EasyJet: Business Environment Analysis, UK Market, and Impacts

This report provides a comprehensive analysis of the business environment of EasyJet, focusing on the UK market. It begins with an abstract and introduction, followed by a detailed discussion and analysis of various market structures, including perfect competition, monopolistic competition, oligopoly, and monopoly, with a specific emphasis on the oligopolistic nature of the UK airline industry. The report then delves into the economic factors affecting EasyJet, such as demand and supply, inflation rates, income levels, and taxation, and their respective impacts on the company's operations and profitability. Furthermore, it examines the effects of Brexit on EasyJet's business, including changes in trade relations and border controls, and the impact of the COVID-19 pandemic on the airline industry. The report concludes with recommendations based on the challenges faced by the organization. The report covers a wide range of topics which provides valuable insights into the external factors influencing EasyJet's performance and strategic decision-making.

Business environment
of Easy Jet

Abstract
Business environment is the combination of factors that affects organisation positively
and negatively. It is very important for organisation that they should identify and analyse the
environment in order to achieve the objectives and goals. Day to day business environment get
more dynamic, that's why it is very necessary for organisation that they should analyse the
factors. It can be internally and externally but both get impact on organisation. It is very
necessary for companies that they find all sources which influence business environment.

Table of Contents
Abstract............................................................................................................................................2
INTRODUCTION...........................................................................................................................4
Discussion and Analysis..................................................................................................................4
Various Market Structures..........................................................................................................4
Economic factors of UK and its effects on Easy Jet...................................................................5
Like Impact of Brexit on Easy Jet's business in UK...................................................................7
Impact of COVID19 on Easy Jet................................................................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATIONS...............................................................................................................10
REFERNCES:................................................................................................................................11
Books and Journals:..................................................................................................................11

INTRODUCTION
Business environment refers to all internal and external factors which affect business in
various ways. There are various factors which can affect business in several ways such as needs
and expectations of customers, employees, management, activities of government and many
more. These factors of business environment affect the profitability of business (Amankwah-
Amoah, Khan and Wood, 2020). Easy-Jet Plc. is Multinational Corporation which is a low cost
airline in London Luton Airport. It provides employment to about 15,000 people in Europe but
importantly in UK. This report contains business environment of UK to operate business. In
order to know the business environment it is necessary to ascertain market structure of UK. This
report also contains impact of Brexit on the businesses. The COVID-19 pandemic has a great
impact on the businesses which is discussed below with some recommendations about all the
challenges faced by organisations ( Mosteanu, 2020).
Discussion and Analysis
Various Market Structures
Market structure shows the way in which various firms are differentiated( Arbabi,
Sobhiyah and Danai, 2020). In business economics, market structures are majorly of four types
that are perfect competition market, oligopoly, monopoly and monopolistic market.
(Source: Market structure, 2021)
Perfect Competition – Perfect competition is that type of market structure in which there
are so many buyers and sellers who deals in homogeneous products with no or less difference. In
these types of market prices are fixed by market forces such as demand and supply for the
products and many more. Here prices are set by industry as a whole ( Aziri. and Ismaili, 2020).
Monopolistic Competition – It is an imperfect competition in which deals in not perfect
substitutes of products by many sellers. The products in this competition have many sellers with
products such as clothing but they are different from each other due to quality, taste and
branding. The companies who enjoy this type of competition are not price taker so they have
partial control over the prices ( Betti and Sarens, 2020).

Oligopoly- It is a market structure where there is less number of firms which are
operating in the market of the industry and enjoys majority of market share( Mugurel-Alin,
2020). These type of firms are neither price taker nor price maker. They generally follow price
rigidity and avoid price wars.
Monopoly- It is a situation in market in which there is only one seller with no substitute
for the product in the market. They are generally price maker as they are the controllers of
industry ( NGUYEN and LUU, 2020).
Market structure of the UK's Airline Industry
In airline industry there are limited numbers of firms who are engaged in this business. It
has imperfect competition because of few numbers of organisations to dominate the market
(Orlova, Nogueira and Chimenti, 2020). That is why it is characterised in oligopolistic type of
market share. As oligopoly compete with their rivals in industry with similar products and every
action of organisation is noticed by their competitors. Hence, competitors react on any measure
taken to enhance market share in the industry. The firms in this industry are interdependent and
ensure that they do not lose their market share for any reason. As it is a large industry which
needs high investment in order to enter into the industry. Therefore, airline industry has barriers
for new entrants ( Brozovic, 2020).
It requires high capital investment to build capacity in order to compete with a well
established organisation in the industry say Easy Jet. Since its establishment Easy Jet has seen
various expansions and grows with the help of various acquisitions( Khoshtinat and Shahabadi,
2020). Its base for being a success is by high consumers demand for low cost travel. It operates
more than 300 aircraft with its associate companies ( Camilleri, 2020). In case of Easy Jet they
operated in an Oligopoly type of market. They have few numbers of organisations who operates
in this industry and they are interdependent on each other. As they are high barriers of entrants in
the industry it enjoys a good market share in the industry.
Economic factors of UK and its effects on Easy Jet
Economic factors refer to the factors which are affects the economy of a country either directly
and indirectly. There are several economic factors which affect the economic environment of an
organisation such as taxes, income level, employment rates, demand and supply and many more
( Khan, Daddi, and Iraldo, 2020). If a country has smooth economic factors then the people of

the economy wants to spend on luxury services which has a positive impact on the business of
Easy-Jet. Some of the economic factors are explained below:
Demand and supply – Demand refers to the need or desire for a product of buyers in an
economy whereas supply refers to process of making the product available to the customers of
organisation. Demand and supply has a relationship with each other and defines the price of the
product offered by the organisation. In case of airline industry, demand for customers is so
sensitive to the actions of the macro economy. Airlines must predict the need of their customers
accurately because of the advantage time period needed to get aircraft. When demand of airlines
is over predicted that might happen because of any reason they go through losses ( Dziubaniuk
and Nyholm, 2020). The important element of demand for airline services is tourism, business
travellers, mail transport, and freight transport. For business travellers, flight schedules are the
most critical competitive issues while for personal and tourist travel it is price sensitive. Airline
services make available access to other goods, such as vacations, business meetings, or foreign-
sourced goods. Therefore, the demand for airline services is linked with demand for other goods.
Whereas supply of this industry is influenced by number of air port, availability of routes,
frequency, number of aircraft and many more ( Osiyevskyy, Shirokova and Ritala, 2020). The
supply and demand together decides the ups and downs in the prices of the tickets. When
demand of tickets are high generally in peak time the prices of airlines goes ups and when there
is no or less bookings in that case it lowers down the prices of tickets.
Inflation Rate – Inflation is a situation of increase in prices and decrease in the purchasing
power of customers ( Elashkar, Aldeek and Shoukry, 2020). Inflation puts an impact of cost of
living, cost of doing any business, mortgages, borrowing money and many other instruments of
an economy. Inflation can have both positive as well as negative impacts on the business.
Inflation causes increase in the prices of the diesel which leads to rise in prices of airlines
industry. The prices of diesel are directly proportional to the prices of booking of tickets in
aircraft. As reduces the purchasing power of customers, there is lack of demand of airlines in the
industry( Ratten, 2020). In situation of inflation there are low chances of booking. Only essential
or business class booking can be observed in that situation. Hence, inflation and growth of
organisation is inversely proportional to each other. In case of Easy-Jet, the inflation increases
the prices of diesel which leads to increase in cost of operations. It results in increase in prices of
tickets of the Easy-jet.

Income level – Income level refers to the earning capacity of customer in the economy. It plays a
vital role in ups and downs of airline sector ( Ren and Jackson, 2020)( Seetharaman, 2020). The
increase in income level provides a good lifestyle to the people which increase the demand of
luxury goods. When income level rises then only they will think to travel somewhere. In case
when income level decreases the demand for aviation industry also falls in the society. But if
with the increase of income level the prices of tickets also increase in that case the people avoid
travelling which led to decrease in demand of the airlines tickets. The income level of the
customers in Easy-Jet also describes the increase or decrease of the business of the
organisation( Fadaki, Rahman and Chan, 2020).
Taxes – Taxes refers to the payment to government to finance government activities in
involuntary basis( Shi, Qiu and Fan, 2020). This type of fees is levied on the individuals. High
taxes in any organisation is defines entry barrier in the particular industry. In airline industry
there are already very high barriers for the individuals. High taxes levied on the organisation also
increase the cost of product which makes the product costly for the customers. Government
collects high revenue from the taxes which are levied on passengers as air passenger duty. In
case of Easy-Jet high taxes levied on the tickets of airlines, it seems that the prices of tickets are
so high. In this situation organisation can lose their customers (GROCHOLSKI and FINDEIS,
2020). The company works on the policies of availability of low cost travel to their customers
and high taxes increase the rate of ticket which is not good for company. Due to this company
also enjoys the situation in which there are high barriers for new entrants due to which they
enjoy their market share.
All these factors of economics affect the operations and profitability of business of Easy-
Jet( Sołoducho-Pelc and Sulich, 2020). It affects both internal and external factors of the
operations.
Like Impact of Brexit on Easy Jet's business in UK
Brexit is considered as nickname for “British Exit” from EU. It was back down of United
Kingdom from European Union and European Atomic energy community. It was taken place at
the end of 31 January 2020. This had impacted business of Easy Jet in many ways. Before when
they are operating with European Union they have to pay heavy duties which make their flights
costly for their customers ( Hatam, 2020). When Brexit breaks the trade relations between
European Union and UK, the duties paid by the Easy-Jet became less now which helps them to

offer low cost flights to their customers who led to increase in their sales and profitability. It also
helps the organisation to attain maximum share in the market. Brexit led to depressed growth of
London which is a financial centre of London. It leads to decline in the revenues of airline
industry as it leads to mass passenger ticket cancellation( Subchan and Setiadi, 2020). As the
movement of goods are restricted through the Brexit it leads to less trade bookings in the airlines.
Due to Brexit there is increase in the border control and passenger management which results in
more allocation of resources for the passenger management. It required a tight security to be
applied at the airports to follow the guidelines regarding passenger management. Airlines can
expect more delays in terms of increased visa and control requirements. There are also some
logistic challenges which are faced by organisation due to Brexit such as missed flight
connection ( Hori, 2020). Air freight is essential for every economy as well as aviation
organisation to grow in the industry. It became unprofitable to carry only passengers. The
competitiveness of air freight is to a great extent relying on the speed and predictability at which
products are transferred between borders. It creates a risk of financial consequences which are
concerned with the poor experience of customers. It increase the cost and time for collecting
visa, high prices and more tough border procedures they will be less concerned to spend money
on auxiliary merchandise and services or to buy flight tickets in the first place( Termosa, 2020).
It also causes Disruption of agreement of air services agreements. All the regulatory frameworks
of aviation system was developed according to the European Union and also includes
international agreements that puts an impact on several trades and movement in UK and other
countries. With Brexit all the air service agreements needs to be negotiated now ( Kahiya, 2020).
Impact of COVID19 on Easy Jet
Immediate Impact
The pandemic has a negative impact on the business of Easy Jet as it reduces the business of
Easy-Jet. In 30 March 2020, Easy-jet suspends it’s all flights and lay off its crew members
because of travel restrictions imposed. These travel restrictions are imposed as result of high
spread of COVID19 ( Hossain, Akter and Yanamandram, 2020). Later they have to close three
of their bases. It starts 650 rescue flights for the passengers taking them back to their places. In
April 2020 they take a loan from government of UK without any environmental conditions
attached with it. Till then all their flights are suspended. Finally in June they announced to
resume their flights with proper safety and precautions from COVID19. They started half of their

routes in July. In august they started 75% of their routes. Their frequency gets reduced by them.
As the result of the impact of COVID the flights of Easy-Jet became costly and follow up
government guidelines make them fly with half customers in comparison of their capacity. It
leads to loss to the organisation and on 17 August 2020 they decide to close three bases in the
UK. There are low travel demands because of high impact of COVID19 ( Ibnugraha, Nugroho
and Santosa, 2020).
Future Impact
As COVID19 affects various businesses in same way it also affects the business of
airlines industry ( Järvinen, 2020). Due to risk of the spread of virus people are avoiding to travel
domestically or internationally. Personal travel bookings are almost stopped due to this reason.
In business travel bookings, almost all the meetings are conducted through online mode only.
Till some time the impact will be the same as it will take time to get null the effect of COVID all
over the world. It increases the cost of operation in industry( Zhanxiang and Lin, 2020). An
aircraft with a capacity of 300 passengers will carry only 150 passengers due to guidelines of
government regarding social distancing. Due to COVID19, the whole world faces a situation of
recession where inflation rate is very high and increases the rates of diesel which will affect the
airline industry also. The high rates of diesel along with low aircraft capacity increase the cost of
operation in Easy-Jet. It increases the cost, even make it just double what it was before, of
travelling to the customers which have high impact on revenue of the organisation( Järvinen,
2020). All these impacts will stay for at least a longer period which gives a foot print on the
growth and expansion of the East-Jet organisation. As COVID is not completed its effect yet and
it will last for some more years. These years are very crucial for the organisation to survive in the
organisation( Ullah, 2020).
CONCLUSION
From all the above discussion it is concluded that it is concluded that business
environment is an important factor for any business to survive. The market structure of any
organisation also explains the profitability of business. There are various types of market
structure in which an organisation operates such as monopoly, monopolistic, oligopoly and
perfect competition. The airline industry of UK operates in oligopolistic market as they are
limited number of firms in the market. Economic factors have various impacts on business of
Easy-Jet. The Brexit have various impacts on the airline industry of UK as it affects the trade

relations of UK with Europe. As the trade between them declines it affects growth of whole
economy of UK and airline industry is a part of it. Just after that the COVID has also taken place
all over the world this pandemic has impacted the business of Easy-Jet in various ways. Not only
in present will it impact the business of the organisation in future also. The COVID19 lead to
increase in operating cost of business in the organisation which makes their prices just double of
what it was before.
RECOMMENDATIONS
For the better working of the organisation there is high need to carry operations in a
planed manner by Easy-Jet. The strategic planning of the operations in the organisation became
very significant for them( Vrbka, 2020). They need to cut their cost to decrease the price of
tickets of aircraft. The success of Easy-jet was depending on the low cost travelling. In order to
achieve this they can use shield in their planes between seats to increase the capacity of aircraft
which lessen the cost of operations in the organisation. It results in low priced tickets attracting
more customers to the organisation. They can also introduce more and innovative services in
their aircraft so that customers can take better experience. It can help them to attract more
customers to their business( Yonghui and JIANG, 2020). They also need to advertise the services
they provide to gain the attention of majority of the customers. As there is less demand for the
travelling due to the pandemic the organisation need to do something to create demand and
provide their services to the organisation. Easy-Jet can join hands together with tourism sector to
attract more and more tourism through their advertisement. They can also provide attractive
offers to the customers to attract more booking of ticket.

REFERNCES:
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