying capacity or willing
power of customers that helps to increase the industry performance and profitability. This also
helps to manage the all functions and activities accurately by offering better quality of services
(Aparicio, Urbano and Audretsch, 2016).
Forex rate: This explained as trading of one currency for another. Foreign exchange
transactions can take place on the foreign exchange market as many business depends on foreign
market where it is important to know the rate as it helps to run smoothly. If there is changes in
exchange rate then businesses get affected negatively low operation and sales of products and
services. Changing in forex rate in relation to UK economy impacts on Easy Jet negatively as
customers select another brand to get products as well as services (He and Harris, 2020).
From the above discussed economical factors inflation rate, forex rate, income level and
demand & supply it can be evaluated that all forces are important to consider while running a
business. A small shift in price, inflation and forex rate impacts on Airline industry as reduction
in sales and profitability. The management of industry should be analyse the environment or
economical factors that might be impacts on functions and activities. The income level of people
is another important factor that states if income of people is good then they make decision to buy
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specific products. In relation to Easy Jet, all factors are considered in providing the air line
services that helps to operate a business and managing all functions (Alon and et.al., 2020).
What are likely impacts of Brexit on the business operations of the company?
Brexit is the situation of withdrawing of United Kingdom from the European Union. This
is kind of trade war in which European country has withdraw from UK country. The impact of
Brexit on business operation is negative as all activities or functions who are running in opposite
country have been stopped. According to this, government of such country has decided to run
their business with new rules and regulation in different country that has created the problem in
operating business continuously. In other words, Brexit is a portmanteau of the words “British”
and “exit” that refers to the UK's decision in June 2016 referring to leave the European Union.
On December 24th 2020, the United Kingdom and EU struck with provisional trade agreement
that ensures two sides can trade goods without tariffs and quotas. The parliament of UK has
declared that no British organisation are allowed to operate their business in European country
with their regulation. If they wants to operate then it is require to follow regulation of European
country. Same as parliament of EU has declared no UK companies are permitted to operate their
business with their policies that has impacted on all businesses negatively. Before the situation of
Brexit it has analysed that all businesses were running good and attaining the profitability. This
is important for all companies to analysis the different regulations and implement in their
business which can help to increase the productivity and performance (Bruter and Harrison,
2016).
Brexit announcement hit UK airline industry and its share price significantly as most of
the passengers of airline industry from EU country who used the airline services. The Brexit
announcement hampered the Airline businesses as 138 million passengers travelled between UK
airports and the EU that reduced the number of passenger in situation of withdrawn. The starting
reaction of the capital market to Brexit on the airline sector that reduced the share prices. This is
a big deal for Easy Jet to face the situation of Brexit as it reduced the number of passengers
and market share price in airline industry. This became challenging situation for companies to
reduce the prices of their air services for the purpose of influencing number of customers and
maintaining the competition. The organisation is having many competitor in UK country such as
Ryanair, Jet2, and others that is continuously reducing the sales of services. The oil, gas, patrol
and other material which are used in air crafts imported from European country at lower cost but
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due to trade war between such country businesses being affected negatively as organization is
buying raw material from parent country at higher cost that reduces the productivity and
profitability (Vega, Feo-Valero and Espino-Espino, 2018).
Therefore, from the above analyses it has been evaluated that Brexit impacted badly on
operation of Easy Jet by following new regulations, reducing market share price, reducing
number of passengers and having many airline industry that also provide services at lower cost.
This created the challenge for organisation run its functions and activities smoothly as it is
difficult to manage (Parnell and et.al., 2020).
Analyse the impact Covid-19 is likely to have on the business of the company?
Other than Brexit another situation or problem for businesses is Covid -19 that also being
affected negatively. In environment a serious pandemic is facing by all companies which created
the challenge of running activities continuously. The immediate impact of Covid on EasyJet as
government shut down travel or businesses to prevent the spread of Pandemic. This industry has
cut down the jobs, going bankrupts as no passengers are buying airline services. According to
government regulation no one is allowed to go anywhere as all transportation services stopped. It
became challenge for select to run their business. This has reduced the organisational
productivity and profitability. The people became so much health consciousness who are
demanding safe, cleaned and proper sanitized services which has increased the cost of company
and affected the over all profits (Pietromonaco and Overall, 2020).
It has been seen that Easy Jet is still facing crisis that industry ever been faced with huge
of uncertainty going forward. This have reduced the fleet size by around 51 aircraft to
approximately 302 by end of September. The regular maintenance cost, operational activities and
functions has reduced due to Covid attack. The organisation is also likely to negative impacts
because it became challenging for Easy Jet to influence the number of passengers by offering
better quality of airline service. In selected organisation number of people are working during
lock down rate of employment has been decreased because tourist comes to visit or spend their
time in other places that being stopped. Thus, Pandemic affected the businesses of EasyJet
(Hammad and et.al., 2020).
The long term impact of Covid -19 is lower productivity, profitability, reduction in
market share price and new hiring for running operation. During pandemic, businesses who have
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adopted digital transformation is only allowed to operate their activities. As the Pandemic
occurred in whole world that hampered businesses badly. In future the are are less chances to
remain same because organisation to having good talent and skilled employees who works
regularly and put their efforts to manage the organisational activities. Coronavirus will hit
demand, forcing airlines to cancel flights and cut costs as cases are increasing day by day. In the
world, still no vaccine are available that can give good results and build the confidence level of
people that they will be safe (Breckenridg and Feldschreiber, 2019). The typical situation for
selected company is how to get rid off fro this serious issues and run business smoothly. In future
it will be difficult for Easy Jet to influence the number of customers by providing better quality
of products and airline services as there are more chances of again lock down due to increasing
death case. Moreover, flight services will also be reduced by management because limited
passengers are allowed to visit as per government regulation that would affect the business
negatively.
CONCLUSION
From the report it can be concluded that market structure is activity that relates to different
activities and that happens in country and affected the business. Types of market structure are
oligopoly, monopoly, perfect competition, monopsony, and others that might be affected the
business positively or negatively. In perfect competition there are number of buyers and sellers
who sells their price at competitive price, in oligopoly there are limited number of seller and high
range of buyers that create competition, in monopoly only having one seller and number of
buyers. The economical factor are interest rate, inflation rate, income level, forex rate, and
demand & supply that has impacted on business in case of small shifting. If all factors are under
control of an economy then it would be affect business positively.
Brexit is the situation of trade war between EU and UK where government has
formulated new regulations to operate the business as increase in tax rate, custom duty and others
that reduced the business productivity and profitability. Covid-19 is serious pandemic which is
facing by whole world as number of death cases are increasing day by day. In this, it became
difficult for airline industry to operate their business continuously regularly. This has reduced the
rate of employment, consumption capability and others.
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Recommendation
From the discussion it has analysed that a business faces many challenges and changes
that might be hamper or foster their entrepreneurship. This is important for organisation to
conduct the environment analysis and bring the changes in their performance which reduced the
profitability. To overcome the challenge of Oligopoly, Easy Jet is require to set the low prices
with better services that influence the customers and increase organisational value. To reduce the
negative impacts of economical factors there is need to follow regulations which can help to
manage the business activities effectively. As selected organisation is facing the challenge of
Brexit where government put some regulations to operate their business in other country. To
reduce this problem business should be establish in their country and for expansion it needs to
get permission from other government which can help to operate the business accurately.
Moreover, whole world is facing the problem of Pandemic where it affected the business
negatively. To overcome the challenge of Pandemic, management of selected organisation
should make proper arrangement and sanitized seats in their flights that cam help to build the
trust of customers that organisation is providing safe services. Moreover, needs to recall all
passengers as well as employees to maintain social distancing, wearing mask and other
protective equipment that can help to provide the safe journey to customers.
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Online
Demand and supply that affects businesses 2021. [Online]. Available through:
<https://www.researchgate.net/figure/Theoretical-example-of-UK-demand-and-
supply_fig2_254458516>
Impacts of Brexit on Airline industry. 2021. [Online]. Available through:
<https://assets.kpmg/content/dam/kpmg/cl/pdf/2016-11-kpmg-chile-advisory-brexit-
airlines.pdf>
(De Ville and Siles-Brügge, 2019)
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