Business Modele Research Paper (Research Paper Sample)

EasyJet is the largest short-haul carrier in the United Kingdom (UK) with a market share of 20%. It operates both domestic schedules within UK and international schedules within Europe. EasyJet is the second largest low-cost carrier in Europe after Ryanair. During the financial year ended November 2014, EasyJet posted a profit before tax of £581 million representing a margin of 12.8% and returns on capital employed percentage of 20.5%. (easyJet plc, n.d.)
EasyJet’s strong financial performance is a reflection of the success of its business model. EasyJet operates on a low-cost business model. This model has made it possible for the business to profitably offer its services to its customers and clients at low costs. EasyJet relies on several business and economic strategies to lower its operating costs and consequently charge lower fare prices than its competitors.
In order to achieve low operating costs EasyJet has ensured high asset efficiency. This has been achieved through maintaining low ground hours and maximizing on flight hours. This business strategy ensures optimal utilization of the company’s assets to generate revenue for the company. EasyJet has also customized its planes to accommodate more seats through interior rearrangements hence increasing the number of seats flown and revenue per seat. Revenue per seat has also been increased through premium charge of allocated seats on prime locations on the plane.
EasyJet has also optimized its sources of revenue through load factor charges which are extra charges for luggage exceeding the maximum weight allowed per passenger. Other non-seat revenue include digital and data initiatives.
EasyJet’s young fleet has been a key factor towards low operating costs. The young fleet incurs less maintenance cost and fuel economy than older fleet. This works towards enhancing EasyJet’s lean programme which is tasked at ensuring that the company’s costs remain low. The company also strategically purchases engines and planes to ensure that they receive one-off savings on prices.
EasyJet’s routes cover diverse network of both primary and secondary airports. EasyJet derives its competitive advantage from its well-balanced portfolio of slots at congested primary airports which in turn increases market coverage and its wide coverage of secondary airports which charge lower landing fees than the primary airports hence driving down the flight costs.
EasyJet’s notable comparators in the flights and aviation services industry are Ryanair, Southwest Airlines and Monarch Airlines.
Ryanair is an Irish low-cost airline. It is the largest low-cost airline by the number of passengers flown in Europe and the second largest low-cost airline in the world after Southwest Airlines CITATION IAT15 \l 1033 (IATA, n.d.). It is EasyJet’s direct competitor in the European market. Ryanair and EasyJet operate under the same European market scope using the same business model of a low-cost carrier.
Southwest airlines is the world’s largest low-cost airline by the number of passengers flown based in the US CITATION IAT15 \l 1033 (IATA, n.d.). Its operations are based in North America covering the US states and cities CITATION Sou15 \l 1033 (Southwest Airlines, n.d.). As a market leader employing similar business model to EasyJet, Southwest airlines is a notable comparator for EasyJet.
Monarch Airlines is a British airline providing scheduled and chartered flight services majorly in Europe and the rest of the world. Low-cost flight service providers like Easy jet provide point to point linkage to travel destinations and long-haul flights CITATION Ope15 \l 1033 (Open Interactive Report, n.d.). The main competition to these short-haul low-cost flights is the scheduled and chartered flight service providers.
The following table shows the ranking of EasyJet’s comparator companies.
COMPANY

REASONS

ADVANTAGES

DISADVANTAGES

1 Ryanair

Ryanair is the largest low-cost airline in Europe with similar business model...