Easy Jet, Strategic management project

Résumé du document

The airlines industry has been highly perturbed by many new external and internal events since the last five years (September 11th, increasing of fuel value, and recently many technical incidents in some flights). All these components transform major stakes and keys of the different airlines strategy. In fact, safety and fuel costs became the key point of most of the company. Airline industry had always strong and heavy regulations, charges and taxes. To the customers in Europe, airline transport had a long time an image of inflexible and high prices offers. The competition was not strong and the major (national airlines) had nearly the monopoly of the market. The arrival of Easy Jet was like a revolution. Easy Jet stakes in the market representing as the low-cost leader airline operator in Europe. It has a basis company on a customer relationship (a cost effective and yet qualify level service). Its strategy is clearly to reduce costs and offer price under the market (virtual offices: internet sales, externalisation of different process).

Extraits

[...] Low cost, especially EasyJet, use quite exclusively internet. In EasyJet policy, an entire virtual sales and services (on floor) is part of its strategy. Services: all comfort (at the airport and outside the flight), but also catering, press Package inclusive” are more and more offered. The objective is to gain customers' loyalty (miles offered, free flight). All majors have this kind of strategy to gain customers' loyalty. It can not be a part of low cost's strategy, which maximize reduction of services and costs. [...]

[...] This method of financing seems to be unflexible. Nevertheless, it expects that it will use a number of sources of debt finance (sale and lease-back transactions, bank financing secured on the relevant aircraft and other financing structures as sales or securitisation of aircraft, public debt offers, and easyJet's internal resources and cashflow). Network growth strategy EasyJet focused on a strategy of network expansion all over Europe. They have now a huge presence across Europe with 212 routes across 64 of Europe place and strategic airports. [...]

[...] EasyJet focuses on the flight (transport service only). Information System This tool informs and records available seats. It is a major competitive advantage, because to be profitable, the company needs to make its planes full as fast as they can. Primary activities Internal logistics Internal logistics can consist in non-effective and productive time of the aircraft. Low cost companies developed for example faster cleaning methods in less than 30 minutes. Most of other internal logistics are usually standards like luggage transport, and they cannot be a competitive advantage. [...]

[...] Since 2002, others investments had a role on these figures. Indeed, acquisitions and network extensions give new opportunities in sales development and new markets, but it incresase charges : more personnel charges, more flight so more maintenance, crew costs, advertising (new markets), taxes, and the most important is fuel, which had the price don't' stop increasing due to economic conjuncture. Nevertheless, Net sales are still increasing since the last four years, and investments cannot be a sign of bad health for a company. [...]

[...] 11th September, recent crashes (black list, confirmation of deficient aircraft), war in Irak, SRAS, “aviary influenza”, anthrax, touched profoundly mind and public opinion. It changes dramatically habits and view to airline transport. These events had consequences on fuel quotation, but also to safety stakes. Indeed consumers are more sensitive in safety stakes. The 5 forces model of competitors Strategic segmentation of the airline industry Airline industry can be analyse into three criteria which are type of clients, distance (long, medium or short flight), and customers' needs satisfied. Customers We can divide them in two classes, in function of their price elasticity. [...]