Easy Jet analysis

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EC2290 essay: EasyJet By: Pejman T Introduction: EasyJet is not the first low-cost airline but is certainly one of the more successful ones. Founded in 1995, by LSE graduate Stelios Haji-Ioannou, it was the first UK no frills airline, which has become a generic term for the low cost airline industry. The key features of this type of airlines include; low fares, no free meals or drinks on board, short flights and flights to secondary airports. EasyJet, inspired by the American airline Southwest that introduced the low-cost concept, has been growing steadily since it launch and starting off with only one single route to Glasgow from London Luton has now expanded to over 100 destinations. In 2000 it was listed on the stock market and 2002 they bought their rivals GO. The success of the company has not been a surprise and could be described by the precise planning of its operations and a clear vision including one type of plane, same number of seats per plane and point-to-point routing. (Yeoman et al.) One of the main drivers of EasyJets profits is their yield-based pricing policy. Based on demand and supply the price increases as more seats are sold thus creating incentives for passengers to book early and hence, the firm securing revenues prior to the flight date plus receiving increased profits for the seats sold closer to departure. Below we can see an example of how their pricing model works. (Rae, D, EasyJet: a case of entrepreneurial management?) In this essay we will first analyze the key strategic elements and the drivers behind the success of EasyJet and compare it to a market competitor. Second, we will analyze their past financial performance and identify the reasons behind the results. Thirdly we will discuss the issues relating to vulnerability and macroeconomic exposure. Strategy In order for a firm to produce and sustain supernormal
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