Assessment 2 Report Case Study

Introduction to the company EasyJet

EasyJet UK is the largest and one of the most popular low-cost airlines in Europe, which operates on different business model, which includes features. The range of prices and the ability to receive services. EasyJet airline was created in 1995 by “Sir Stelios Haji-Ioannou” whereby the aim was to provide flight services to those travelers who wanted cheap flights to various regional destinations in Europe. From the London Luton Airport, the airline was offering domestic as well as international connectivity to more than 150 airports, across over 30 countries (Barqueira et al. 2022). Its avowed task is to offer cheap flight services to the people with an intention to compete with the existing airlines.

Figure 1: Company easyJet

They have since increased the company size to its current form that offers a host of services and larger fleet some of which are operative in the European market. It prefers to use Airbus “A320” family aircraft and their roles efficiently with high aircraft use, short turnaround time and Second Tier airport hubs for the low operating cost (Mrňa, and Badánik 2021). The company also has the effective usage of technological tools for the enhancement of the booking systems, improvement of customer satisfaction and efficiency of business processes.

EasyJet has no hub and spoke system and its operation is purely based on point to point therefore it does not for instance operate in France to connect passengers on different flights. The airline's business strategy is built on three key pillars: which are fare levels, customer relations and operating costs respectively. EasyJet’s target market is business persons, and holiday makers, services include ticket flexibility, in-flight services, and a frequent flyer program (Deas 2020). Issues of the environment are also very relevant for the company as it grows from the next level through the management of its emission and impact on the physical environment.

Business environment PESTEL analysis

PESTEL analysis evaluates the probability of the driving forces in the macro environment and applies political, economic, social, technical, environmental and legal activities to the company’s business context. These factors can be viewed as fairly crucial for EasyJet UK as defining the business operational model, strategic positioning, planning of the future evolution of the business.

Political Factors

Brexit and its Outcomes: EasyJet operations have been affected by UK exit from the EU because most of the airline operations are in Europe. This was made possible through the “European Common Aviation Area (ECAA)” which will enable the airline to fly in the member countries of the “European Union” before the decision to Brexit. After Brexit which saw the UK vote to leave the European Union, this change has had to be adopted through establishing a new Austrian subsidiary known as Easy jet Europe in order to operate in the European market (Zahn 2024). However, challenges including the following ones: enhanced regulatory barriers for investments, and modification of the treaty for civil aviation of the UK and EU seems to be awaiting this airline.

Government Regulation and Subsidies: Marketing communications of EasyJet has to be in compliance with the legal aspects as per the aviation laws in the United Kingdom and in other countries of the European Union (Oliveira 2023). These are safety measures like APD of the United Kingdom, taxation measures like emission and fuel efficiency standards etc. Changes in policies regarding subsidies, taxation, or sustainability issues created big effects on the operating cost and competitiveness of the company.

Geopolitical Instability: Geopolitical risks are significantly substantial in air transportation because of risks such as terrorism, war, or diplomatic tension. The threats include the Political instability that has an impact on some of the larger economies such as the Middle East or some parts of Europe that undermine the demand as well as the organization’s flight plans and routes thus the EasyJet’s bottom line.

Economic Factors

Economic Cycles and Consumer Confidence: There is no fixed strong correlation between the airline industry and the economic conditions. Some of the reasons people and businesses may require flights may include the following, during the recession people and businesses are less likely to fly which implies that the number of people requiring flights will reduce (Cavalieri, and Corrizzato 2022). However, during the period of economic rebound, the need to prefer air transport as a means of travelling usually prevailed.

Fuel Costs and Exchange Rates: In the time of defining this particular factor the major direct operating costs in airlines are fuel. One other factor that could be identified is the fluctuation in the prices of oil in the global market. This is because it affects the cost structure of EasyJet. While the firm uses hedging techniques to fix fuel prices to shield it from volatile fuel costs, a constant rise in fuel prices reduces the profit of easy Jet (Stingel et al. 2021). Further on, the airline is vulnerable to fluctuations of foreign currency exchange rate given that the company operates in different countries that have their currencies of counterparts. Fluctuations in the pound to euro or dollar affect profitability because fuel is normally bought in the US dollars.

Rising Inflation and Operating Costs: Fuel costs have also risen because of inflation in the UK and other European countries; wages, airport charges and maintenance of aircraft have also developed (Kelly 2020). This leaves the company in a dilemma of facing increasing operation costs while at the same time aspiring to maintain low fares that might put pressure on their profit level if not well checked by better efficiency or other sources of income.

Social Factors

Changing Consumer Preferences: EasyJet Company mainly focuses on the ability to offer the consumers an affordable means to travel. The trend of a detailed preference by the consumer market towards more individualized and added value service has emerged. As per the recent survey, the traveler, especially millennial as well as Gen Z, is more eager to get the customized or personalized travelling experience, and more willing to spend extra bucks for comfort, flexibility, and better customer service (Havlovic 2020). In response, EasyJet has provided tiered ticketing and the improved customer services in the online environment through the mobile booking application adapted with the updated information on travelling.

Demographics and Aging Population: In the time of increase in life expectancy, the number of elderly people in Europe is also an area of concern to EasyJet as it has a Strengths Weaknesses. The elderly people have different preferences in travels compared to the younger ones for instance they prefer comfort and less complications in travelling. It may cause the generation to opt for more luxury packages or all-inclusive types of products. EasyJet will have to ensure that it caters for this segment while at the same time keeping its cost lower.

Post-Pandemic Travel Trends: COVID-19 has therefore impacted air travel with more focus on health, safety, and flexibility (Bodnár et al. 2020). The travelers are more concerned about the hygiene measures and sometimes, it is important to have the flexibility of the bookings.

These challenges, EasyJet acquired better cleaning services, touchless check-ins, and providing more flexibility in tickets to benefit customers who are cautious holding uncertainties of travelling interruptions in the future.

Figure 2: PESTEL Analysis

Technological Factors

Digital Innovation and Automation: In the past years innovation has become a vital strength in the operation of EasyJet through technological advancement. Customer’s online booking, mobile application, and self-check-in services help in minimizing the expenses and improve customers’ satisfaction (Hoffmann 2022). Further, it has considered carrying out changes in flight scheduling, pricing models, and even maintenance activities, thus employing “artificial intelligence (AI)” and data analytics. The following are the technological factors favoring EasyJet in the low-cost airline business:

Sustainability Technologies: In the time of new environmental concerns about aircrafts, EasyJet has been in the lookout for new more environmentally friendly and efficient aircrafts namely; the Airbus A320neo that comes with lower emissions and efficiency in its use of fuel. The company is also getting involved in an organisations to study the possibility of an electric or hybrid aircraft which would be useful in reducing the company’s carbon emission in the future (Kelly 2020). However, these technologies are still at the development stage which may possibly take several years before they become market ready.

Cybersecurity Threats: EasyJet has exposed itself to risks of cyberattacks due to its increased dependence on the use of the digital systems. Earlier this year the airline was hit by a data breach that compromised nine million customers’ information and this testifies to the fact that flight companies cannot ignore the issue of cybersecurity (Panduwinasari et al. 2020). Holding and breaches in the future are likely to affect the company’s reputation and lead to a loss and fines or loss of customer base.

Environmental Factors

Climate Change and Carbon Emissions: The airline industry is under pressure to limit the negative effects on the environment. Aviation is a source of greenhouse gas emission that has been severely targeted by Europe’s policy makers as most countries in the “European Union” have implemented strict emission control standards (Nanni 2020). EasyJet has committed to be among the best companies that has well-developed strategies towards the reduction of carbon footprint through such measures as; voluntary full carbon offset; investment on new generation aircraft with lower carbon footprints. However, there has been a major challenge in apportioning an optimal balance between environmental sustainability and cost control for the company.

Sustainable Tourism: The number of people using environmentally friendly transport systems has been increasing and this demand is likely to go up specifically among elites and other influential persons. EasyJet has taken the position of a market leader in terms of low-cost sustainable aviation by actions to eliminate single-use plastics that are brought on the flights and the effective management of the flight trajectories to minimize fuel consumption on board the aircrafts, as well as its participation in the projects of electric and hybrid aircrafts (Kola 2020). New and exciting initiatives are therefore aligned to this emerging group of travelers who are growing more conscious with their effects on the environment.

Regulations on Environmental Impact: Government and international organisations including “International Civil Aviation Organization (ICAO)” are now tightening the screw over “Carbon Dioxide emissions” and noise control standards. The “European Union’s Emissions Trading System (EU ETS)” is the scheme that forces airlines to purchase permits for emissions (Isaev 2023). In the time of observing these regulations the operating costs increase but failing to observe them one may be locked out of the markets as well as facing penalties.

Legal Factors

Aviation Laws and Compliance: The Company EasyJet just like any other international flight company is bound to encounter a myriad of aviation legal systems of the countries where the company operates. These are the regulations on the passengers, protection of the aircrafts, accommodation of airports and also labour issues (Huang 2024). For example, “EU Passenger Rights Regulation (EU/EC) No. 261/2004” or more commonly referred to as “EU261” established a very high compensation standard in case of delayed or cancelled flights which financially hurts the airlines each time it occurs.

Labor Laws and Unionization: EasyJet has thousands of employees in many different countries and territories and is subordinated to different labor legislation. In the UK and Europe which are famous for the labor unions the company is likely to experience collective bargaining agreements and Labor strikes (Smerichevskyi et al. 2024). All the operational weaknesses that de-motivates the staff and adversely impacts the customer experience of the venue. 

Post-Brexit Legal Complexities: All the legal issues that EasyJet has faced post-Brexit in areas of Traffic rights, safety certification and employment laws (Stone et al. 2021). The organisations has had to ensure that its operations, which are both in the UK and EU, meet the current legal issues that may change with the introduction of new agreements new regulation could be developed, which would put more restrictions and possibly more control on the airline thus affecting its operations (Thestrategystory, 2022).

Conclusion

EasyJet UK is in a competitive and complex trade arena that is characterized by various factors. The PESTEL analysis presented in the subsequent will illustrates that the company is operating under unfavorable political, economic, social, technological, environmental, and legal environments. Its capability of doing change, introducing new strategies and forming competitive cost structures make the company a fit actor in the challenging environment of the low-cost airline market. Some of the risks that threaten easy jet include political risks especially after the Brexit event and some economic factors such as volatility of oil prices and inflation rates. In the growth of consumer interest in environmental protection and increasing the amount of sustainable and flexibility-need travel services, explain the need for constant changes in airlines’ services. There is still a large scope for growth in technological developments of digital platforms and sustainability.

Reference List

Journals

• Barqueira, A., Quadros, R. and Abrantes, J., 2022. Airline booking applications: the case of Ryanair, Easyjet and tap air Portugal. Aeron Aero Open Access J, 6(1), pp.7-15.
• Bodnár, M., Jackle, F. and Linzner, T., 2020, April. Exploring the difference in perception of service quality of Low Cost Carrier customers through online reviews: Social Media Analysis. In ISCONTOUR 2020 tourism research perspectives: Proceedings of the international student conference in tourism research (pp. 231-242). BoD–Books on Demand.
• Cavalieri, S. and Corrizzato, S., 2022. “We’re sorry for any inconvenience caused”: Pragmatic aspects of handling complaints in customer-airline company tweets. Lingue e Linguaggi, 53, pp.101-115.
• Deas, B., 2020. CORONAVIRUS LIVE: Up to 4,500 easyJet staff could lose their jobs. Telegraph & Argus (Bradford, England).
• Havlovic, S.J., 2020. European works councils in the airline industry. In Strategic Innovative Marketing and Tourism: 8th ICSIMAT, Northern Aegean, Greece, 2019 (pp. 1-6). Springer International Publishing.
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• Hoffmann, N., 2022. Brand position in the eyes of customers: assessment of selected airlines by the passengers’ online reviews. Catallaxy, 7(1), pp.7-21.
• Huang, S., 2024. The integration of hybrid business model strategies and technologies about LCCs and FSCs.
• Isaev, R., 2023. Management of marketing activity of Islam Karimov Tashkent International Airport.
• Kelly, J., 2020. Airline finance and financial management. In Air Transport Management (pp. 197-218). Routledge.
• Kelly, J., 2020. Airline finance and. Air Transport Management: An International Perspective, p.197.
• Kola, J., 2020. DEVELOPMENT OF MARKETING STRATEGY FOR BUSINESS CUSTOMERS OF ENTERPRISE X LTD.
• Mrňa, D. and Badánik, B., 2021, November. Differences in low-cost airline operating models in 2018, 2019 and 2020–comparison of easyJet, Ryanair and Wizz Air. In 2021 New Trends in Aviation Development (NTAD) (pp. 128-133). IEEE.
• Nanni, A., 2020. Sustainability transition challenges for low-cost airline from E-aviation technologies and solutions.
• Oliveira, J., 2023. An Overview of the European Low-Cost Carrier (LCC) Market: Identifying Sources of Competitive Advantage. PQDT-Global.
• Panduwinasari, E., Afandi, A. and Wahyuni, H., 2020, April. Low Cost Carrier in Airlines: In Terms of Cost Perspective. In 1st Annual Management, Business and Economic Conference (AMBEC 2019) (pp. 84-89). Atlantis Press.
• Quadros, R. and Oliveira, A.P., 2021. DIGITAL TRANSFORMATION ON AIRLINE’S TOURISM BUSINESS. TRANSPORTS. IZGLĪTĪBA. LOĢISTIKA UN INŽENIERIJA-2021, p.53.
• Smerichevskyi, S., Poberezhna, Z., Mykhalchenko, O., Petrova, Y. and Smilyanets, V., 2024. Ensuring the sustainable development of the aviation enterprise in the context of forming innovative potential using digital technologies.
• Stingel, H., Bich, J., Hartmann, S.P. and Elfen, Y., 2021. European Airline Consolidation-Acquisition Strategy for a Potential Takeover of JET2 by Easyjet (Master's thesis, Universidade NOVA de Lisboa (Portugal)).
• Stone, M., Aravopoulou, E., Stott, R., Parnell, B., Machtynger, J., Machtynger, L. and Foss, B., 2021. Reciprocating business model innovation–how client and supplier models interact. Journal of Business-to-Business Marketing, 28(2), pp.187-202.
• Zahn, R., 2024. The Status of European Works Councils in UK Law Post-Brexit: A Commentary on EasyJet PLC v EasyJet European Works Council and Olsten (UK) Holdings Limited v Adecco Group European Works Council. Industrial Law Journal, p.dwae037.

Website

• Thestrategystory, (2022), EasyJet PESTEL Analysis. Available at: https://thestrategystory.com/blog/easyjet-pestel-analysis/ [Accessed on 17.09.2024]

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