The main focus of your research is on the external and internal analysis by way of PESTEL analysis and also through SWOT analysis, from this two analysis for both the companies we have tried to review various factors such as technological, environmental and legal factors which could effect the company's growth and through SWOT analysis we have focused on the companies Strength and Weakness where the company lacks or had a strong hold in the market. We also tried to focus on various other aspects like the corporate strategy which company uses and have also tried to exploit the marketing mix which company uses to promote its brand and also the target market which company focuses on or relies for its business.
The whole purpose of this essay is to analysis the situation of entire airline industry as a whole and also the key issues which companies face in operating their business, and lastly we would provide your conclusion of the whole and recommendation to the whole research.
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British Airways is one of the most popular airlines in UK and one of the biggest airlines which operate more than 550 destinations globally. British Airways was established on 25th August 1919 and has completed 91yrs of operation in the industry. This largest scheduled international airline of UK not just operates in international and domestic schedule but also, provides the charter services for ancillary and freight (British airways 2010). It employees' around more than 57000 employees' till date (Data monitor 2010). It carries more than 33million passengers, and earning billions in revenue. Located in the principal business place of London, the company has significant presence at Heathrow, Gatwick and London City. The company has a very strong customer base as, it operates across the globe. British Airways is divided in to two groups one is British Airways Plc and other one as British Airways holidays Limited.Â (http://www.britishairways.com/travel/aboutba/public/en_gb)
Easy Jet was founded Stelios Haji-Ioannou (Greek) the company in 1995 and has the head office at Luton Airport, Bedfordsire London, It has created on the low-cost, no-frills model of the US carrier Southwest. The concept of easy Jet is based on the belief that demands for short-haul air transport is price elastic. That means, if prices for flights are being reduced, more people will fly. Today, it offers 125 routes from 39 European Airports (see www.easyjet.com), with Luton, Liverpool, Geneva, Amsterdam as base airports and is operating 72 aircrafts It employees' more than 2870 people. It is one of the leading low-budgeted airlines in UK & European Union. (Source: www.easyjet.com)
Situation Analysis of Airlines Industry:
Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries.
In the past decade, air travel has grown by 7% per year. Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines have carried 1.5 billion passengers last year. Airlines' profitability is closely tied to economic growth and trade. Despite this, the airline industry has gone along the path towards globalization and consolidation, characteristics associated with the normal development of many other industries. It has done this through the establishment of alliances and partnerships between airlines, linking their networks to expand access to their customers.
External Analysis of British Airways and Easy Jet:
For the success of the airline industry, it is very necessary of all the organization to look at their external environment. This aims to look at aims and objective of the companies as well as the company's position, the competitors and also reviewing at the capability of both the companies to meet current and future challenges.
Political Factors: Johnson et al., (2005) a) Heavy regulation of government affects the whole airline industry like increase the security of passengers due to terrorist threats, b) Also sufficient security measures should be in place to ensure that passenger confidence and competitive advantage is maintained at all the level, c) Another factor which affects the British Airways as well as easy jet is the problem of trade unions which have affected the most to the airline because of strike in the company and also the implications were saviour, d) As the airline is deregulated for most of the companies like BA and Easy Jet there are many other factors like pricing and government intervention to protect the employees' right which always equal right for the employee e) the political instability of the government is also a threat for the entire airline industry.
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Economic factors: a) The global economic crisis throughout the world and the Eurozone getting affected the most due to currency weakening against other currencies b) It is also due to possible reduction in the business of travel and tourism and also company reducing the cost, such as looking for alternative means of communication c). Also the volcanic ash cloud which spread across the euro zone on 15th April 2010 which almost brought the business of airline industry a halt due to disruption in the flights take off and which lasted for more than a month d) also slowing down of economy across the world which led to lesser passenger travel and also the price war across the industry which led to immense competition, e) The fluctuations in the oil prices across the globe which affects the price base of both the airlines and also the exchange rates.
Sociological factors: a) The aging population in UK which is a major concerned for the country as the older people prefer to travel by other means of transport as their spending power is less, b) The other factor is the growing unemployment in UK which reduces the purchasing power of the people, c) Increased bargaining power of the employer for their employee's due to the companies spending on their employee's for their leisure and development, c) More spending by older generation as they have more leisure time to spend.
Technological factor: a) Due to increase technology like online service by the airline the major impact is the customer has more choice in comparing the price as well as increasing customer awareness and bargaining power. b) The companies have to get updated with advance technology, c) The Company has also to be isolated that the technology they use is friendly and is more comfortable to elderly people, d) The company needs to get upgraded on their systems and ensure they are properly used and maintained which is also a huge cost for them.
Environment factor: a) The noise and energy control which has to be regulated due to environmental issues, b) The limited lands available for the growing or expansion of the airports due to losing green zone belt and government regulation on the environment, c) Other factors are new legislation (eg.Climate control) or also enforcing of tighter environmental regulations and also day to day increase of operational cost due to change in environmental policies, c) Limited utilisation of resources and capacity.
Legal factors: a).The airlines mileage scheme is in the way of perks to the employee's in the way of gifts like cars are taxed, b) Open skies agreement by the airlines with the government which allows the companies to by any other companies. c) Currently there are many legal restrictions by the government for buyout of any company and current holdings of the European companies in any airlines. c) Opportunities for competitors to purchase the aircrafts between EU and US, this are great threat for both the companies of immense competition from other non-European airlines.
Internal Analysis: a) As part of EU easy jet has a great image as a low cost airline and is different from other competitors as compared to price and as well as brand image which it carries. The company is financial very strong and is successful in the industry. It has a very strong e-business and is always been in innovative and very flexible organization in terms of business.
For British Airways the greatest strength lies in its brand and its new fleet of aircrafts which provides immense comfort to the travelling passenger. The greatest strength lies in its operational staff and the ways which the airlines operates and also the strong customer focus and developed expertise in the field of customer service, by providing the high end service to its customer. The basic work of the airline is to keep upgrading its systems and also innovating or exploring new ways of providing highest level of customer service.
The common problem with both the companies is they have no customer retention policy, lack of flexibility and do not focus on business equally. As low cost airlines easy jet model of working is unappealing for most of the business travellers. The model of low-cost airlines is far most similar to some on the new or existing airlines and the price war is reaching a limit. The other thing is the recruitment of new staff quickly and just giving them training so that they can be competitive in market.
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For British Airways it's very important to maintain their brand image in the market, the relation with their employees are in a very bad shape due to continuous strike and also due lack of reliability and trust of the employee's. As the airlines industry is shrinking there has to be a new innovation and change in the way of operation if the company needs to survive in the market it needs to focus on new ideas and new marketing tactics to retain its market and stay ahead.
Opportunities in the market:
There is predication by many analyst that there is great potential in the market for growth and sees a great opportunity ahead which lies in the industry.
The market scenario where there is credit crunch is very favourable as the companies are more conscious on price and also on the people.
Also the other benefit is the reduction of the cost of the aircrafts, which has ultimately reduced the operating cost of all the airlines.
There are also new markets which are untapped till now and which have a great potential as business prospective.
Threats to the Company:
The first threat is the immense competition from other cheap airlines which are offering a similar service and at cheaper rate.
Due to saturated market there is always shortage of new options as there are limited resources.
Due to various security threats the companies have to cut down their business travel in times of credit crunch and also its very time consuming process to get the additional security arranged or for arrange for new flights.
Due to competition the company has to spend more on the marketing and branding, which is too expensive and also which could affect the company's profitability in future.
Key Strategic Issues from Pestle Analysis:
The global economic issue in the period of credit crunch which the airlines face due to any circumstances (like volcanic ash issue, union strike or could be employee retention).
The other possibility is the higher regulatory requirements from the government like legal issues or the current laws of open sky policy.
The technology factors like increased used of internet by the customer (eg. Ticket booking or for online check in etc.).
Changing customer demand or changing business environment for airline industry.
Companies Current Position in the Market:
British airway currently is in healthy position compared to its peer's competitors and is position as, one of the premium service provider in market. It has already joined hands with many leading airlines and has already segmented its market. It's UK biggest international flight operators and is also one of the largest international and domestic freight, mail and ancillary service provider. It has already established, as one of the greatest players in the airline industry and has a great operational strength. It's a FTSE listed entity on the London stock exchange.
As compared to British Airways, Easy Jet is UK most cheapest or low-cost airlines which has a huge presence across Europe and in UK. It, has positioned itself in such a way that it had provided immense flexibility to people in terms of price. It has increase its European market share from mere 6% to 10% in 3-4 years and is commonly now as budgeted airlines. Its one of the most affordable airlines, which has created a great impression in the minds of people and could be positioned as one of the leading airlines in UK and Europe. It, is also one of the value traded on the London Stock Exchange.
Vision of British Airways:
"The companies' vision is to become the world most responsible airline and to be the world's leading global airlines". (Source www.britishairways.com/ba_reports)
Mission is to provide good customer relations and service
Send none of our UK waste to landfill by 2010.
Reduce our average noise per aircraft by 15% by 2015
Make it easier for customer to carbon offset their journeys
Support a whole range of community and conservation projects around the world.
Mission Statement of Easy Jet:
"To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this will develop our people and establish lasting relationship". (Source: www.easyjet.com)
"The goal of easy jet is to become one of the biggest players across the industry as budgeted airlines and provide the best service to customer. It also plans to be a leading environmentally efficient and responsible airline, striving to be efficient I the air, efficient on the ground and to lead the way in shaping a greener future for aviation". (Source: corporate.easyjet.com/en/archieve)
Company Strategy towards their Goals:
The first thing that British airways planned is by growing their operations and making corporate responsibility a prominent part of their business.
By investing in efficient and flexible new aircraft even in economic downturn time.
By reducing the manpower on the entire terminal will help the company to reduce the cost.
By introducing new product such as new business class seat on long-haul flights and restyled first cabin.
Delivering first class or one of the best customer services at every touch point.
It also focuses to on mileage business and boosts its profit by doing third party engineering, I flight sales and also new online business through e-ticketing and also providing great co-operate packages for regular travellers.
It also plans to have the most presence in key global cities and also build the strongest position in market of UK and across the globe.
Corporate Strategy of Easy Jet to achieve its Goals:
Easy Jet as one of the leaders in low cost airline its strategy is to improving its margin by three ways focus on yield, ancillaries and costs.
Its main aim is to provide low cost t its customer by controlling its cost and focusing on the core areas like flight frequency, on board food equipment, offering tailored plans to the customer.
The other thing that company is focusing to achieve its goal is improving the infrastructure, providing accurate information to its customer's and also providing key supports to its crew members by giving them crew efficiency programme which has been implemented.
Increased focus on the cost by constructively engaging the governments and regulators that set them.
Segmentation of market for British Airways and East Jet:
Market segmentation of British Airways:
Due to increased competition to BA in terms of price and it also varies from route by route due to open sky policy. It focuses on two main aspect of current market 1). The short haul market and 2) long-haul market.
Short haul Market: In this kind f short haul market the company focuses on the people who prefer to take a shorter routes within the nation called as domestic flights, which many of the UK companies are operating. It has already operating in to premium class travels, where its already grown and is providing and excellent customer service with the help of their marketing skills and technology. Its also looking beyond, its segmentation and also trying to focus not only on long-haul flights but also on shorter distance lights due to immense competition from some larger players who operate on the similar routes.
Long-haul Market: As, we now that the BA is one of the most reputed and well known name in airline industry and has a very big market share in operating in long distance flight, its prime focus of business segmentation is exploring new destination and new routes so that it can target more and more people across the globe and position itself in such a way that it can sustain in market in any condition and be at the top. It, has also new plans to enter in to low cost air ticketing by entering into a price war with its competitors on a regular basis to grab the market share and retain its customers
Market Segment of Easy Jet:
The vast business of Easy Jet is in t and from the UK and it targets at the business and leisure consumers. The target people are those ones which are keen on saving time and money. It also provides various other packages like hotel accommodation, ca parking, choice of aircraft for frequent travellers and its tries to target more customer base by offering additional services. Easy Jet is focusing or targeting corporate business travellers and also targeting consumers through websites and also offering them last minutes deals. It is also trying to target the smaller income groups and also the places which have a small demographic location and which could help the company to garner more customers.
Marketing Mix for British Airways and Easy Jet:
Marketing Mix are the related to four elements of marketing such as Product, Price, place ,Promotion, it is based on four assumptions of marketing for any organisation, in this essay we would be discussing about the four models which are used by two companies in different way like for BA and Easy Jet.
Product: Product is the biggest thing for a company, as every company is fully dependence on the product; BA showcases its product by taking a customer feed back on their products offered and also innovating new product across the airports. They have a large variety of products t be offered to the customer.
Easy Jet has the different way on putting its brand; it develops the products according to customer needs and has different way of presenting its brand image.
Price: Price is the most important factor in the airline industry as every company is heavily dependence on the price as the key drivers of the company is price. The company uses this pricing strategy to get more and more market share and to garner more customers across the globe. BA provides various deals which, are based on its pricing which is a tool which can be used to generate new revenues for the company.
The whole concept of Easy Jet is to provide low budgeted airlines and to provide its customers with the cheap travel and convenience. As, a low budgeted airlines the whole business of Easy Jet or its strategy is developed on pricing factor and also the marketing mix is also the depended on the marketing department.
Promotion: Marketing and advertising go hand to hand as every company needs to promote its brand to enter the market. Due, to immense competition the companies develop different marketing strategies like spending on the advertising, through internet and other ways of communication. BA uses its promotional strategies like introducing of text and mobile services for the business customers. Modernise the aircraft fleet and offer new services.
Easy Jet also uses the same strategies to promote its brand like advertising and also using technology to promote its brand.
Place: Place is the one of the number one priory for the airlines as no airline can operate without a proper location. For BA as it's operates from UK and has the operational base in UK for carrying out day to day activities. As the companies operate through various airports for carrying out the business activity like the warehouses for carrier purpose and also using the space for the aircraft servicing. They need to develop the infrastructure around the place which they occupy and need to get updated regarding the place.
As a result of the external and internal analysis number of strategic option were proposed, we conclude that the combined strategy to improve the quality service was deemed most suits. Due to current scenario of the airline industry we have chosen to consolidate the current position of both air lines as both of them have their own marketing and strategic expertise in their various segments. Due to scope and scale of operation and focus on passenger tariff we would recommend further strategic analysis to implement level strategy.
Due to lack of primary research and restricted excess to company's information there may be limitations in finding and recommending strategy.
Both the companies need to work on their different strategies to maintain its lead in the market and also we also suggest if the strategic intents are followed would lead to the success of both the companies.