Study Of Easyjet And The Airline Industry Tourism Essay

Study Of leisurely grand And The transmit duct Industry Tourism look for undemanding one thousand teleph wiz line passage is one of direct inexpensive British stressline established in 1995. lite Jet has seen a fast expansion, operating national and international improvement on 500 routes amongst Europe, North Africa and Asia. Its successful strategies based on broken-monetary value, no frills model which follow from the a conceit that pick ups for short-haul air holdation is set whippy. That means if the bell of plane books are being reduced, more(prenominal) people leave fly.Micro scotchs study determinants of demandThe demand for a particular good or service depends on a variety of f comportors. Key influences include the expense of substitutes peculiarly goods that are close substitutes, and the scathe of complements, the levels of consumer income, consumers expectation.()The availability of alternative modes of transportation for air spark away a re lurch rewrite of magnitude, in particular ownership of automobile and the railroad line development. These close substitutes might be a threat a do of traditional airway companies, dominating short journey sector (less(prenominal) than 3 hours). However, it is extremely difficult for rail transport to challenge a low- greet air lane lodge like diffusejet. For example, Euro stars cheapest fines to Paris is 149, whereas diffused Jets charges start from 17.99Airline cost per rider, and rail fares, from Barcelona outlay ElasticityAs demand law, when opposite factors on demand remain unchanged, a graduate(prenominal)er set for a product testament lead to a degrade sum of money demanded. The legal injury elasticity of demand measures the responsiveness, or sensitivity, of the demand for a good to changes in its price when other influences on demand are held constant. It is defined as the plowshare change in quantity demanded resulting from a given percentage change in price.For example, if a 1% development in price leads to a 1.5% drop in quantity demanded, the own-price elasticity of demand is 1.5. In this case, since the percentage fall in demand is greater than the percentage come in price, total spending on the good go forth decline, and the demand for it is said to be elastic. If, on the other hand, a 1% price rise causes a smaller percentage decline in the quantity demanded, the own-price elasticity give be less than one, and demand is said to be inelastic.(.)The demand for air travel should be distinguished among foodstuffs for course and unoccupied travel long-haul and short-haul travel and international and long-haul travel. Accordingly, to examine the sensitivity of the demand for air travel to its price, separate estimates of the own-price elasticity of demand are ga in that locationd for all(prenominal) of these distinct markets.Since the alternative modes of transportation for long distance are non widely available, it i s considered that the demand for air transport will be less elastic for long-haul charges than for short-haul flights. Moreover, international travel tends to be spread over more judgment of conviction than domestic help travel due to globalization, so that the plane fine is more expensive than domestic tickets. globalization makes international travel peculiarly business travel less sensitive to changes in ticket prices. On the other hand,travelers for leisure are more likely to postpone stumbles to special locations in rejoinder to spiriteder fares, or to shop around and look for more affordable fares. Therefore, it is concluded that the demand for air transport for leisure travel will be more elastic than business travel.Price Elasticity of Supply and DemandThe relationship between demand and price of traveling by air can be some(prenominal) elastic and inelastic. To a large extent it depends on the type of nodes traveling. For example a family planning a vacation th at requires air travel, if the price of an air lane ticket is extremely high, they are more likely decide to delay the trip until the prices are lower. This shows that leisure air travel is considered elastic. However, if a business customer lodge ins to travel across the country by the next day, they will inquire a plane ticket regardless of the ticket price. For business travel, the price of airline would be considered inelastic because it is a necessity. The current market for business travel has a big part in the tot up and demand within the airline labor. More so in the economicalal downswing with the price of fossil oil fastly increasing, the cost of an airline ticket is consequently has risen and the demand for leisure travel has fallen. In addition, another(prenominal) reason for the decline in demand is that after 9/11 there has been growing concern over in-flight safety. some other factor that influences the price of an airline ticket is the date that it is pur chased. If there is anemergency, the customer may need to book a ticket on the day of travel or even purchases a ticket close to the departure clip. The fact that there are still umpteen unsold tickets is disregarded and the price will be higher.http//www.associatedcontent.com/article/1013568/the_economys_ furbish up_on_the_airline.html?cat=27elastic.gif http//www.fin.gc.ca/consultresp/Airtravel/airtravstdy_1-eng.aspMarket structure of Airline industryThere are many factors impacted on the bare-assed-fangled poor financial performance of traditional airlines, including the effects of 9/11, the global economic recession, the increasing step-up of low cost airlines that operate chthonian a different business model, and the recent surge in kindle prices. As described below, several simultaneous factors are transforming the global airline industry. The growth of affordable airlines The increasing growth of the market share of low-cost, low cost fares during the last few years is one of the roughly earthshaking trends in the industry, and has presented a considerable threat to the viability of network of traditional carriers. The response of the traditional network airlines to the growing low cost airlines challenge will be critical to determining the future structure of the airline industry, both in the United States and in Europe.Competitive analysisThe most axiomatic agonistical advantages Easy Jet had are delivering low-cost and maximising margins. easyJet keeps be low by cutting off the unnecessary costs and frills which is in traditional airlines. This is done in several major ways firstly, easy jet take advantage of the Internet to reduce distribution costs and thence maximize the utilization of the substantial assets and maximize utilization of each aircraft and therefore, significantly reduces the unit costSecondly, Easy Jet launched paperless operation and ticketless travel which means passengers receive an email containing their travel deta ils and booking abduce instead of abbreviate a paper ticket when they book online. This lower the cost of issuing, distributing, processing and reconciling millions of tickets each year. At the said(prenominal) time, Easy jet simplified its work practice by delivery the concept of paperless operation and a well designed information system allows precaution and administrative job carried out done its IT systems of corporation. The no-frill service on table is another reason for Easy Jet to keep cost low, because everybody constantly complain roughly food on board so wherefore bother to provide food if people dont want it? Cutting off free catering on-board decrease cost and unnecessary bureaucracy and eradicatement. It is withal an in-chief(postnominal) differentiator between easyJet and other airlines and a potent coefficient of reflection of our low-cost approach. Passengers can purchase food on-board if they need it . ironically, Easy jet have won awards for our cater ing service. The new concept of a naive service model also reflects a more general need about eliminating other unnecessary, costly services. pre-assigned seats, interline connections with other airlines and cargo/freight cheat are the characteristics of traditional airline result in high multifactorial to look at cost.Moreover, easyJet use airports effectively by flying to main speech airports end-to-end Europe with high frequency and obtain efficiencies by means of rapid turnaround quantify. By cutting off turnarounds time to 30 transactions and below, easyJet can gain extra turnaround place on the high-frequency routes, thus, maximizing utilization rates of its aircraft. Easy Jet made an agreement with airports about progressive landing charges.the operationeasyJet currently has operating various bases throughout the UK and mainland Europe. It is a truly European operation and was one of the few airlines to take advantage of the reforms offered by the single European a viation market.Manage costFuel cost is one of the biggest and volatile single cost for Easy Jet therefore give the sack talent is very important to Easy Jet. In 2009, Easy jet saved 1.2%of fuel they burn through the improvement of fuel efficiency and new flight planning system. Easy Jet have aimed a 3% improvement in fuel burn, which will deliver 20million by 2012. It is crucial for Easy Jet to manage cost effectively so that it can continue to offer agonistical fares profitably. Easy jet plans to make at least 190million of cost reducing by the end of 2012, which will allow Easy Jet to equaliser splashinessary pressures and produce 1 per seat benefit to the bottom line. The work party efficiency will be improved by 10% through route and crew optimal tools and a new roster system.Marco-economic sustain economics in general, especially air transport has been viewed as the science lab of economic activity. Flourishing transport derived by booming economy, as an increasing econo mic activity, expanding industrial production and booming trade relation will inevitably lead to an ever-greater need for transport. A decline of the same parameters will reflect on a decreasing demand for transport. Within the transport industry, air transport seems to be more sensitive to such economic environment. In the face of recent financial crisis that affected world economic growth and international trade, airline industry are affected by this crisis.The EUs air transport system has been considered as a very important factor of the Unions economy. In the meanwhile, it is quite sensitive to economic environment and economic development in other industry. In 2008, the worldwide financial downswing had increasingly resulted in a global economic crisis. At the same time, the impacts of this crisis for air transport sector reflected on obvious decline of air travel demand because of less transported passengers and goods, decrease of supply through reduction of frequency, and lo wer company profits.Figure3 gross domestic product Yearly Growth from 1990-2008 ostentatiousness and ve make upable oil Price ImpactThe inflation rate in Europe was 0.90% in February of 2010. Inflation rate reflected on a general rise in prices measured against a standard level of purchasing power. The effective measures of Inflation are the CPI which measures consumer prices, and the GDP that measures inflation in the whole of the domestic economy. Oil prices are pushing up inflation across Europe. And oil price really matters to the health of global economy. The global economic downturn in 2000-2001 resulted from higher oil price since 1999, and global GDP growth have decreased. Higher oil price are contributing to high level of cost and unemployment and accelerating budget-deficit problem. The impact of high oil price on oil-importing countries varies mainly depending on the degree to which they are net importers and the oil earnestness of their economies.. European countries a re highly dependent on oil imports, which would drive most in the short term, their GDP went down by 0.5% and inflation increasing by 0.5% in 2005. The United States suffered with GDP declining by 0.3%,mainly because its domestic production meets a bigger part of share of its oil needs. Japans GDP decreased 0.4%, with its low oil intensity compensating for its almost high habituation on imported oil.The problem of fuel rates/ cost is one of many factors all airline companies faced with. The price of a caskful of oil has been a huge impact on airliner and global airline industry. According to the statistics, the cost of fuel has been made up by 31% of the total cost of business of airline companies. The aviation industry is always sensitive to the change of fuel price. In the economic recession, the number of the passenger would scare away if airline company rise the ticket price, disdain of the situation of fuel price surge. Therefore, the only ways for airline company to minif y the loss because of the higher oil price are beef up management, cutting cost and efficiency improving, instead of simply raise the price.Another financial risk exposure in the airline industry is amuse rate. Interest rate risk is important to airline companies in cost of the cost of debt finance. Higher financial leverage ratios are dominant in the aviation industry because of its capital intensive nature and high cost of equity. High earnings volatility made cost of equity increase. candour can be less attractive due to lower price earnings ratios found in the airline industry. In the meanwhile, cost of debit is closely related to the interest rate changes. Therefore, the impact of interest rates on general business could be large consequential effect. Moreover, high interest rates result in higher cost of distress, this is especially for the airline industry.Legislation ImpactOne of the most difficult reconciliation acts that airline companies faced is the challenge of bal anceing global warming and remaining competitive position in marketplace. The airline industry is responsible for 2% of the worlds artificial carbon emissions and 6% of the Uks. It has already achieved a great deal in keeping emissions down,and it is continuing to take its responsibilities seriously through industry-wide initiatives, in-depth research, roadmaps, not to honor new airframe and engine technology.In 2005,the temper impacts of aviation have finally arrive on european political agenda.because the air travel is the worst humour choice of all transport modes, per passenger kilometer of aircraft emits tree times more than cars. Per tonne kilometer of freight, aircroft measured about an order of magnitude worse than lorries. the UK Climate Change Act, passed last November called into question how quickly the industry could deploy into new aircraft and fleets the technological advancements it was claiming were going to help it deliver a percentage reduction in CO2 emissio ns. Airline companies must act quickly to lower its own CO2 emissins to meet goverment regulation,many people argued that the climate change policies will destory the development of aviation industry. However, the study shows that climate change legislation could be designed in a sustainable way. selection of the Easy Jets Low-cost ModelLow-cost airline model has turn out to be successful, and has been copied by the many airline company worldwide. Low-cost airline model is based on strict adherence to several major principles point to point flight, maximization of flying hours, short-haul, use of secondary airports, no-frill, and no delay, which result in low cost, low fares and high demand and cognitive content utilization. ( Macario et.al.2007) Although the air transport market is heavily impacted by the economic crisis, in turn, economic recession provides a potential hazard to low-cost airline company. Easy Jet announced a profit increase in 2009. Low cost airline companies a re increasing their market share compared to traditional airline.Potential strategies for Easy JetFirstly, Easy Jet should material body stronger air transport network. Although Easy Jet has a leading presence on Europes top 100 routes, it still needs to lace its positions in the key market and focus on the routes customers find the most attractive, at convenient times. Easy Jet needs to continually manage schedule quality and fine-tune its network. Which means it will offer customers the prospect to arrive when they want and when they want. It will allow Easy Jet get increasing market share of flight and have higher effect factors than its competitors. Increasing frequency and stability on major routes with launching new the route mix offer more choice to its customers based on market research. For instance, Easy Jet launched flight with daily return flight from several cities in UK to many European cities. As the demand declines through the summer months, it should manage its schedule and move assets to leisure routes in order to maximize its capacities. In addition, unnecessary cost created by overnight boodle could be avoided by base management, in order to improve efficiency and maximize revenue.Secondly, it is important to listen to customer and understand their need and then design schedule and service to match. the relative effective way to get close to its customers is to collect all customer data, which provides a fast and bright view on trends in customers travelling habits. With these customer databases, it allows marketing segment tailor marketing emails according to individual customer purchasing patterns and preferences.Moreover, build increasing customer experience to appeal business travelers. Departure time is vital for customer and ensuring customers arrive at their destination on time is a key to delivery of a winning customer proposition. In a recession economic environment, Easy Jet has potential opportunity to increase share of th e business travel market due to many corporate tend to low cost air travel company to cut business cost.http//hubpages.com/hub/rise-in-fuel-prices-airline-industryHow a rise in fuel prices affect the airline industry