Operations Management: Easy Jet's Capacity Management - Essay Example

Download file to see previous pages Easy Jet is a United Kingdom based airline that started with the cost focus strategy. Although the airline started on a small scale but due to its dynamic model of offering such low fares that travelling has now become easily reachable for all classes who earlier could not find it affordable at all to travel in a plane. The report starts with theoretical literature review conducted in previous years on capacity management in airline industry by various scholars. Later those theoretical concepts were applied on the Easy Jet. Certain issues faced by easy jet were discussed and solutions that they followed to solve the problems. The report ends with few recommendations. Academic theories on capacity management “Capacity management is the ability to balance demand from customers and the capability of the service system to satisfy demand”. (Armistead and Clard, 1994, p. 6) Dana, Orlov (2008) sheds light on importance of demand shifting. The paper states that in business which does not charge all the customers equally should make use of demand shifting. Demand shifting is highly supported if the database of the customers is maintained. If demand is forecasted and in times of high demand all those passengers who prefer lower fares are given the option to shift their trips in seasons of lower demand. This is only possible if proper database of the customers are maintained and records are kept. All those customers who are particular in terms of time and even are willing to pay more to reach on time should be given preference in times of peak season. Shumski, Zhang (2008) states that capacity should be allocated before time after demand is forecasted. And in the case where capacity is exhausted, substitute capacity should be provided. It further adds that demand should not go unmet. The company can provide a better place to the customer. The company should also make sure that a very high class product is not provided to the low class customer. The paper further adds that the company should always ration some capacity to the high profile regular customers so that their demands should not go unmet in any circumstances no matter how late it arrives. Wang, Sun state that profit maximization is only possible if the appropriate product is provided to the right customer at the most appropriate price, no matter whatever the circumstances may be. This can also be known as revenue management. This negates charging of uniform price to all the customers and supports the strategy that every customer should be charged according the value the customer holds or should be charged as much as he or she is willing to pay. In order to maximize the revenues the businesses should allocate the capacity in advance so that any opportunity to satisfy the need of high class customer that might come any time should not go wasted. Curry, (1990) stated Capacities should be ...Download file to see next pagesRead More