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).
[...] 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. Business population do not pay attention to the price. At the opposite, tourist and middle class consider the price as the first condition of choice. If the price seems to be too expensive, train and car can be substitutes. [...]
[...] The bus ticket will be sold on the internet website, but separately from the plane ticket, and available on a diiferent coupon in order to make the difference between the two services. The taxis network will carry the companies' colors but will have an other name, as recognazable as the others firm activities. We can propose easyTaxi or easyCab. We know that easyJet is making low rates. Nevertheless, it might be a good idea to run a system points in order to fidelize the client. If it is too costly for the company, some discounts should be applied on other firm services, like on easy Rentacar or [...]
[...] Financial performance analysis Major stakes to easyJet management is focusing on the growth of the return on equity. In order to achieve this, easyJet continues to challenge industry norms and reduce cost base through being highly productive and innovative. Equity seems to be stable, but the operating income has to support the heavy investments. EasyJet'ROE curves This curve confirms a slide of easyJet's strategy from an economic strategy to a financial strategy (Investments, acquisitions). In the same time, it keeps its low cost strategy, but some experts' point view analyse also a slide to a middle cost strategy. [...]
[...] Salaries are quite high and with others compensations (free flight, less hours' flight) in Majors Cost salary achieves approximately 30% in global costs. At the opposite, most of the low costs, like EasyJet, worked on this support to gain a competitive advantage. Indeed, they work on productivity to be more effective and reduce costs salary. Technology development Innovation in terms of aircraft could be an advantage. Economic fuel and new fleet can be a real competitive advantage. Suppliers Companies have quite the same suppliers. [...]
[...] BUSINESS SEGMENT MASS MARKET & LEISURE SEGMENT Strategic segment to Strategic segment to low cost majors 15% of total Buyers & Consumers needs: cheap passengers of sales ticket turnover. Monopoly of in this cost” competitive advantage : segment. To keep this market share, new ( Cheaper price luxury services can be offered. ( Increase of Internet uses New aircraft the is a ( Outsourcing and Internet sales : real advantage for costs reduction cost” weaknesses on this Target: ticket usually not paid segment : by consumers Buyers: consumers' ( Regularity on flight, unflexible companies. [...]
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