Contemporary Business Environment: Easy Jet's Market and Brexit Impact

This report provides a comprehensive analysis of Easy Jet's contemporary business environment, focusing on the airline's operations within the UK. It begins by examining the market structure in which Easy Jet operates, identifying it as an oligopoly and discussing its characteristics. The report then delves into the economic factors influencing Easy Jet, including demand, GDP, fuel prices, foreign exchange rates, and global air traffic, highlighting their impacts on the business. Furthermore, it explores the likely consequences of Brexit on Easy Jet's operations, addressing issues like business operations within the EU, supply chain disruptions, financial losses, and future risks. The report also assesses the impact of the COVID-19 pandemic on Easy Jet, detailing financial losses, workforce reductions, stakeholder impacts, and operational changes. The conclusion summarizes the key findings, emphasizing the dynamic and unpredictable nature of the contemporary business environment and its effect on Easy Jet's strategic decisions. The report uses various academic sources to support its arguments and findings.

Contemporary
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
The market structure in the UK within which Easy Jet operates................................................1
The economic factors within the UK that affects the business of Easy Jet.................................2
The likely impacts of Brexit on the business operations of the Easy Jet....................................3
The impact COVID-19 on the business of Easy Jet....................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
A contemporary business environment is an extensively competitive market environment.
In recent phase of time, contemporary environment is characterised as environment of
uncertainty, ambiguity volatility, dynamic and complex. Easy Jet Airline is one of the renowned
name in leading low cost airline in UK (Boone, Kurtz and Berston, 2019). Easy Jet is
successfully operating its business since 1995 but due to hitting of global pandemic COVID-19,
first time they have witnessed financial loss. This is thus, contemporary market is full of
uncertainty and unpredictable. Easy jet is firm comes under the oligopoly market structure of
UK. This report revolves around the internal and external environment of Easy Jet and impact
of global pandemic on its business performance. Furthermore, this report outlines the impact of
Brexit on operations of Easy Jet. Identification of contemporary business environment issues
helps an organisation for developing future focused perspective. This is because in order to
survive in dynamic competitive market a Easy Jet need to formulate business strategies to
recover from the financial losses.
MAIN BODY
The market structure in the UK within which Easy Jet operates
There are four market structure in UK : Monopoly, Perfectly competitive, Monopolistic
competition and Oligopoly. It is analysed that the UK's low cost firm Easy Jet with competitive
interaction and low cost pricing strategies operates under the oligopoly market structure. The
oligopoly market is dominated by 4-5 number of suppliers in which actions of one firm
influences the another firm. In oligopoly market structure the firms to price- fixing according to
group or either according to one firm rather than from market (Niemimaa, 2019). Profit margin
in this are higher than normal. Firms under oligopoly are barriers to new entrants, slow
innovations and also have legal privileges, and valuable customer loyalty to survive. Oligopoly
market firm have objective to maximize the profit or to increase the market share. Number of
suppliers in oligopoly market are less which gives them benefit of no competition and firms
operates successfully without any disturbance. This fosters the relationship and collaboration
between the firms to earn maximum profit. Firms under this market structure supply common
good and services under the fix price. In oligopoly market if any firm lowers its price to increase
the sales growth the company would be in price war with other respective firm, hence commonly
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no firm indulge themselves in such war rather funnel their money into research to improvise their
goods and services and into advertisement to let customers know what different and unique the
firm is providing from others (Dube, Nhamo and Chikodzi, 2021). The major problem faced by
the oligopoly market is prisoner's dilemma which means every firm has some intention to cheat
other in order to increase its profit. For which there are some contracts and legal restrictions.
Characteristics of oligopoly market are: Interdependence, Strategy, Barriers to entry, collusive
oligopolies, competitive, no price strategy. The airline industry is formulated under the oligopoly
market structure (Igwe, Nwajiuba and Igwe, 2021). Easy Jet is low cost airline company with no
frills and gaining high customers with its low cost pricing strategies. This firm in oligopoly
market has entered the market by overcoming the high entry barrier by differentiating its services
specifically from well known British Airways with high market share. The low ticket cost with
less frills by easy jet has tempted many customers to fly by Easy Jet and also increased its market
share. Easy Jet has strong market share in UK's Oligopoly market. Easy Jet is highest leading
airline firm with approx 51 million passengers transported via Easy Jet Ltd.
The economic factors within the UK that affects the business of Easy Jet
The Easy Jet is warned with the economic instability due the various events occurred in
UK which affects the economic growth of the airline industry. The airline industry is the periodic
one with the economic growth and business profits (Rotondo, Corsi and Giovanelli, 2019).
There are several factors which affects the business of the Easy Jet : Demand: Easy Jet is the biggest firm in aviation industry in UK in demand factor. The
demand in aviation industry is affected by many geopolitical factors such COVID-19
which totally bring the demand to zero overnight . There are long term consequences on
demand of passengers to earn the profit to come out of losses faced by Easy Jet. The
demand of leisure passengers are more after the pandemic rather than business class
passengers. EU27 GDP: There was increase in EU27 GDP in 2019. The GDP is a key factor to
measure the overall economy of UK and there impact on various industries. The COVID-
19 has created a heavy debts in the airline industry as there no demand with no profit.
Economic factors remains in favour of Easy Jet if the GDP is high. The scale of network
of Easy Jet is efficiently useful in scheduling the local demand and to gain the
competitive advantage after this landscape.
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 Brent price and Fuel rates: A global benchmark for the price of Atlantic basin crude oils
all over the world (Nižetić, 2020). In UK the Brent price was fell with high difference
this year. Airline industry always protect themselves from oils Brent price due to
COVID-19 there was heavy reduction in Brent price. Fuel price is the biggest cost that
Easy jet faces and has cost base in economic growth of business. The price of Jet fuel is
highly dependent on the fuel price of UK which affects the cost of Easy Jet. Foreign Exchange: The conversion of one currency rate into another highly affect the
export business and the economy of various business as well (Oxford Analytica, 2019).
The same happens with airline industry in UK when there is relative change in exchange
rates of UK. Easy Jet faces the impact of exchange rate fluctuations, mainly the British
pound consecutively act against the US dollar and the euro to reduce instability. Due to
this factor profit and capital expenditure of Easy Jet has a bad impact.
 Global Air Traffic: Earlier the ATC of UK was so disturbed and busy in managing the
rush in air but in current year due to pandemic this economic factor was totally off. The
short haul travelling is recovering faster in easy jet flying after pandemic and easy jet is
also trying to focus on profitable flying.
The likely impacts of Brexit on the business operations of the Easy Jet
The word Brexit derives from the “British” and “Exist”, it is the UK's Decision to
withdrawn its name from the European Union (EU) (Abrate, Nicolau and Viglia, 2019). Since,
easy jet majorly owned by the EU but the large dark cloud of Brexit impact the operations of
Easy Jet. Due to Brexit the economical and operational factors of Easy Jet were adversely
affected as the GDP was impacted and demand was also reduced.
 Business operation in the EU Countries: In order to continue air services after the Easy
Jet Prepares itself for Brexit by establishing an airport operator certificate and license in
Austria in order to protect its flying operations rights within the European Union.
 Supply chain: There may be chances of the supply chain disruption regarding the spare
parts; thus, for avoid the chances of the supply disruption between UK and Europe, Easy
Jet Built their own additional spare parts hub within the EU.
 Financial losses: As per the reports of the Tourism agency visit Britain,there is drop in
the European tourist in UK. Furthermore,threats of Custom immigrations formality and
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even EU airspace restriction have put overseas booking of the Easy jet down. Thus, it
may be evaluated that the uncertainty of Brexit hurting the business of the Easy Jet
 Future risks: Easy Jet have prepared themselves for Brexit, but still there are external
risks associated with air-flying service, ground services in case of no agreement.
However, the possible license and certificate to qualify for air service are under the
regulations of UK's Civil Aviation Authority, so the validity of certificate might become
an issue to operate within the EU.
 Operations within the UK: To continue its air, ground and supply chain, Easy Jet have
transferred its fleet and pilot's license to their subsidiary airline which is Easy-jet Europe.
However it has found that operations within the Britain will suffers in case of hard Brixit.
 Oil price impact: With the impact of the Brexit, easy jet is facing the issue of higher Oil
price due to higher inflation rate in the Europe. Thus, higher oil prices means hight cost
of operations this is thus made a complex for low cost airline like Easy Jet to provide air
service within the lowest margin.
The impact COVID-19 on the business of Easy Jet
The global pandemic COVID-19 and the national lock-down and quarantine restriction
have disrupt the business of many industries across the globe. Airline industries were brutally
affected one. Surviving in the shadow of COVID-19 is quite impossible for Easy Jet (Syafrian,
2020). There were many aspects where this Pandemic influence the business of the Easy Jet.
Some of the areas are following:
 Financial losses: Easy Jet have recorded their first time financial losses in its 25 years
successful business history due to COVID-19. This is because there is huge drop
recorded in the booking as government shut down cross border transportation. Due to
lower demands, market shares of the company falls down gradually and they are burning
with cash that they are no good position to operate with existence business model.
 Lay-off of the personnel: To resume their business again after COVID-19, Easy Jet have
revealed that they are planning to cut down their workforce by 30% that means they will
lay off nearly 4500 its employees. This is because they are preparing to resume with
lower customer demand under the shadow of COVID-19 crises. Due to lay off of many
employees, Easy Jet were brutally criticised by the British Airline Pilots Association.
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 Impact on the Easy Jet stakeholders: Easy Jet have revealed that this is the worst crises
that they have witnessed in throughout their business journey. Easy Jet had reduced their
fleet aircraft number by 321, which in 51 less than their operations before COVID-19.
However, one of the biggest shareholder and founder of Easy jet Sir Stelios Haji-
Loannou have criticised that the future of airline is in danger as they had declined the
order of 100 new aircraft from the Airbus. Meanwhile, Airbus have proposed that they
may sue Easy Jet for not accepting new airlines. Thus, this will impact on the investor
faith on the company, as Easy Jet is playing gamble to their business to return back to
same market position.
 Impact on operation after resuming business: Easy Jet is operating its business by
selling third seat that means they are operating with a capacity of 30% passengers.
However, it will be not easy to back to same position before pandemic with this capacity.
Moreover, government made strict guidelines regarding the safety measures that a
business is obliged to follow. Passengers are making demands for enhanced security
measures so that they can relaxed about the healthy safety inside the aircraft. Easy Jet
have developed a method for scanning the temperature that can check 200 people per
minute.
CONCLUSION
As per the carried out study, it has been concluded that contemporary business
environment is extensively competitive, dynamic and unpredictable (Coles, 2020). The firms
within the oligopoly market of UK are interdependent, involved in price fixing ,and invest there
money into advertisement to become differentiable from other firm to attain high market share
and large number of passengers. Economic factors have a negative impact on the businesses of
the various airline firms in UK in early stage. Brexit has fell down the turnovers and profitability
of airline industry and created a restriction over the travel flow of the firms. COVID-19 has a
very loud impact on the UK's economy and businesses of airline industry.
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REFERENCES
Books and Journals
Abrate, G., Nicolau, J.L. and Viglia, G., 2019. The impact of dynamic price variability on
revenue maximization. Tourism Management. 74. pp.224-233.
Boone, L. E., Kurtz, D. L. and Berston, S., 2019. Contemporary business. John Wiley & Sons.
Coles, T., 2020. Tourism, Brexit and the climate crisis: on intersecting crises and their
effects. Journal of Sustainable Tourism. pp.1-18.
Dube, K., Nhamo, G. and Chikodzi, D., 2021. COVID-19 pandemic and prospects for recovery
of the global aviation industry. Journal of Air Transport Management. p.102022.
Igwe, J. O., Nwajiuba, A. and Igwe, P. A., 2021. Migrants as Creative Economic Forces and
Contributions to the UK Local Economy. Migration Practice as Creative Practice: An
Interdisciplinary Exploration of Migration. p.119.
Niemimaa, and et,al., 2019. Business continuity of business models: Evaluating the resilience of
business models for contingencies. International Journal of Information
Management. 49. pp.208-216.
Nižetić, S., 2020. Impact of coronavirus (COVID‐19) pandemic on air transport mobility,
energy, and environment: A case study. International Journal of Energy
Research. 44(13). pp.10953-10961.
Oxford Analytica, 2019. Business braces for uncertainty as Brexit date nears. Emerald Expert
Briefings, (oxan-db).
Rotondo, F., Corsi, K. and Giovanelli, L., 2019. The social side of sustainable business models:
An explorative analysis of the low-cost airline industry. Journal of Cleaner
Production, 225. pp.806-819.
Syafrian, D., 2020. Political Strategies of Multinational Companies in Managing Uncertainty:
Lessons from Brexit. In Non-market Strategies in International Business (pp. 75-100).
Palgrave Macmillan, Cham.
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