School of Business Law and Computing
Bucks New University
BM634 Dissertation
Impact of pandemic on airlines sales and employee turnover-A case of Easy Jet
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Abstract
The research project highlights the impact of the pandemic on the context of the Aviation industry sales and employee turnovers. It describes the current situation of Easy Jet in midst of the distresses of the pandemic. The research has discussed the history of the Covid 19 pandemic and determined its spread. It has also identified the issue that has arisen due to the same. This has discussed the way it has affected the industry at the same time it has understood the effects of the pandemic on the aviation industry. Further, the study has learned the strategies that were adopted by the industry to tackle adversity. The research has also discussed the positive impact of the epidemic on the industry and the way they have improved. This has also discussed through theoretical perspective the different theories that might be utilised by the industry to overcome the issue in future.
Table of Contents
1.1 Background to the research topic 5
1.2 Background to the research organisation 5
1.5 Research Aims and Objectives 7
Chapter 2: Literature Review 8
2.1 Introduction of literature review 8
2.3 Conclusion of literature review 17
Chapter 1: Introduction
The onset of the Covid 19 catered significant distress in the social, economic, political and cultural sphere all across the world. It can be recognised as an infectious disease that is spread through the SARS-CoV-2 Virus and is transmitted via the liquid droplets passed due to coughing, sneezing and talking (WHO, 2022). Globally over 428,968,263 confirmed cases have been recorded of the Covid virus among which 5,969,439 have already lost their lives in the global pandemic (WHO, 2022). Due to the onset of the Covid 19 the aviation industry has faced numerous distresses in passenger air transport over the last two years. It has threatened the viability of numerous firms operating in the aviation sector and hashindered the growth of the industry and the employees associated with the sector.
The estimated loss of the revenue for the Airlines accounts for about 370 billion USD (Statista, 2021). Implementation of the lockdown restrictions has forced the organisations to shut down their operations and have raised the unemployment of the people connected with the sector. Covid has decremented the overall lives and the livelihoods of the employees connected with the same and increased the detention rates of the same. Inculcation of the social distancing measures has reduced the passenger loads for the airlines and has negatively impacted the growth of the companies associated with the same. The operating cost of the organisations has been increased due to the implementation of the health and safety requirements incorporated within the employees and the working spheres.
Easy Jet can be recognised as the low-cost European airline company that offers services to the customers via the inculcation of the cost advantages, operational efficiencies and the leading positions in delivering high-quality services at lower rates to the consumers. It can be recognised as one of the largest airlines in the world with about 308 aircraft and operating via the 927 routes (Easy Jet, 2022). The company has a strong financial capital of market capitalisation estimated at 5 billion pounds and has the strongest credit ratings in the world in the context of airlines. Easy Jet employs over 13,000 employees among which 4,000 serve as pilots and the rest act as crew members (Easy Jet, 2022). The company along with its key suppliers tends to deliver numerous operational and commercial activities and place a huge significance on the management of the interrelationship.
It aims at delivering incremental innovation and constant performance because of satisfying its customers. The company flies over Europe, UK, Switzerland and Austria and aims at becoming the world’s most data-driven aviation brand (Easy Jet, 2022). The overall revenue of the brand is directed to attend the benefit from the data projected that led to the restoration of initiatives to foster the differential seat prices among the customers. Due to the onset of the Covid pandemic, the organisation has inculcated severe losses and sales have surged over drastic numbers in the brand. This has negatively impacted the working spheres of the brand and has hindered the operational sectors of the employees in the same.
The overall change in the behaviours of the customers was incremented following the onset of the Covid pandemic and has resulted in a huge drop in sales for airline services in the world. It has a hundred the operational sphere of the aviation brands and has incised the employee turnover rates. The combination of the null demand from the target market and the supply socials derived by the aviation department has collectively forced the brands to announce thousands of job losses that have hindered the livelihoods of the employees. International Air Transport Association had forecasted the air traffic to be below the 66% of that in 2019 and hindered the overall functioning of organisations (BBC, 2020). The operational cost of the aviation sector has risen due to the Implementation of additional health and safety requirements that avail the travellers to use sanitisers and face masks. This has created a negative effect on the profit rates of the organisations due to the increment of the expenditure of the aviation industry. Moreover, the changes in the transport behaviour of the customers have cared an additional force n the maintenance of the employees and profit rate in the sector.
Easy Jets suffered a loss of around 1.3 billion pounds in its 25 yearshistoryand the sales surge accounted for about 50% in recent times (Kollewe and Topham, 2020). It forced the organisation to cut back 20% of the planned winter schedules to amplify the further travel restrictions that were posed by the government. In the pandemic situation, the brand had to provide support under the guidance ofthe prime minister to offer vaccines for 4000 crew members (Kollewe and Topham, 2020). The research will amplify the impact of the Covid lockdown restrictions on the aviation industry and the employee turnover rates in the context of Easy Jet. It will help to assess and evaluate the degradations occurring in the employee and the operational sphere of the organisation with a view of incrementing the complex distressed situations in the pandemic.
The questions regarding the research are as follows
What is the significanthistory of a pandemic?
What is the positive and negative impact of the pandemic that has changed the sales and the employee spheres in Easy Jet?
What are the strategies the organisation can implement to mitigate the arising issues?
The research aims to evaluate the impact of the Covid pandemic on airline salesand employee turnovers in context to the functioning of Easy Jet.
The objectives of the research are as follows.
To study the history of the pandemic and related effects
To evaluate the impact of the pandemic on Easy Jet’s sales and employee turnover
To recommend the strategies for the airline to improve its sales
Chapter 2: Literature Review
2.1 Introduction of literature review
This literature review is going to discuss the history of the pandemic and its positive impact on the aviation industry. It will also discuss the negative impact on the industry and determine the strategies that were undertaken by them to overcome the issues that arose from the pandemic. Further, it will discuss the theoretical perspective on the topic.
2.2 Main body
History of pandemic
The Covid19 pandemic started spreading by the end of 2019 from the region of Wuhan, China. It is suspected that the virus SARS-CoV-2 evolved and then started spreading throughout the world. According to Tay et al.(2020), the SARS epidemic in the year 2002 affected over 8000 people and led to the death toll of 774 in 37 countries worldwide. The virus had been in existence for a long time and used to affect animals that have mutated and started to affect humans and was named the COVID19 virus. WHO (2022) stated that the Covid19 pandemic is an infectious disease that mainly affects the reporter tract of the human being that in severe cases might lead to death.In the start, several people expected a moderate respiratory illness but were able to be recovered through special treatments. However, the older people with underlying illnesses were affected the most resulting in deaths.
People with sicknesses such as diabetes and chronic respiratory illness and so on are heavily affected by the virus. The virus kept spreading and ended up affecting half of the world’s population. Due to the rapid spread, the government of the countries implement certain rules and restrictions to lower or stop the spread. According to WHO (2022), these restrictions was approved by the World Health Organisation (WHO). The restriction included wearing of face mask all the time and keeping a distance of at least 1 meter from the others. People were advised to avoid an area that has poor ventilation or is too crowded. Coughs and sneezes were to be covered by the bent elbows o tissues. WHO (2022) advised the public to clean hands frequently and ensure the covering do nose, mouth and chin. The spread has resulted in worldwide panic among the people for their health. It has along with affecting the normal life of the people has affected the industry severely. The restriction has resulted in the people staying at home has led to the closing of several company’s physical stores due to lesser sales. It can be said that the travel and aviation industries were the most affected due to the restrictions.
Positive impact of a pandemic on the airline sector
The pandemic has changed the aviation sector critically by giving them both positive and negative impacts. However, the positive impact of the pandemic in the aviation sector is that it has made them highly aware of the hygiene and the health of the passengers. According to EASA (2020), the aviation sector has undertaken several safety protocols that to decrease the spread of the virus and ensure the safety of the customers. They had managed to enhance the cleaning activities of both amplitude and frequency. These protocols include cleaning and disinfecting the surfaces appropriately. It has enhanced their avoidance of the contamination of the food. The pandemic has focused on the health safety of the passengers. They have been ensuring proper ventilation, minimising the percentage of the recirculation of the air, and favoring the use of fresh air. They have been aware of keeping the toilets and maintaining them to ensure a safer flight with no fear of catching the virus. EASA (2020) states that the aviation sector was led to their installation of a protective screen that is to be used by the staff while interacting with the customers.
They have also focused themselves on ensuring the protection of the employee in their respective organisations. Aviation also gained the usage of new automation to ensure the safety of the employees. some of the companies explore the UV cleaning system for the sanitisation of the interior of the aircraft. According to Future Travel Experience (2022), the innovative technology was adopted by the airline sector that was supplied by Honeywell. Portable ultraviolet-c light equipment can cover a mid-sized airline cabin in less than 10 minutes. Some of the companies have insisted on the rapid testing of their crew to ensure they are not affected. This move has caused an increase in the confidence of the crew member about travelling. Future Travel Experience (2022) stated that companies like Etihad become the first to introduce ambassadors that are specially trained that can provide the essential information and care to the consumers in the terminal and on the flight as well. The aviation sector has put down guidelines for the employee to keep wearing masks and taking healthy precautions to avoid any spread of the virus.
Amankwah-Amoah(2021) stated that it has led the aviation sector to innovate by adopting a more customer-oriented approach and discarding old traditions. It is also suspected that the organisation is likely to adopt new automation for the processes to rectify the defects that are existing. The pandemic has shown the aviation industry the dire need for innovation in the sector. PWC (2022) states that the aviation industry has expanded the work from home option that will help them in keeping the employee from getting affected. They have also undertaken measures for social distancing in the companies stand heavy sanitisation process. The industry has undertaken additional precautions, not safeguard the employee from the spread by implementing the multi-layered physical; security role that is expanded to include the health screening.
The negative impact of a pandemic on the airline sector
The covid19 pandemic has affected the aviation sector severely through the restriction of the government. The restriction such as social distancing and sanitisation has made the public cynical towards travel at all. It was reported by Airlines (2021) that 4.8 million jobs were lost at the beginning of the pandemic. The job losses included the highly-skilled roles by the lack of air travel. It was reported that over 630 billion USD was reduced from the GDP benefits that came from air travel. The pandemic has led to the drop of jobs in the h aviation sector by 41.7 billion. Airlines (2021) state that direct aviation jobs such as airports, at the airline and so on, fell by 4.8 million.
It was also reported that about 39200 special aircraft took 5.4 million passengers’ homes after the closure of the national and international border. The change in consumer behaviour has resulted due to the several restrictions put by the government to ensure the spread is lowered. This has decreased the confidence of the passenger for travelling. It was reported by OECD (2020) that the air transport revenue generation was down by 90% in April of 2020 that was still down by 75% by August of that year. The shock has put the liquidity buffering of the airline industry under pressure.
International travel restrictions had contracted the economic activity of the airline industry along with the changes in the transport behaviour of the consumers. The social distancing measure has forced a reduction on the airline for the passenger load factor by 50%. OECD (2020) stated that the commercial air traffic is suspected to be slow to recover from the hit of the pandemic where the number of flights is not more than 40% below the pre-crisis level. To be particular the airline industry is considered to be the highest dispersion in terms of productivity than any other. The epidemic has put the industry in a crisis with distinct abilities of the companies to withstand the hit. According to Statista (2022), by the year 2022 air freight traffic is expected to grow to 69.3 million metric tons. It was reported that the revenue loss of the airline worldwide in the year 2020 due to the pandemic was 370 billion USD. Tay (2020) stated that the covid19 has changed the scenario of the aviation sector as they might lose $133 billion in sales in 2020.
Figure 1: Coronavirus: impact on the aviation industry worldwide – statistics & facts
(Source: Statista, 2022)
China was considered as the largest aviation market after the United States and the United Kingdom however the pandemic the ranking of the country was dropped drastically. Companies such as Lufthansa announced the hiring freeze and various other administrative procedures to cut the prices. The company also want to consolidate their position as much as possible to lower the spread of the coronavirus. It also had to encourage people to take on leave that is unpaid to save money. Mhalla (2020) stated that Lufthansa reduce the project volumes by 10% and their material expenses by 20%. ICAO reported that the different countries aviation suffered havely losses regionally such as $120 billion in the Asia Pacific, $100 billion in Europe and so on.
Impact of a pandemic on sales and turnover
The covid19 pandemic has resulted in a higher loss of the industry which they have ever faced. For instance, the European airline has faced a loss of $15.4 billion due to the pandemic. Business wire (2020) stated that it was also estimated that the airline might receive 700 million lesser passengers which were 28% less than the previous year. The airline industry has seen a dramatic drop in sales during the pandemic due to the restriction. The government has to support the airline by donating 160 billion USD. It is also suspected that the debt might increase by 28% in the year 2020. United Nations (2021) reported air travel dropped by 50% in the domestic sector and 74% in the international sector. It has reduced in contracting of the passenger load on the airline industry by 50% due to the social distancing measure implemented by the governments.
The visible risk of job instability due to less revenue generation by the company in the sector has led the employee to career turnover. The airline employees are highly concerned about the chances of getting them infected ad being laid off has taken a rise currently more than ever. According to Amankwah-Amoah(2021), the thought of getting infected and instability in the job has driven pressure on the employee’s stable mental health and life. PWC (2022) reported that air travel was recorded to be down by 95% due to the covdi19 pandemic that has led the leader of the alone industry to take hard decisions. The decision was mostly about the workforce by cutting down the jobs. It was reported that over 11 million jobs were at risk within the sector. The executive director of the across industry Air transport action group stated that 4.8 million jobs might be lost in the industry. It was also seen that the regional breakdown showed a loss of $120 billion in the Asia Pacific region, $100 billion in Europe, Northern America with $88 billion and so on.
Strategies used by the airline sector due to pandemic
The aviation industry undertook several strategies that to ensure the reduction of the impact of the pandemic on their sales. The shortage of pilots and mechanics were critical during the pandemic, which the industry has tackled by restraining the costs. According to PWC (2022) Restraining the cost has helped the industry to reduce the demand spike. An increase in variable pay has eased the financial contraction from the companies while providing incentives for maintaining employee engagement. Lack of communication with the consumer might affect the reputation of the company by diminishing their emergency procedure of them. The aviation industry started the use of social media as a medium of communication with consumers.
The strategies that have been undertaken by the aviation industry to restore the confidence of the consumers in travelling might include taking the right precautions. The companies in the sector have undertaken the appropriate protocols to diminish the risk of the spread of the virus. Social distancing is one of the main protocols where they advise the consumer in keeping an appropriate distance from each other. Wearing a mask while at the airport as well as on flights has also been considered mandatory in the industry. They have established the requirement of being vaccinated and the proof for that must be provided. The industry has focused itself on hygiene by implementing precaution that is followed by them in the terminal, inside the airport and so on.
To increase their fallen sales the companies have taken to social media and the internet to promote their service by targeting the potential consumer. Sanitisation processes are being taken seriously by the industry by keeping the surfaces by using an effective product that helps in proper disinfecting. They have also allowed the employee with a small stipend that will allow them to set up a home office to promote a hybrid workplace. The aviation sector has accepted the advanced automation that has included fare auditing and no-show processing allowing them in mitigating the per transactional costs allowing the employees to focus on a task with higher value. For communication, the airline industry has established social media as a medium for crisis communication. this is because they have more followers on them and they were able to reach more people at once. Scheiwiller and Zizka (2021) stated that it was seen that the airline published 2.42 messages per day in the pre-crisis stage while it became 1.65 during the crisis period.
They have tried on reducing the cost that included reducing the salaries of the employees. Increasing the cargo service is one of the strategies they have implemented with taking extra precautions and announcing them to the passenger for safety. According to GÖV and ERBAY (2021), they have delayed the order for the new aircraft to reduce entire expenses and remove the old panes from the fleet. They have started using the non-flying planes as cargo. They have also started to focus on employee engagement to increase their productivity, keep the employee loyal, and reduce turnover.
Theoretical perspectives
Crisis management is the application of strategies that are designed to help a business in mitigating the effect of sudden negative events (Rozanovet al., 2020). It helps the organisation minimise the negative impact an event can cause to the business. Finks Model of Crisis was developed by Steven Fink that lays out four stage crisis model that includes prodromal, acute, chronic and resolution as stages. The first stage is the period between the crisis’s first signs and its eruption. This stage could be when the aviation sector has determined the potential crisis that might affect them and started taking the measure. The aviation industry in this stage might fast to identify the crisis beforehand that will help them in thinking strategies to prevent or limit its scope. The acute stage of referred to as the stage when the trigger unleashes the crisis. The first case of the coronavirus was first caught in 2019, which was supposed to be taken into consideration by the aviation that will have to help them in strategizing from the start.
Figure 2: Finks Model of Crisis
(Source: AlBattat and Mat, 2013)
The chronic stage is when the negative event has a lasting effect. The aviation industry is suspected to be in the same stage and during this; they might strategise carefully to increase their fallen sales and revenue generation. The resolution phase has been reached by several countries at this point by the mitigation of the covid19 in this stage the aviation industry might consider they grow further and redeem themselves from the losses they have faced.
Burnett’s model of crisis management is another model that was developed by John Burnett in the year 1988. This model has three broad stages that include identification, confrontation in reconfiguration they all have two-step to be followed in each of the stages. Using this model, the aviation sector might identify the crisis in the organisation that has led to employee turnover and strategize in accord with that. The manager of the companies might consider the formulation of strategies to mitigate the threat to the organisation due to the pandemic.
Conceptual framework
Figure 3: Conceptual Framework
The History of a pandemic is to be understood to determine the issues that it has caused to the aviation industry. This topic’s discussion has described the various issue that has been faced by the aviation sector. That leads to the discussion of the positive and negative impact of the pandemic and identifying how it has affected the sector in both ways. The strategies are to identify the ways adopted by the industry to tackle the pandemic and lately the theoretical perspective to analyse what they can do better in future.
Literature Gap
This literature could have been effective if there was enough information available for employee turnover in the industry. It could have been better if there was more information was available for the spread of the pandemic and the ways the industry has tackled the adversity. There is little information about the strategies that were used by the companies in the sector to mitigate the negative impact. The literature also contains less information about the positive impact on the industry.
2.3 Conclusion of literature review
From the above literature review, it can be said that the pandemic has affected the lives of several people in the world. The rise of the pandemic has given rise to several problems that have been faced by the industry. It was noted that the most hit due to the pandemic was taken by the aviation industry. The industry is still suffering from the hit however, it has managed to get a little better by establishing the right strategies. These strategies include focusing on the hygiene and sanitisation of the airport and terminal as well as the aircraft. They have seen to be undertaken newest automation such as ultraviolet- c light equipment hat help in better sanitisation. The literature review has also included theories that might help the aviation industry in creating a strategy to tackle the pandemic or such adversity.
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