Easyjet Airlines and Its Productivity in the Airlines Industry - Report Example

Business Report: Easyjet Airlines Business report: Easyjet Airlines Introduction: Easyjet Airlines and its productivity in the airlines industry With its headquarters in London, UK, EasyJet Airlines limited is the largest Airline in the UK and one of the largest in the entire European region. This rank is based on the fact that it serves the largest number of passengers in the UK and thus it is quite well a renowned airline in Europe. Butler and Russell (2010) refer to it as one of the world’s largest giants in tourism market. According to various authors – Canwell and Sutherland (2003); Dale and Oliver (2005); Butler and Russell (2010) and EasyJet Plc (2011) –, EasyJet is a low-cost airline that has dominated the travel markets in North America and Western Europe and is rapidly spreading to the other markets of the world. As at 2010, EasyJet recorded total revenue of £3452 million which was the highest performance in the airlines industry by an individual airline (EasyJet Plc, 2011). In 2011, the company laid out strategies to spread further especially in the European market after which it hit 62.5 million flown seats from 56.0 million in 2010, 54.5 million passengers from 48.8 million in 2010, and a load factor of 87.3% from 87.0% in 2010 (EasyJet Plc, 2011). Better still, the travel networks in Europe shot high as shown in the table below: New number of routes Percentage growth by country UK 300 Italy 8.6 Switzerland 72 France 29.1 France 67 Spain 10.5 Italy 59 Switzerland/Germany 21.7 Germany 30 London 6.6 Spain 19 UK regions 6.0 Table 1: Number of routes offered to passengers and focus on growth across continental Europe. [Obtained from EasyJet Plc. (2011)] This improvement of 2011 alone was an enough indication that the company is going in the desired direction and in line with the company’s prime mission – to become Europe’s most preferred short-haul airline making market leading returns (EasyJet, 2011). EasyJet’s Current strategies and what it has not done Since there other competitors including Air Berlin, Ryanair, Air Lingus, Air France-KLM, Lufthansa, British Airways and other Package Holiday airlines, EasyJet has established various strategies to remain afloat as a leading airline. One of the main strategies is a sharp focus on the short-haul market. As shown in the improvements explained above, EasyJet has almost dominated the European market as far as air travels are concerned. This has been through establishment of short distance stopover travels (Butler & Russell, 2010). The second strategy has been lower travel fare than that of its competitors. According to Butler and Russell (2010) and EasyJet Plc (2011), with the successful implementation of the yield management technique, EasyJet has been able to cut down its fare to 50% of that of its competitors’ gross fare. EasyJet has been on the fore front to make its travel accessible and convenient to its customers. This has been successful through internet booking facilitation that has made many customers feel better served relative to other companies that do not provide such a service. According to EasyJet Plc (2011), over 50% of the tickets are sold to customers on a ‘first come first served’ basis via internet and mobile booking a full season before in the UK. Similarly, over 40% of the tickets in Spain are purchased online (EasyJet Plc, 2011). The other strategy is establishment of satellite airports that make its operations efficient. EasyJet’s airports of London Luton and London Stansted are examples (Butler & Russell, 2010). These strategies have been, on the largest part, successful and have served as the company’s major strength leading to its sustainability. Despite these strategies, the company, with its rather huge capability, has failed to focus on long-haul markets. It has targeted the European region too much at the expense of the long-haul markets such as Asia, Australia, Africa and South America where airline companies such as Fly Emirates, British Airways and Air Berlin have fair market share (Page & Connell, 2006). Its vision that focuses only on the short-haul market is somewhat too limiting. The company is also criticized for avoiding to environmental compensation especially in Germany. This offends the European agreement on the same subject of environmental responsibility. Any negative critic means potential negative mileage and therefore dangerous to the company. Customers’ reaction on EasyJet relative to other airlines Due to the low cost strategy (Baum, 2006), customers find EasyJet a reliable travel service. EasyJet (2011) prides in the increase in the number of passengers recorded by the company especially in 2011. The above statistics are illustrative. Following the utilitarian theory (Canwell & Sutherland, 2003), the increase in the number of passengers can only attributed to the customers’ increased liking of the low cost and flexibility of the travels. Online booking has as well made EasyJet a pioneer in the customer care. Since its establishment in 1998, Dale and Oliver (2005) claim, customers have shown delight in adopting the new and convenient technology by the rise in the number of online bookings. Elsewhere, Canwell and Sutherland (2003), Butler and Russell (2010) and EasyJet (2011) describe EasyJet as a rapidly growing threat to its competitors – in the UK, EasyJet serves the largest number of Air travel customers exceeding the numbers of other large companies including British Airways. However, customers looking for long distance travel services prefer to-fro airlines like British Airways, Fly Emirates and Air Berlin for the obvious reasons (Butler & Russell, 2010). One prime reason is the insecure nature and clumsiness of frequent stopovers. Busy businessmen go for other convenient options. In tourism, comfort comes first (Page & Connell, 2006). Business tourists will therefore feel cheated what with the disturbing stopovers irrespective of the amount of the cost they pay (Page & Connell, 2006). Effect on customers and stakeholders EasyJet has many stakeholders. Any shift in the revenue affects the stakeholders’ financially. Lately, the company has shown steady increases in its revenues (as illustrated above) which are shared to the stakeholders. According to EasyJet Plc (2011) for example, in 2011 financial year, EasyJet had £584 million to be shared as dividends to its various stakeholders. Of great importance is the company’s policy on the question of dividends and dissemination of info updates on the company’s proceedings. Its policy on dividends stands unchanged – the dividends are to be shared equitably with no weighting on any stakeholder annually (EasyJet, 2011). Similarly, dissemination of information on the company proceedings to all stakeholders is done once after a financial year – Annual reports and accounts 2011 itself is an example (EasyJet, 2011). This is a manifestation of high accountability to stakeholders (Baum, 2006). The policy on dealing with the customers is all about making the service to the customers as hospitable and convenient as possible. A small shift in the prices is communicated via online customer booking accounts and/or on various advertisements in the media (EasyJet, 2011). Economically, short distance travelers find EasyJet economical as expressed by the huge ticket purchases made quite early before the actual travel (Butler & Russell, 2010). Recommendations As discussed above, EasyJet has made various strategic strides that have favored its today’s development status. However in business, and especially in tourism, the primary goals are or should be to cover the largest market as possible and thus to serve as many customers as possible. EasyJet’s main goal of becoming Europe’s best option in this context, and focus one short haul markets, is rather too limiting if not blinding. Instead, the company should increase its tentacles by revising its vision and focusing on the long haul markets as well. Highlighted above, there are many large markets outside Europe and the larger North America. These include Upper Asia (Middle East and Far East), Lower Asia (Australia and other Pacific islands), Africa, Central and South America, Caribbean Islands, and West Indies). This would eventually serve as its economic booster and eventually generate higher revenues relative to the current revenues. In terms of revenues per annum, companies such as British Airways may rank higher. The company should also seal any loopholes for critics. Accountability to the environment is a pro society undertaking (Baum, 2006) – especially as it concerns tourism industry – which will build on the company’s already great name. Conclusion Easyjet Airline is one of the largest airlines in the entire European region due to the largest number of passengers it serves. It is the largest airline in the UK, where it is headquartered. EasyJet main vision, as a company, is to become the Europe’s most preferred short-haul airline making market the highest amount of returns. To this end, the company has undertaken various strategies which have been proved successful in the analysis above. The main successful strategies include: establishment of online booking that has made the company convenient; establishment of satellite airports making its operations swift and flexible; the low-price strategy that has made the company the most preferred in terms of socio-economic preference; increasing networks to favor customers’ accessibility; and short haul stopovers that are convenient for short distance air travels. However, the company has ignored long haul markets and has not been an option for long distance travels. Similarly, failure to invest in long haul markets is perceived as a huge and unfounded opportunity cost as other airlines in the region benefit from long haul markets. As the main recommendation, Easyjet should start focusing on the long haul markets. This will help the company generate more revenue, develop more and serve a larger number of customers. List of references Baum, T. (2006). Low-cost Air Travel: Social Inclusion or Social Exclusion? Tourism Culture & Communication, 7(1), pp. 49-56(8). Butler, R.W. & Russell, R.A. (2010). Giants of Tourism. Cambridge, MA: CABI. Canwell, D. & Sutherland, J. (2003). Leisure and Tourism – Leisure and Tourism GCSE Series. Gloucester, UK: Nelson Thornes. Dale, G. & Oliver, H. (2005). BTEC National Travel and Tourism Book 1. Portsmouth, UK: Heinemann, 2005 EasyJet Plc. (2011). Annual reports and accounts 2011. Accessed on 26/03/2013 from Page, S.J. & Connell, J. (2006). Tourism. (2ne ed.). Andover, UK: Cengage Learning EMEA. Read More