BABS Contemporary Business Environment: EasyJet's Market Analysis

This report analyzes EasyJet's performance within the contemporary business environment. It begins with an introduction to EasyJet and its operations, followed by an overview of market structures, with a specific focus on the UK airline industry's oligopolistic nature. The report then delves into the economic factors impacting EasyJet, including demand and supply, income levels, inflation, and foreign exchange rates, assessing their influence on the airline's performance. The impact of Brexit on EasyJet's business is then explored, detailing the challenges and opportunities arising from the UK's departure from the European Union. Furthermore, the report examines the immediate and future impacts of the COVID-19 pandemic on EasyJet's investments and overall business strategy. The report concludes with recommendations on how EasyJet can navigate these challenges and leverage opportunities, supported by a comprehensive reference list.

CONTEMPORARY
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
2.1 Various Market structure.......................................................................................................3
Market Structure of UK's Airlines industry.................................................................................4
2.2 Economic factors of UK and how they will affect Easy Jet..................................................4
2.3 Impact of Brexit on Easy jet..................................................................................................7
2.4 Impact of Covid-19 for investment........................................................................................8
2.4.1 Immediate impact................................................................................................................8
2.4.2 Future impact......................................................................................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATION...................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Easy jet is a British multinational budgeted airline having their headquarter in London,
Luton Airport. It operates in international and domestic flights over more than 30 countries. Easy
jet also listed in London stock exchange and established in 1995. Easy jet had affiliated airlines
like Easy jet UK, Easy jet Switzerland and Easy jet Europe (Akinola, 2020).Whereas, easy jet
employed more than 15000 employees in European market for the smooth work flow and better
service to their customers.
This report will show various market structure in airlines industry, economic factors of
UK and how they affect the easy jet by influence with factors like demand and supply, income
level of consumers, inflation rate, taxes, Forex rate, recession and employment rate. How Brexit
affects the market of airlines and also the Covid -19 impact for the investment and their future
impact on market. Lastly conclusion and recommendation is being added for better
understanding.
MAIN BODY
2.1 Various Market structure.
Market structure refers to degree and nature of competition in a market that offers goods
and services. Market offers different kind of goods and service by different producers to
consumers looking for particular goods and service.
Perfect competitor: This market has large number of buyers and seller who sell and
purchase homogeneous products without any restrictions. Easy entrance of rivalry exists in the
market and they offer the product on market price (Acosta, Ihle and von Cramon-Taubadel,
2019).
Monopoly: It is the market where only one producer sell product in market and barrier to
entrance of competitor. The product had no close substitute in market and having low cross
elasticity of demand.
Duopoly: It is a form of Oligopoly where only two sellers are present in market selling
the same goods. Change in price and output may affect the other seller. However, both the seller
are independent.
Monopolistic competitor: It is a market where large number of firm selling differentiated
products in a same market. This market is not perfectly competitive. However, one competitor
cannot influence the price of other seller in same market.

Oligopoly: It is a market where few firms offer the same homogeneous product or
differentiate products. The competition is among the few firms which are dependent on each
other.
Market Structure of UK's Airlines industry.
Easy jet is one of the key competitor with international and domestic flights which
operate in oligopoly market. The imperfect competitor in market having limited number of
airlines companies dominated the industry (Albers, and Rundshagen, 2020). High investment in
industry lead to barrier to entrance in market. All individual airlines have power to change the
fair of ticket at different level of output. The two market which are dealing in the UK's airlines
are from short haul and long haul market. Companies are adapting the low-cost carrier strategies
that is being prominent factor in creating the demand for short haul places in European market.
Low prices are offered to consumers by the airline companies to increase the demand in
European sector. UK's airlines companies uses the Scenario planning to develop their business
strategy for future uncertainty. Airlines are more customer oriented to offer with low price and
rapid change in technology and education make firms to use scenario analysis to evolve the new
strategies. It also helps in sustainable growth of companies.
After recognizing Global leading airlines in world, UK's airlines industry has changed
their strategy and vision for longer term. High technology is being used by the industry to cut
their cost and to earn more of profits by developing the airports and terminals. However, UK
government integrates with the airlines to reduce the carbon emission and pollution release from
the aircraft (Akbar and Kisilowski, 2020). Hence, UK market is an oligopoly market due to few
numbers of airlines in market and barrier to entrance as all industry is working prices are set
according to their services offering from each airline company. The market is already well-
established offering through short hauls to long hauls and rule the market.
2.2 Economic factors of UK and how they will affect Easy Jet
Demand and Supply in UK
The aviation sector in UK Economy has been a major contributor speaking of the previous
decades. High quality infrastructure has created better transportation linkages which have
increased the number of people travelling through air. The increase of world trade has also led to

people going for business travel quite often. The tourism sector has also been a major crowd
puller for international tourists.
The manufacturing in aviation sector has been impressive with many airlines reaching
economies of scale. Easy Jet has been able to operate its flights for a number of customers and
supply quotient has been fulfilled (Addepalli and et.al., 2018).
Speaking of Covid, airlines sector has been affected the most among transport. Even road
and railways transport were operating at a reduced scale. However, the airlines had been
cancelled for both domestic as well as international. Speaking of initial stages of covid, flights
were operating but not getting customers due to the fear of virus. This caused operational losses
to Easy Jet with flights moving at a very reduced level of customer intake. With covid vaccines
coming up and increased rate of recovery, flights have resumed operations. The businesses
opening up in adjoining countries have again resumed operations thus production being resumed
and people returning to their jobs and education purposes. This has again created the demand for
travel for business, job and education purpose and expected to reach the earlier normal levels.
Income level
The income level of UK has been generally high with a decent per capita income. UK being a
developed economy has registered growth in living standards of people and earning high income
with advent of IT industry in past two to three decades. Business expansion being made easier
with improved transport routes and facilities has led to people growing wealthy and thus able to
spend more (Belhadi and et.al., 2021). Ease of doing business has rated UK to be the 8th country
which makes it easy to start up a new business and thus creates new employment opportunities.
UK has trade relations with other countries where people and students travel for internship and
jobs thus bringing foreign currency which is counted in UK's Gross National Product. This helps
airlines too as there is a continuous chain of people going out for education and work. The GDP
per capita income is $42,976.
With advent of Covid, the income levels dropped down with cutting of jobs and
businesses facing loss due to lock down. People working through work from home were getting
reduction in salaries due to covid. Household savings also dropped down. The household income
had dropped lower than the one in 2008 financial crisis. Average income fell by 4.5%. This has
adversely affected the airline business as people cannot afford high fares. Thus, airlines like Easy

jet have to reduce their fares for a period of time. Thus, they have to face a loss in revenue from
earlier times (Addepalli and et.al., 2018).
Inflation rate
The inflation rate decides the price of goods and services in UK. In UK, inflation had dropped to
negative during covid last year which was the lowest in 50 years. It has now returned to positive
slowly with rate increase of 0.5% few months back. The rising oil prices and return of businesses
after lock down have impacted the rate to increase. This has raised the ticket fares in airlines and
Easy Jet have also revised their prices. A higher inflation rate may influence the middle class
customers to go for alternatives like trains speaking of domestic travel or rescheduling their
outings to other countries. However, the business class have to travel and will do so (Karaman,
Kilic and Uyar, 2018).
Speaking of the whole scenario, a rising inflation will take down household savings. But
a small and stable amount of inflation will also mean that money is in circulation which would
encourage buying increasing business and thus generating more employment opportunities. As
the economy recovers with businesses opening up creating new opportunities and furloughed
employees being called up again, the income level will rise and people will again be able to take
the costlier means of travel, i.e. air. Easy Jet will be able to recover its revenues then.
Forex rate
It denotes the currency foreign exchange rate influencing the economy with trade taking place
with different nations. The economic activity taking place thus determines the currency rate
owing to its demand of products. Thus we can say that demand is the force affecting Forex.
Coming to UK, demand of goods to be exported was high but manufacturing sector capacity was
not at its optimum level. Although, UK could maintain its rate at high valuation. The trade with
adjoining countries made the currency grow stronger (Niewiadomski, 2017).
With impact of covid, trade with outside countries got reduced due to reduce in
transportation. Speaking of Airline industry, airlines operating in cargo had to be stranded with
decrease in demand of goods and fear of covid. Same happened with travellers cancelling their
flights to UK, their fares convertible to UK currency had to be refunded. Easy Jet had to make
cancellation of lot of flight tickets during this period. People using the airline for tourism had to

get tickets cancelled with lock down. The transactions which could make the currency stronger
went bust and thus happened a devaluation of currency.
2.3 Impact of Brexit on Easy jet.
Brexit was the agreement that withdrawal of UK from the European Union. This
withdrawal had affected the whole UK country and its economy. UK's government had faced
recession and reduced the economy condition due to Brexit (Mhalla, 2020). It also affected the
airlines industry and it created losses for the industry. Easy jet is low cost airlines and has
suffered losses by reducing in the share by almost 10% after the implications. Passengers are
unwilling to take risk booking a trip for holiday in these situations. It affects the customers
demand directly due to increased in price and cost of airlines. Before the withdrawal, Europe's
low cost carrier maintained higher fuel costs lead to declining in price of fair ticket as capacity
increased. Airline industry has been affected very strongly suffered due to high investment in
spares and aircraft, high fuel bills of airlines, crew members to maintain its schedule. Schedule
routine of all aircraft is been disrupted after the Brexit as all companies need to reschedule their
cost and price by creating new strategy to cover their lose (Maneenop and Kotcharin, 2020).
With new agreement with UK government it made with new policies, rules and
regulation are implied on the aviation industry. The restructuring the policies of aviation industry
need time and cost which may affect till it become the routine. Change in technology is also
readapted to reduce the cost of airlines, high technical spare parts and air crafted to be used for
cover the loss from Brexit agreement. The pricing strategy is being recreated to charge low fair
ticket from consumers to increase the demand and revenue of Easy jet. To attract the customers
and increase the demand, easy jet has increased their offers like free meal and drinks in
international flights.
After Brexit, UK economy is not stable and had face challenges to recover their economy
from the recession. This directly affect the airlines and easy jet investments in their business.
Easy jet reduces the employment that crate unemployment and followed by other airlines. The
Foreign direct investment has decreased after the Brexit affect and hits UK's economy. Easy jet
suffered from loss and need to raise the funds from government and international investor to
remain in market (Brezonakova, Badanik, and Davies, 2021). Ultimately is effect increase the

fair ticket due to increase in cost, reduces the opportunities that are arisen in the European
market and development of company in new markets. The charges of easy jet is increased that
are implied on the entering international boundaries. Easy jet opportunities and development to
enter in new market for expanding their business has reduces due to change in market
environment.
2.4 Impact of Covid-19 for investment.
2.4.1 Immediate impact
The direct impact of Covid-19 on easy jet is reduction in travel of passengers from
aircraft. After the lock-down in all over world, almost all flights are has being temporary stops
from flying. Reduction in demand of airlines in the market had impact losses and not able to
recover the basic cost of travelling by companies (Nava, and et.al., 2018). All over the world,
aviations industry and other travel industry is being temporary closed for public use. All
companies had occurred huge loss during the lock down due to no usage of public transport.
Easy jet also had faced huge loss during the lock-down and had cut off their employees salary
and the employee in company. Maintaining cost of aircraft had impact company financially and
loses are suffered by easy jet (Hussain, Bashir, and Bilal, 2020). Whereas, some aircraft is being
sell out by easy jet during the lock down that are giving high cost of maintenance and unable to
meet their profits from them. Easy jet management had not maintained their staff and daily
routine work which cause increasing in cost of company. However, UK economy is already
unbalanced economy and pandemic hit hard to country which make suffered to whole country
people and ultimate result in deflation and unemployment.
2.4.2 Future impact
The long term impact of Covid-19 on easy jet is to balance again the financial condition
of the company. The working of company is being effected the company after Covid 19 that may
take few years to cover all losses from Covid (Doi and Ohashi, 2019). As the economy is being
hit very badly after the Covid, unemployment has increased highly, recession in the economy is
suffered by UK government and people. Easy jet had removed many employees during the lock
down and face loss which need to be covered by company. The travelling industry is reduced in
market and demand by customers to travel is currently very low. Easy jet need to create the
demand in customer mind by offering attractive offers to customers with low fair.

Cost of aircraft is unable to meet by easy jet for few months till increase in demand of
travelling industry. The safety travel precaution is need to be more effective to satisfy customers
for travelling in easy jet. This can increase the cost of company as airlines had to provide with
safety travel kit to all passengers travelling through their flight (Bottasso, and et.al., 2017). More
of employment force will be needed by company in order to meet the new demand after the
economic balance. The company need to be cost-efficient, customer-centric, agility and
sustainability. All sustainable changes are adopted by company in order to gain profit by
changing organization structure like entities of goods or rigid of IT legacy. Easy jet need to
found new opportunities to meet their cost and to earn profits which can be done through
reduction in aircraft operating certificate, streamlining IT system, harmonization of tariff that
help in to invest in new areas.
CONCLUSION
This report concludes that airline industry is an oligopoly market in UK where only few
competitors are present and barrier to enter the market of airline. Easy jet has been affected due
to many economic factor that interrupt the operating function of company in market. This
economy factors include inflation rate of UK country which increased price of fair, income level
of people living, demand and supply of travelling through airlines. Forex rate of country that
changes at a time of inflation and recession, interests rate which changes by government during
inflation and recession. Taxes that are implied by government and airport authorities to airlines,
recession in country and employment rate of country affect the operations. Whereas, Brexit
agreement also affect the conditions of airline industry and lead to decrease in demand of easy
jet. After Brexit affect, uncertainty of Covid impact arises and suffer loss to whole world and the
future impact in the working of easy jet. Recommendation to overcome the challenges faced by
company due to economic, Brexit and Covid effect.
RECOMMENDATION
Easy Jet is a budget price for the UK city that lead to face many challenges during
environmental change and suffered from loss. From the economic factor, easy jet need to analyse
the market situation time to time, to avoid the uncertainty from external factors. It needs to
change according environmental changes to avoid the loss. They can convert them into
opportunities if analysed properly. The major challenges that are arisen at a time of recession in
country where company need to cut their cost to increase the demand for airline travel. As the

purchasing power of customers are already low, company had to offer more facilities to attract
them. Whereas, after the Brexit affect, again demand and losses incurred due to change in cost
and policies. It needs to be analysed that affect the company operations. The share price
decreased by 10% due to Brexit that can be avoidable if company finds alternative or planned for
the situation that arises to avoid the losses. Lastly Covid-19 impacted to whole world and
uncertain to all, if correct measurement is taken by easy jet, then their financial reverse can be
used for maintaining the cost of aircraft by increasing the investments and prepared for work
from home to employees, cutting of unnecessary costs, safety and precaution need to
implemented very early to prevent the Covid circumstances.

REFERENCES
Books and journals
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nonmarket strategy in a COVID-19 world. Journal of air transport management. 88.
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Bottasso, A., and et.al., 2017. Competition, vertical relationship and countervailing power in the
UK airport industry. Journal of Regulatory Economics. 52(1). pp.37-62.
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market structure matter?. International Journal of Emerging Markets.
Karaman, A.S., Kilic, M. and Uyar, A., 2018. Sustainability reporting in the aviation industry:
worldwide evidence. Sustainability Accounting, Management and Policy Journal.
Maneenop, S. and Kotcharin, S., 2020. The impacts of COVID-19 on the global airline industry:
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Mhalla, M., 2020. The impact of novel coronavirus (COVID-19) on the global oil and aviation
markets. Journal of Asian Scientific Research. 10(2). p.96.
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Nava, C.R., and et.al., 2018. The impact of the EU-ETS on the aviation sector: Competitive
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Online
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