Business Management in the Airline Industry: An Analysis of easyJet plc

Module code:	BMAF004-20
Module title:	Introduction to Business and Management
Assignment:	S1. Group Presentation (Face-to-face presentations will be taken in week 11, 12 and 13 by Module Lecturer)
Word count:	3,000
Contribution to module mark:	100%
Module leader:

Introduction

Business management is considered as a significant process of planning directing, organising and controlling its internal activities to establish long-term goals in future aspects (Tang et al., 2022). The presentation will include a brief documentation of business management in the field of the airline industry to analyse its current situation in the marketplace with an overview of easyJet plc. Besides, certain theoretical frameworks will also be conducted such as PESTLE and SWOT Analysis to showcase a major interrelation between the external and internal business environment. In addition, a brief explanation of the selected organisational structure of easyJet will be given as well to align with theoretical concepts and deduce better research findings. Lastly, some recommendations will be suggested to improve the internal infrastructure of the company and bring innovative solutions further.

Founded in 1995, easyJet is one of the most popular budget airlines in the UK (LinkedIn, 2024). The company has a vast network with 343 aircraft and 1045 routes in 35 countries and 158 airports (easyJet plc, 2024). The organisation is led by Sir Stephen Hester, non-executive chair, Sue Clark, senior independent director, Johan Lundgren, CEO, Kenton Jarvis, CFO and more (easyJet plc, 2024). The company has established a name for itself through its low-cost business model and employs over 10 thousand employees across the globe (LinkedIn, 2024). As of 2023, the organisation has garnered over 8.2 billion GBP in revenue which showcases a 24% increase from the previous year (Statista, 2024).

Figure 1: Revenue of easyJet plc

(Source: Statista, 2024)

Main Body

PESTLE analysis for easyJet highlighting the influence/impact it has.

Political

Political Stability- As of 2022, the political stability score of the UK has reached 0.50 which is above its average score of 0.47 indicating a considerably stable political environment (The Global Economy, 2024). This stability can influence travel patterns, consumer confidence and the overall economic environment in which easyJet operates. Moreover, Ivanov et al. (2020) have mentioned that political stability is important for economic development, hence, this stability can help the company to maintain a positive financial performance for itself.

Brexit Impact- On the negative end, Brexit has significantly impacted the aviation industry. The UK's withdrawal from the EU has made air travel more expensive, requiring visas for travel, longer passport cues and more (Statista, 2024). New custom regulations, potential restrictions and trade agreements on flights and more can create challenges for easyJet.

Economic

GDP Growth- The GDP growth rate in the UK has improved from 0.15% in 2023 to 20.46% in 2024 (Statista, 2024). This increase in GDP presents a positive economic outlook which can affirmatively impact consumer spending on travel which can increase demand for air travel, hence influencing sales and profitability of easyJet.

Figure 2: GDP Growth Rate in the UK

(Source: Statista, 2024)

Increase in Fuel Prices- However, fuel prices have been increasing as petrol prices rose to 150.1 pounds per litre which can negatively impact easyJet (BBC, 2024). Fuel price hikes can directly increase the operating cost of the company which might require it to increase its fares. Hence, the profitability of the company can be impacted.

Social

Household Income- The average median household income in the UK has increased to 38100 British pounds which enhances the purchasing power of consumers (ONS, 2023). This can motivate UK citizens to spend more on travel as this will increase their confidence in the economy, thus positively impacting easyJet’s sales.

Travel Tendencies- The UK is seeing an increasing preference for outbound travel as in 2022 outbound travel doubled inbound travel reaching 71 million visitors (Statista, 2023). Hence, easyJet can promote its outbound travel more to attract customers who are willing to spend to travel outside the UK.

Technological

Digital Integration- Organisations in the aviation industry are adopting advanced technology such as online boarding procedures, automated check-ins, AI and more into their existing frameworks (BIMA, 2024). The adoption of digital technology can enable easyJet to streamline its operations and enhance consumer engagement while reducing its cost of operation.

Cybersecurity Issues- However, the integration of digital technology has increased the risk of cyber-attacks which can lead to data breaches and operations. For instance, 32% of businesses in the UK have encountered disruptive cyber security in the last 12 months (Statista, 2024). This creates challenges for easyJet to maintain its operation and efficiency and protect customer data at the same time.

Legal

Data Security Regulation- The Data Protection Act 2018 controls the way organisations or businesses use personal information and requires them to maintain fair and lawful data usage, transparency, limiting access and more (Gov.Uk, 2024). Concerning cyber security issues, adherence to this law will be necessary for easyJet to ensure data protection and privacy maintenance.

Aviation Laws- UK aviation businesses are required to abide by a range of laws including the Civil Aviation Act 1982, Civil Aviation Authority Regulations 1991, Civil Aviation Act 2006 and more (ICLG, 2024). Additionally, as an international airline, easyJet is also required to comply with aviation regulations from different countries. Changes in regulation can impact the company's cost operation and profitability. Moreover, not adhering to these laws can lead to legal consequences.

Environmental

Sustainability Measures- Sustainability has become one of the major concerns in the aviation industry. This is due to the fact that that industry has emitted 38.1 million MTCO2e of greenhouse gas in 2023 which contributes to climate change including extreme weather events and more (Statista, 2024). In this consideration, the UK government is aiming to mandate at least 10% sustainable aviation fuel (SAF) in the jet fuel mix by 2030 (Segal, 2024). As an operating entity in the UK, easyJet is required to adhere to this regulation by increasing SAF in its fuel, however, the company is likely to face challenges like low supply available on the market, increased price compared to conventional fossil-based fuels and more.

Mention the key strengths and weaknesses of easyJet

Strengths

• easyJet’s low-cost and point-to-point business model can be considered one of its major strengths as it helps the company provide a hassle-free and positive experience to its guests (easyJet plc, 2024). It offers efficient operations at affordable fares delivering ease and reliability.

• The organisation is one of the largest airlines with a vast network comprising 343 aircraft which operate 1045 routes to 158 airports across 35 countries (easyJet plc, 2024). Thus, the company provides customers with a wide range of options and destinations.

• As of 2023 easyJet ranks second in terms of brand awareness in the UK as the organisation has 92% of brand awareness (Statista, 2024). The strong brand recognition allows the company to attract a loyal customer base.

Figure 3: Most Well-known Airline Brands in the UK

(Source: Statista, 2024)

Weaknesses

• Due to a global IT outrage, easyJet has faced a disruption across its network and issued a warning for its customers to arrive at least 3 hours before their flight (Clyde-Smith, 2024). This indicates that the organisation needs to enhance IT to ensure a smoother customer experience.

• easyJet's focus on short-haul flights has limited its long-haul capability. This can affect its ability to compete with other airlines offering long-haul destinations.

• The organisation has been accused of not adhering to the National Minimum Wage regulation of the UK Government as it has failed to pay approximately 4000 of its current and former staff the minimum wage for over 5 years (Chapple, 2024). This shortfall amounts to nearly 340,000 British pounds. This affects its image as an employer and can create obstacles in the future to attract more staff for the organisation.

Explain how the strengths and weaknesses interrelate with the external environment.

Leveraging digital technology can be one opportunity for easyJet as many airlines are implementing technologies like automated check-ins, online boarding procedures, AI integration in operations and more (BIMA, 2024). This seamless integration of modern solutions can help the company to enhance customer experience, reduce cost and improve its operation efficiency across its vast network. Although easyJet operates across 35 countries, it is mainly based in Europe (easyJet plc, 2024). Hence, the company can expand its network to other continents around the world which can increase its market shares and help increase its current customer base. Strategic partnerships and alliances with other travel companies or airlines can also become growth opportunities for easyJet. It can also help the company in its cost-sharing and enhance its brand reputation further. The organisation also needs to adhere to various regulations to mitigate its issue with underpayment of employees.

On the negative side, the cost of fuel in the UK is increasing rapidly and in 2023 petrol prices have hit an average of 150.1 pounds per litre and diesel prices have increased to 1508.3 pounds per litre (BBC, 2024). This hike in fuel prices can significantly impact the operating costs of easyJet directly impacting its profitability. Competition in the aviation industry in the UK is significantly high as there are around 13 airlines. British Airways, Emirates, Ryanair, Jet2.com, Virgin Atlantic and more are the most prominent competitors of easyJet though the company’s high brand reputation as a budget airline can be helpful (YouGov, 2024). Aviation emissions in the UK from domestic and international flights have reached 38.1 million metric tons of carbon dioxide equivalent (Statista, 2024). Although emissions decreased due to the pandemic, 2022 saw a sharp rebound in emissions as restrictions were lifted. With sustainability concerns, this can affect easyJet if the company does not take immediate measures to reduce its carbon emissions.

Organisational structure of your selected business

From a specific business perspective, an organisational structure can be depicted as a strategic system that identifies the nature or characteristics of the company through which tasks are allocated by higher authorities (Oh and Han, 2020). Therefore, a company with effective organisational structures and approaches is quite beneficial to managing internal operations and maintaining consistency in the workplace to make informed decisions in future aspects. There are various types of organisational structures including divisional, functional, hierarchical, network, flat and hybrid structures as well. However, it can be stated that the airline industry is facing major challenges of recession and quarantine caution which lead to global damage in every aspect of aviation and fails to meet market demands (Fraser, 2020). This also affects the tourism sector and travel agents, operators, retailers and employees to survive in the competitive environment for higher efficiency growth. Therefore, easyJet involves an effective leadership team comprising a Senior Independent Director, Non-Executive Chair, Chief Financial Officer and so on to manage its operational functions and resolve internal conflicts immediately (easyJet plc, 2024).

Furthermore, the airline company also provides the best practices in the field of corporate governance to review its policies and ethical legislations to maintain integrity and high business standards. On the other hand, the airline industrial bodies have called for help from the UK government in order to expand their supply chain distribution globally and deal with high job losses due to the sudden coronavirus crisis (BBC, 2020). Thus, easyJet decided to make low-cost holiday packages to grab the attention of local customers and build healthy relationships with clients and stakeholders. It includes a strategic focus on building the best airline network in Europe and following a low-cost revenue model with sustainable work efficiencies to deliver stronger productivity growth (easyJet plc, 2024). Apart from these, the business has formed a management team which involves the CEO, CFO, Chief Commercial Officer, Chief Marketing & Customer Officer and so on to operate its internal functions and resolve queries to promote brand awareness (The Org, 2024).

Thus, it can be depicted that the company follows a hierarchical organisational structure which helps in forming a strategic chain of command from higher authorities with a single entity to control over the system. However, it might affect the internal operation of the business to make slow decisions and can be delayed which leads to inflexible working conditions. Besides, the industry is also facing certain challenges such as supply chain shortages and high fuel prices which could make the future of the aviation sector uncertain (ING, 2024). Thus, easyJet decided to cut down more than 4,500 jobs in recent years and reduce its workforce by 30% as it is struggling with a sudden collapse in air travel due to the pandemic session (BBC, 2020).

Therefore, the application of the System theory of organisational structure will be helpful for the business to form a network in the workplace that comprises a complex unitary whole to mitigate external threats (Hermanu et al., 2024). easyJet can form an interconnected management system to make multiple subsystems and dimensions to absorb upcoming threats of personal conflicts. However, to mitigate the ongoing scenarios, the business decided to create a welcoming business environment for employees to work as a team and increase productivity levels to generate better outcomes in future aspects. Additionally, about 50% of people said in the UK that they were very satisfied with the airport screening security system in the field of Charter flights as of 2019 (Statista, 2024).

Figure 4: Management team of easyJet

(Source: The Org, 2024)

Figure 5: Level of satisfaction with airport security screening

(Source: Statista, 2024)

Select a current issue that your selected business is facing

Assessing the SWOT framework, it can be depicted that easyJet is facing certain crucial challenges of limited resource availability and a lack of funding options due to the sudden outburst of the Covid-19 pandemic. Besides, the company has been accused by the UK government of not offering sufficient wages to its workers over the last 5 years (Chapple, 2024). This might have a negative impact on the internal business functions of easyJet to support local communities and enhance its employability assets to create consistency in the workplace. In addition, the cost of fuel in the country is increasing gradually which could affect the price of petrol and diesel as well with a hike of 1508.3 pounds per litre (BBC, 2024). Besides, the aviation emissions from both international and domestic flights reached up to 38.1 million metric tons of CO2 (Statista, 2024). Besides, fights departing from airports in the UK emitted 32 Million Metric tons of carbon dioxide as of 2023 (Statista, 2024). Therefore, the company should take the necessary measurements and resolve internal problems to define competitive edges.

It has been stated that the competition level in the aviation sector is significantly high in nature as there are about 13 popular airlines including British Airways, Jet2.com, Virgin Atlantic, Emirates and many more (YouGov, 2024). Apart from these, due to the sudden IT outrage, easyJet has also faced a global disruption across the UK which led to flight delays and poor management functions. Thus, the organisation should mitigate the issue and take strict actions against wrongdoers or offenders to build strong coordination with customers and stakeholders. easyJet also focuses on short-haul flights which leads to limited long-haul capabilities and influences its ability to compete with other renowned companies in the aviation industry. Lastly, it has been depicted that the company decided to cut off more than 4,500 jobs globally due to the outbreak of the pandemic session which might have a negative impact on the employability assets. Therefore, a lack of financial support and poor management function can also affect the company to understand the actual demands of workers and fulfil their basic human needs to define competitive growth.

Similarly, some of the past workers said they faced certain challenges due to an ineffective managerial system and unstable work-life balance to compete with other rivalries (Indeed, 2024). Thus, it requires a huge investment to support employability assets and invest in innovation development to adopt modern technologies in the long run. Staff shortage could affect the business internally to run its operations and expand supply chain distributions to enhance effective customer care services. Therefore, staffing issue is considered as the crucial issue for the business to execute its further operations and mitigate external issues of economic downstream.

Figure 6: Employee ratings

(Source: Indeed, 2024)

Suggest a solution for the problem

Analysing the research findings, it can be recommended that the company should raise a huge capital strength from various external resources such as crowdfunding and bank loans to support its managerial facilities in future aspects. Besides, it can also conduct different marketing campaigns to connect with a wider range of local societies and deliver quality services to create higher market opportunities (Kedi et al., 2024). It would also help the business to develop its internal structure and enhance its productivity levels to stand against its competitors. Furthermore, the organisation can collaborate with other renowned companies for resources and knowledge-sharing in order to increase profitability growth in the long run. Therefore, easyJet can also participate in various activities and create a partnership with the UK government to enhance its operational systems for better working conditions. Besides, collecting foreign direct investment from other countries and stakeholders is also crucial for the business to run its operations globally and enter a new market segment to assist positive outcomes.

It also highlights the financial condition of easyJet to tackle external uncertainties and deal with the rising cost of living crisis and insist people to purchase its products or services. Moreover, unemployment is also increasing gradually which might have a negative influence on the business performance to support basic human needs. Therefore, the company can follow the Talent Management Model to enhance both internal and external talent pools in order to hire a skilled labour force and deliver quality approaches in future aspects (Holliday, 2020). easyJet can also hire talented candidates with sufficient work experience and industrial knowledge to work deliberately for an inclusive business environment. Similarly, the company should follow strict laws and regulations in the workplace to abide by ethical considerations and take the necessary actions against offenders to maintain consistency in the long run. Lastly, the company can adopt various modern techniques and equipment such as Artificial Intelligence (AI), machine learning and robotics to develop its internal infrastructure for higher work efficiency levels.

Figure 7: Talent Management Model

(Source: Holliday, 2020)

Conclusion

The presentation has delved deep into the external environment by conducting a Pestle analysis. The evaluation indicated a moderately favourable condition for easyJet with stable political conditions, economic growth, increased customer household income and more. However, challenges like data security issues, complicated regulatory environment and more still prevail. The organisation’s strength of high brand awareness, effective business model and more can help sustain competition and other challenges. On the other hand, its weaknesses include a poor IT system, failure to pay minimum wages and more. The major issue with the company is its lack of funding which is affecting its employee payments. Recommendations such as including a talent management model and increasing employee wages can be efficient for the company.

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