Evaluate the attractiveness of the budget airline sector by considering the business and competitive sectors.

B820 TMA 01

December 2003

To: Paull Robathan

Submitted by: Kerry Sheehan

CONTENTS PAGE

1

EXECUTIVE SUMMARY 4

PART A 6

ENVIRONMENTAL ANALYSIS 6

STEP ANALYSIS - 1995 6

THE BUSINESS ENVIRONMENT 8

STRATEGIC SPACE 8

THE ATTRACTIVENESS OF THE BUDGET AIRLINE SECTOR 10

COMPARING MEASURES OF ATTRACTIVENESS IN THE BUDGET SECTOR 12

Analysis of Demand and Competition 12

Financial Analysis 12

Industry Specific Modelling 13

SUMMARY 13

PART B 15

EASYJET'S STRATEGY 15

DELIBERATE V. EMERGENT STRATEGY 16

COMPETITIVE ADVANTAGE: 16

Industry Participation 17

MEASURING SUCCESS 17

DEVELOPING SUCCESSFUL STAKEHOLDER RELATIONSHIPS 18

Operating successfully in the competitive environment 19

Maximise Revenue: 20

Maximise Load: 21

Minimise Costs: 22

THE CHALLENGES AHEAD 23

SUMMARY 26

REFERENCES 27

EXECUTIVE SUMMARY

It was the finding of this report that the budget airline sector in Europe was attractive to the potential entrants in 1995. However during the remainder of the decade it has proved that the opportunities and attractiveness diminished to the extent that the industry was ideal for acquisitions or indeed mergers.

An easyJet A320, G-TTOC, prepares for departure at...

English: Stelios on the maiden easyJet flight, 199...

English: Stelios, aged 17

Table 4 on page 12 summarises the difference between 1995 and 1999 after consideration of the macroenvironment, competitors and financial modelling.

Furthermore it was concluded that Stelios based his strategy for easyJet around that of Southwest Airlines with a keen focus on:

Cost focus

High customer satisfaction

Brand awareness

Careful consideration was also given to the individual appeal and entrepreneurial skill of the founder himself. To the extent that he was the main asset to the company during formative years but post 1999 could become a source of concern to potential investors.

The conclusion is that easyJet have positioned themselves well in 1999 to face the challenges of the new millennium but will require professional management and a refocus on core values to offer accessible service to an ever demanding,