Easy Jet Airline An Overview Commerce

Easy Jet Airline is one of leading low-cost British airline established in 1995. It was founded by Sir Stelios Haji-Ioannou. Easy Jet has expanded rapidly, operating domestic and international service on 500 routes between Europe, North Africa and Asia. Its successful strategies based on low-cost, no frills model which derives from the concept that demands for short-haul air transportation is price elastic. That means if the price of plane tickets are being reduced, more people will fly.

Source: www.easy jet.com

An overview of U.K airline industry.

Despite recession and rise of terrorism post 9/11 that rocked the entire world, air travel remains a large and growing industry as it facilitates economic growth, world trade, international investment , expansion of business and tourism. Also with rise of low cost flyers, travelling to far away destinations has become faster, easier and also cheaper.

Terminal passengers at civil airports, uk

This is a chart showing passengers at civil airports, United Kingdom

Source: office of national statistics, social trends 39, department for transport- Aviation.

What are the alternative scenarios with regards to the costs of production (marginal costs like labor costs, raw materials, energy)? Consider the macroeconomic expectations for the second half of 2011 and different scenarios about the macroeconomic developments and the course of the recession.

DETRIMENTAL EFFECT OF RECESSION

Recession in general causes havoc in the economy. There are many factors which affect the airline industry during recession. Out of all the factors some of them have affect heavily which I am going to discuss.

One of the important factors is price rise of fuel. According to the statistics, 31% of the total cost of business of airline companies is made by the cost of fuel. During Recession any price rise in tickets would scare away many passengers. Therefore fuel efficiency is very important to easyjet. Easy jet saved 1.2%of fuel in 2009 through better fuel efficiency system & new flight planning system. It has aimed a saving of 3% of fuel burn by end of 2012. It is crucial for Easy Jet to manage cost effectively so that it can continue to offer competitive fares profitably.

Another factor is managing staffs. The crew efficiency was improved by 10% through route and crew optimal tools and a new roster system. It can also reduce the ground staffs by having some technological advancement at the airports like automated check-in counters.

Sources: A case study of EasyJet and the airline industry By Florian Mayer

The above scenario can be the following example table

NoF

FC

VC

TC

AC

MC

TP

QD

ToTP

TR

MR

MP

1

1000

3500

4500

4500

-

30

200

6000

1500

--

2

1000

6500

7500

3750

3000

40

200

8000

1000

500

-2500

3

1000

9000

10000

3333.3

2500

20

725

14500

3500

2500

0

4

1000

10000

11000

2750

1000

25

600

15000

4000

500

-1000

Fig. 1

Where

Nof

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