BABS Assignment: Contemporary Business Environment Analysis of EasyJet

This report provides a detailed analysis of EasyJet's contemporary business environment. It begins by examining the market structure in which EasyJet operates, identifying it as an oligopoly within the UK airline industry and discussing the factors that influence this structure. The report then delves into various economic factors impacting EasyJet's business, including growth projections, inflation, government spending, exchange rates, the labor market, and interest rates, particularly in the context of the COVID-19 pandemic and economic recession. Furthermore, the report assesses the impact of Brexit on EasyJet's operations, highlighting changes in regulations, employment, and supply chains. Finally, it explores the significant effects of the COVID-19 pandemic on EasyJet's customer base, productivity, and profitability, offering a comprehensive overview of the challenges and opportunities facing the airline.

Contemporary Business
Environment

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Market structure in which EasyJet operates.............................................................................3
2. Economic factors affecting the business of EasyJet in UK.....................................................4
3. Impact of Brexit on the business operations............................................................................7
4. Impact of Covid 19 on business ..............................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The contemporary business environment is considered to be very competitive as it needs
to cope up with the modern marketing which is not limited to developing of the good product but
extends to pricing it attractively along with increasing its accessibility. This also deals in
communicating with the present as well as the potential stakeholders and the community people
which is considered to be a competitive necessity (Nikitina and Lapiņa, 2019). The
contemporary business environment must integrate the modern tools in order to sustain in this
emerging and competitive industries.
The report will shed light on the business environment of EasyJet which is a British Airline
company and is low cost airline group. Its headquarters are in London Luton Airport and it
performs its operations internationally and domestically on more than 1,000 routes in many
different countries through its affiliate airlines such as EasyJet Switzerland, Europe and UK. The
company is second largest budget airline in Europe in terms of carrying the number of
passengers (EasyJet, 2021).
This industry is highly affected by the pandemic of COVID-19. This is why, the report will
highlight the market structure in which the company operates. This will be followed by
mentioning the economic factors which affects the EasyJet’s business along with analysing the
impacts of Brexit on the its business operations (Hamilton and Webster, 2018). Lastly, it will
examine and explore the impact which the pandemic has on the company’s overall business in
terms of customer base, productivity and profitability.
MAIN BODY
1. Market structure in which EasyJet operates
Since past two decades, the industry of airline has been experiencing the major
fluctuations which have impacted the overall segmentation and the structure of market. EasyJet
Company is the most important part of European Airline Market and there are various
microeconomic factors which impacts the firm and the industry as a whole. EasyJet operates in
the airline industry of UK. The market structure of the industry is oligopoly which is basically a
form of imperfect competition (Implications of airline industry structure and change for
consumer, 2021). This states that some number of firms dominate the industry. The airline in UK

is using the oligopoly market power for restricting the competition (Park, 2019). The new players
in the industry are able to carve out a niche which is also considered as the major strategy of
EasyJet. Oligopoly is basically a market structure in which small firms are there among which no
firm can keep others from having major important influence. In this the concentration ratio helps
in measuring the largest firms’ market share (Belyaeva, 2018). This deals with two or more firms
instead of single or dual firms. This does not mean that any number of firms can participate in
this. The less number of firms can have more influence on the other firms.
The airline industry of UK whose market structure is oligopoly is affected by various
factors such as economic, legal, technological etc. which affects its formation, dissolution or
maintenance. In this, the government policies also play a major role as it can encourage or
discourage the oligopolistic behaviour and also the firms seek the support and blessings of the
government for limiting the competition (Matović, 2020). For stimulating the competition,
various legislations such as ‘open skies’ were implemented by the European Commission whose
objective was liberalizing the air travel in the European Community and challenging the cartel of
national airlines which carried the flag like the British Airways. Most of the airlines of Europe
considered themselves immune from the truth of the operating environment.
It is difficult for the new players to enter the airline industry due to its complex market
structure, high costs of aircraft acquisition and the other capital requirements. This is why; this
industry is appeared to be more contestable. The market structure in which the EasyJet operates
depends mostly on the average household income of the people because travelling abroad needs
larger investment which is possible only when the income of the people is more than enough.
This is how; the market structure of the airline sector in UK is such that the large firms which are
smaller in number are relatively larger than compared to the overall market size leading to
substantial market control (Bottasso and et.al., 2017). The other industries are depended on the
same because they use the processes and products of the industry as the base material or the
input. This creates larger entry barriers for the new players to enter the industry.
2. Economic factors affecting the business of EasyJet in UK
Economic factors of UK have seen affecting the business of EasyJet heavily. This
company is going through a very tough period of recession during the Covid 19 pandemic which
has caused economic recession (Sauce, 2020). Due to the recession the economy has seen the
increase in price of almost all the resources because of which the company is struggling to

provide the customers which low prices travel experience. The economic factors which affects
the business of this company are,
Growth :
The projections according to many economists suggests that UK economy is going to
remain pretty flat in the coming years. This decreases the scope of development for companies
like EasyJet. Despite a flat economy the trend in fuel prices will be continuously increasing and
that will increase the total cost of the company due to this EasyJet has to increase the prices of
tickets for its flights which proves very bad for the business of the company(Accountingcpd ,
2019). These factors will result in poor confidence of the businesses in UK specially airline
industries. This fall of economy has made the companies like EasyJet to revise its policies and
strategies for surviving in these difficult times. In order to increase its growth company has to
take different measure including reduction in employees and also introduce bright managerial
changes. EasyJet has been trying to save fuel by every means possible (Fukui and Miyoshi,
2017).
Inflation :
Prices of all the resources increases when a company experiences increase in inflation.
UK's economy is going through a tough period of increasing inflation. As a result the companies
are finding it difficult to find the correct balance in the economy. Inflation will force the
employees of the company to demand high salary because they are able to sustain their expenses.
The company's resources cannot allow it to increase the salaries of the employees. Only way of
doing so would be to increase the prices of the tickets of flights of EasyJet. This would be bad
for the business of the company because it may have to suffer huge loss of customers base as the
competition in airline industry is very high (Accountingcpd , 2019).
Government Spendings :
In the recent times the government of the UK has been more concerned about Brexit and
Covid 19. Government spendings in any industry is less likely to happen because of this. The
government deciding to invest in a company like EasyJet would be very good for the business as
the company may develop chances of recovery from its losses faced during this pandemic. This
means the company will not have to reduce the staff of the company for decreasing its cost of
production. Recession period which has occurred due to Covid 19 is very important for all the
businesses including EasyJet (Iacus and et.al., 2020). That is why government should be

providing help to the sectors which are struggling in the pandemic period. EasyJet's growth will
be very significant for the growth of economy as it will give rise to tourism and that is key to
decreasing inflation in a country.
Exchange Rates :
From the start of the pandemic UK pond has been very low. It has been recovering since
the beginning of the New Year. Economists predict that it may rise in the upcoming years.
Exchange rates are fluctuating so much due to factors like Brexit and Covid 19. Rate of Inflation
changes due to the changes in exchange rate of the country (Accountingcpd , 2019). Main cause
of changes in exchange rates occur from the trade of different countries. Recession due to Covid
19 has also shown their affects in the trade of different countries. Disputes between certain
countries have led to decrease of export of the countries. All these factors also have affected the
business of EasyJet by decreasing the tourism in the countries. This also means that the
international flights decreased. Tourism has basically stopped after Covid 19 and has affected
many countries and companies. For increasing exchange rate the countries can make efforts for
starting the Tourism and Travelling this benefit EasyJet directly as well as indirectly. Tourism
means increase of customers for EasyJet.
Labour Market :
This economical factor of the business talks about only workers and labours. This decline
in UK economy has due to recession has increased in inflations rate, this has resulted in high
prices of the resources. Labours in UK economy as a resulted started to demand increase in their
wages. This impacted many companies like EasyJet, as a result these companies have started to
fire employees to cut its cost. Before the pandemic situation the unemployment rates of UK's
economy was very low but things have changed many companies have started firing individuals
for surviving recession. Solution to this problem faced by the company is the involvement
government. With the help of government company's like EasyJet can survive and it will not
have to fire its employees for reduction of costs. Increase in unemployment can give rise to new
companies which might be concern for EasyJet (Sauce, 2020).
Interest Rates :
Interest rates as an economical factor talks about the rate of interest which is charged by
the banks of a particular country for Loans and other types of borrowings. These rates have also
gone high since due to the recession period in the current economy. EasyJet is struggling due to

this period of recession. Solution for most companies in these times is taking loans from
financial bodies but due to increase in interest rates this alternative is also not very good for the
company. If the interest rates come down in future EasyJet can use that opportunity for
stabilizing its business which has been affected the most in this time (Sauce, 2020).
3. Impact of Brexit on the business operations
Policies and regulation of trading have seen many changes in country due to Brexit.
Companies like EasyJet have lost many loyal and well-trained employees. Over the years
EasyJet has maintained a very good reputation which is now proving to be very difficult because
of Brexit. Reputation is key for EasyJet in order for it to maintain its huge customer base which
are key for high functioning of the business. The changes which many predicted was lot less than
the changes which have occurred due to Brexit (Janse van Nieuwenhuizen, 2018). The economic
growth factor was a long term decision which was taken and is now seeing its limits. Changes in
law affected employment factor of the company which resulted in a lot of impacts to EasyJet's
functioning. Supply chain of the company changed for changing the output, which made sure
that there are average decisions which are being taken. Brexit also led to change in the
shareholder of the company which mean that EasyJet had to bring in new shareholders which
made the work of the company slower for the time being. Losing so many shares is not good for
any company (Hill, Korczak and Korczak, 2019). This led to unsolved resolutions in the
company which affected its operations in higher and lower level.
The rate of taxes increased significantly on the import and export making sure that right
actions and improvement in the company were taking place. Functioning of the company started
to decrease because Brexit presented uncertainty of events in the economy which was not good
for the competitive environment of the company. Troubles of the company increased so much
that its was hard for the company to operated effectively to avoid sufferance. For compensating
the loss faced because of Brexit the company took a lot of time and the competitors were able to
gain advantage of that situation for building higher reputation and functioning in the market. Due
to Brexit the number of fleets were decreased which resulted in higher functioning which is good
for the operations and operative factors (Breinlich, Leromain and Novy, 2019). The company
was unable to increase its profits because the networks of the company was reduced. Investments
of the market got reduced because of which the company's customers standard and trends were
unable to be maintained. Loyalty and trust of the employees and clients is very important in the

company so that there are going to be more satisfaction and improvement which can take place
so that the impact is going to be positive of the company in the market. Impacts of Brexit was
very close to bringing recession in the economy which could have been very bad for the
company. Easy Jet has to make the right decisions in these time to be able to operate effectively
and efficiently in the market which is good for the standards of the company (Heffer-Flaata,
Voltes-Dorta and Suau-Sanchez, 2020).
4. Impact of Covid 19 on business
Like all other companies in aviation sector EasyJet has been also affected significantly by
the onset and progression of pandemic. The organization has witnessed its first ever loss in
profitability and revenues due to pandemic and related restrictions on travelling (Garrow and
Lurkin, 2021). The organization is seeking more funds which can help it to survive. The
pandemic has not only affected the regularity in operations or profitability but has also caused
various issues in its operational aspect as well. Due to increasing cases entire Europe is expecting
the predictions of Lock down and travel restrictions for long time. Thus, uncertainties have made
it hard for EasyJet to even manage its day to day operational and maintenance expenses. In the
wake of it, organization is also planning to lay off its employees so that it can fit well into
smaller market size which has emerged from Covid pandemic.
Figure 1: Impact of Covid on profitability of business

(Source: Philip, 2020)
Organization is planning to lay off employees so that operational cost on staff
management can be reduced as due to restrictions organizations are not feeling need of staff
members. The pandemic has made airline industry completely go down on knees and thus
organizations such as EasyJet and its competitors as well are finding ways to minimize the
expenses because there are no sources of revenue in the situation (Nižetić, 2020). In addition to
the job cuts EasyJet is also planning to lower its aircraft fleet because as per capacity there is
negligible traffic of the customers. The situation has been becoming alarming and seems no hope
for airline industry EasyJet is also in constant communication with its suppliers and airport
authorities so that better deals can be cracked and expenses can be reduced.
With slight flexibility in the travelling and relaxation in lockdown the operations of
flights have begun gradually. However, at present the organization has reduced number of flights
greatly and that too are mainly domestic flights. Organization has not initiated all of its
international operations with the aim to first minimize the service so that Covid safety and
precautions can be ensured. Thus, business activities are shrinking to a great extent. As an
outcome of pandemic the airline service provider has to restrict its several flights to majority of
international countries because of strict regulations related to quarantine and Covid precaution
measures. This has directly affected the international exposure of the firm. Before pandemic the
organization has various expansion and growth strategies. However, with the changing situations
instead of growth planning EasyJet has been now searching for options to make it survival easy
and necessary in the airline industry.
The post pandemic situations have also forced organization to emphasis more on finance
management so that expenses can be balanced and sustainable profits can be gained. The
business has been also facing significant risk factors because people are also avoiding to travel in
this situation (Maneenop and Kotcharin, 2020). Thus, even if flights are resumed the airline
service provider have not seen significant consumer traffic. It will take time for the organization
to regain its higher level of profitability and revenues.
CONCLUSION
With the help of this project it can be concluded that EasyJet as a company has been
suffering in lot of ways after the Covid 19 pandemic and other factors like Brexit which has been

disturbing its business environment. In this project the marketing structure of the company
EasyJet has been discussed by giving emphasis over its structure in the market for the past two
decades also the market structure of EasyJet company which has been influenced by the current
business environment which has been shown and discussed in this project. EasyJet has
understood the future possibilities of growth after this period of recession that is why it is making
significant efforts for surviving in this difficult times. This project discusses how different
economic factors which include Growth, Inflation, Government Spendings, Exchange Rates and
Rate of interest affect EasyJet's business in UK in the current situations of recession of the
economy. This project also shows the impact of Brexit over the Business operation and how it
has affected various activities in the company including change of shareholders, loss of
important loyal employees and also lack of profitability of EasyJet. With the help of deep
analysis of the current recession situation caused due to Covid 19, it can be concluded that Covid
19 has impacted the business of EasyJet in severe ways and it also requires certain solutions
which the company is willing to make.

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