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Airline Business - Case Study Example

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The uncertainty in business environment shapes the strategies pursued by companies. It should be noted that even the emergence of new business organizations are often facilitated by the changes and trends in the external environment. One example of this is easyJet Airline Company Limited (EasyJet) which is a budget airline in Europe that took its strategy from the American firm Southwest Airlines…
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Download file to see previous pages The major drivers which facilitated this trend are: the deregulation of the European air travel sector; the establishment of the European Union; the 9/11 tragedy; the rapid technological advancement; and change in customers' lifestyle and preferences. It is irrefutable that the deregulation of the European airline industry primarily contributed to the rise of low cost carriers. It can be recalled that deregulation has lowered the barrier to entry in the industry as well as enhanced the competitiveness of the players which are previously receiving subsidy from the government. This, in turn, largely contributes to the cost efficiency of airline operators allowing them to charge lower prices to passengers. While this is true for budget airline like EasyJet large carriers have suffered significantly from the deregulation as this opens the door for the entry of smaller firms and heightening the competition among industry players.
The establishment of the European Union affects the airline industry has the same effect like the deregulation of the sector. This has opened up markets and lowered operating costs, encouraging the proliferation of low cost carriers (Sorensen 2006).
The 9/11 tragedy which left terror worldwide has also helped in lowering the cost of air tra ...Download file to see next pagesRead More
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