Strategic Analysis Report: Easyjet's Challenges and Solutions

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This report provides a strategic analysis of Easyjet, a low-cost airline operating in the United Kingdom. It begins with a PESTLE analysis, examining political, economic, social, technological, environmental, and legal factors affecting the airline. The report then applies Porter's Five Forces to assess the competitive landscape, including the bargaining power of buyers and suppliers, the threat of substitutes and new entrants, and rivalry among competitors. It identifies key challenges faced by Easyjet, such as fluctuating oil prices, the impact of Brexit, natural disasters, and terrorism. The report proposes various solutions to these challenges, particularly focusing on enhancing security measures in response to terrorism. Finally, it outlines the implementation of these solutions, emphasizing the importance of advanced security systems, staff training, and effective communication with passengers to build confidence. The report concludes with a summary of the findings and recommendations for Easyjet's strategic direction.
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Strategic analysis
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Introduction
Easyjet is the low-cost air carrier which is located in the United Kingdom and is operating in that short-haul
airlines. There are around 820 routes in which operations are performed and are providing the services in many
countries (25).
Q1. The strategic position of Turkish airline
Pestle analysis
Political factors
Many terrorist attacks were faced in main
destinations including Nice, Paris, Turkey, and
Brussels (1).
Operations are carried in various countries making
exposure to several political conditions and risks.
Economic factors
The negative impact was faced by the earnings
made in the company due to the impact of Brexit
29).
There was growth which was attained because of
many economic factors and they helped in raising
market capacity (30).
Lower rate of interest and fuel also provided
various advantages.
Social factors
There are strikes in the traffic controller which
creates issues (28).
Broader nature of the society and class structure
affected the position of the company (3).
The benefit was received because of leisure
interest (29).
Technological factors
The changes in technology are taking place at a
fast pace and it is not possible to cope with them.
The competitors have used various new
technologies which is a demerit for the company
(2).
The cost is increased in order to introduce new
techniques in Easyjet.
Environmental factors
Delay and cancellation of flights are faced due to
adverse weather conditions.
Laws related to environment pollution also require
compliance which increases the costing of
business.
Legal factors
Certain breach of contracts is made and by that
penalty is to be paid by the business.
Law concerning the safety of passengers is to be
complied with effectively (31).
Figure 1 Cash flow bridge (5) The cash that has been
generated from the various
operating, financial and
investing activities are
represented in the graph.
581 m is generated from the
operations of Easyjet (4).
The fluctuations which are
made in the financing and
investing activities are also
represented in the graph.
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Porter’s five forces
Bargaining power of buyers: The producers in the
industry are few and this results in the availability of
lesser choices for buyers. The income is also low
and that also made the bargaining power to be low
(27).
Bargaining power of suppliers: Weak power is
available with the suppliers due to many of them in
the market (9). The products should be standardized
and with low cost to switch.
The threat of substitute: There is a weak threat
from substitutes as few of them are available and
that too at a high cost which is not preferable for
Easyjet (26).
The threat of new entrants: The cost which is
required to operate in the aviation industry is very
high and that makes the new entries difficult in the
industry (10).
Rivalry among existing competitors: There is
positive growth in the industry and in such
situations, the competitors focus on their growth in
place of dealing with the competitors (9).
Figure 3 Tegel operations (8)
The seats that are available and the load factor for the
year 2018 are identified and the average length of the
sector is 836 km. The loss amount to 152 m is reported
in 2018 from operations performed.
Figure 2 Fleet planning (6) The planning
for the number
of aircraft
which will be
operating in the
coming years is
provided. It is
identified that
the maximum is
403 and 283
will be the
minimum
number of
fleets (7). In
2019 332
aircraft will be
flying.
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Figure 7 Share price
of Easyjet (13)
Figure 4 Gross capital expenditure (11)
The capital expenditures which will be made by the company are represented and it can be noted
that in nest year no expenditure will be made in addition and then decline is attained (Easyjet,
2018).
Figure 5 Forward booking (14)
Figure 6 Delay in network growth (12_
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Q2. Challenges faced by Easyjet airlines
There are various challenges which were faced by Easyjet and they are explained below:
1. Oil prices are the main challenge which is faced by easy jet in many years and that is due to changes which
have been noted in the price which increased at a fast pace (16). With the rise in the price of the oil, there is
an overall increase in the cost of the company (15). The cost which will be charged from the passengers in
the form of tickets will also be more due to the same and that will affect the demand in an adverse manner
(14). The consumers will not be willing to pay a higher amount and because of that, the profitability of the
Easyjet suffered (19).
2. Brexit has also impacted on the performance of the company as with the exit of EU there were losses to be
faced. The flights in the European region were affected and the overall revenue and flights have reduced.
The demand for the flights has declined due to the uncertainty which prevailed after Brexit (17). The
confidence of investors got weak and they were worried about their investments. This also affected the
future investments which were intended to be made by all investors earlier (18).
3. Natural disasters are another challenge and there is the adverse impact of the calamities on Easyjet. The
flights are disrupted and affect the arrival and departures. The passengers are affected by the same as they
have to face the difficulties due to irregular flights (19). It is not possible for Easyjet to avoid these issues as
disasters are unavoidable and spontaneous (24). The overall demand of the company is affected and there is
a decline in the number of profits which are made by the Easyjet before the occurrence of calamity (21).
4. Terrorism also affects the operations and performance of the company as that creates insecurity among
consumers. 9/11 attack was the main challenge in which the plane was hijacked and then crashed in the
world trade center (20). This affected the flights in that period and also people were not willing to travel by
flights, particularly in the same location (23). There was fear of terrorist and the loss was suffered by the
company because of this attack (22).
Q3. Various solutions to terrorism
The terrorist attacks which are faced by any airline affect all the airlines in the industry adversely. In them, the
trust of people is broken and they are required to be taken into confidence (32). The terrorism cannot be avoided
but there is the need to have a proper solution by which safety is made and further losses can be avoided. The
safeguarding actions will be specified in advance in respect of all the attacks which can be faced. There will be
proper planning which will be required to be made in advance by the company. Confidence of the consumers
will be gained as they can only save the company from losses (33). A security system will be required to be
strengthened by incorporating new and advanced technology which can help in creating extra protection against
terrorists. Staff shall be made to learn about the ways through which they can deal with such situations
effectively (34). The ticket price shall be reduced to attract more passengers in such situations as they are less
willing to travel by flights. The advertisements will be made in which the security system of the business will be
promoted to increase the trust of people and ensure them about their safety (35).
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Q4. Implementation of the solution
The company will be required to make the appropriate implementation of the available solutions. There is a
high risk of terrorism in the aviation industry and to deal with that the more focus will be made on the
undertaking of the safety measures. There will be an undertaking of the proper process in which the steps that
are to be used will be specified. All the steps will be implemented in such a manner that there is a proper plan
which will be formulated (37). The plan will be implemented by communicating it to all the parties involved in
the process. This will help in taking all the steps in advance by which the impact of the situations that will be
arising can be reduced. The customers will be required to be made aware of the conditions and the actions
which are taken by the company (36). There will be an introduction of the latest security system which will
provide with the best security to all. The programs will be launched in which training will be provided to staff
to deal with the situations and to carry on the plan in an effective manner (40). There will be the creation of the
advertisements in which complete details will be provided and the same will be published in such manner that
all the passengers are aware of the policies and procedures which are being followed by the company for their
benefits (38). There will be the attraction of more customers and for that, they will be offered with fewer
amounts in the time of crisis and that way customers will be attracted to travel by flights. By the implementation
of all the steps, the issues in relation to terrorism will be dealt with most effectively and efficiently (39).
Conclusion
The analysis about Easyjet has been carried out and in that, all the external forces and factors which affect the
company's position have been identified. There has been the determination of the challenges faced and with
that, all the solutions that are available for them have also been taken into consideration.
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Reference
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