“British Airways Plc” and “easyJet Airline Company Ltd.” are two companies operating in the airline industry. Conduct non-primary research on these companies and deliver the following items:

BRITISH AIRWAYS PLC

AND

EASY JET AIRLINE COMPANY

2006

Executive Summary

British Airways Plc and Easyjet Airline Company are two of the most recognized airlines in Europe . However , they possess different operational and marketing strategy . Within this , I am comparing and contrasting both of the companies . British Airways is a considerably older and larger airline with traditional services that target various segments . It gains its competitive advantage from having one of the widest airline routes in the world and providing customers with quality premium services

Easyjet on

the other hand , is the new class of airline . It is a low cost carrier that gains competitive advantage from providing customers with cheap tickets and on-time services . Both companies lived in a highly competitive environment , but the market share seems to move in favor of the comparatively new and growing airline British Airways Plc and Easyjet Airline Company Introduction

The Airline Industry

The airline industry is one of the most competitive industries in the world . There are many factors that influence the operations of companies within the business . Sometimes it is difficult to differentiate between airlines , but other times , the differences could be as big as a plane Nevertheless , all airlines have one similarity , which is the extent of competition they face . In the modern industry , there is no escaping the fierce competition which influenced by various factors

For instance , one of the most influential factors in the airline industry today is Information Technology . Companies must arrive and depart on time , safely and without delays or complication (Barnett 2003 . This requires a huge amount of information being routed to numerous stations each minute . Companies with the best use of their capacity in Information Technology generally will lead in several aspects of the competition . On the other hand , companies that failed to take advantage of innovation in technology will be left behind in the dust

I .2 British Airways and Easyjet Airline

Within this , we are discussing two airlines which has a considerably different characteristic . The British Airways is one of the largest fleets in the world with one of the widest flying routes in the industry . The company has been around for more than 60 years and they are still dominating the industry . On the other hand , Easyjet can be considered a newcomer compare to the British Airways . The company has a relatively new strategy which has gain popularity after the September 11th tragedy (Bureau , 2003

This seeks to compare and contrast both airlines and discovered the strengths and weaknesses of each . Furthermore , this will provide a suggestion for the companies to deal with existing challenges and solve existing problems

Strategic Comparison

II .1 Products and Services

II .1 .1 Type of Services

Both companies provide international and domestic scheduled and charter air services for the carriage of passenger , freight and mail . The main difference within their services lies within the way they stated themselves for the market . Easyjet is what we know now as a low cost carrier , an airline operator which main segment is to deliver frequent fliers with inexpensive flights (Devlin , 2002

On the other hand , the British Airways might have segments that serve to provide customers with cheap flights , but it does not place the segment as a core service of the company like Easyjet does

II .1 .2 Geographical Coverage

British Airways also have a wider geographical coverage compare to Easyjet . While Easyjet serves more than 200 routes between 65 European Airports , the British Airways flies across the Atlantic with more frequency than any other operators . British Airways flies to more than 140 destinations in 75 countries in United Kingdom , Continental Europe the Midle East and Africa

II .1 .3 Number of Segments

Due to the wider geographical coverage , wider target market and wider range of services offered (including professional cargo carrier , etc British Airways also has more business segments then Easyjet . The range of services spans from low cost flight until the executive clubs that includes membership and premium class services . Easyjet on the other hand , prefers to find their place in customer 's heart by enhancing itself as the `number one low cost airline ' in Europe . It focuses on the low-cost segment and has few segments in additions . Product /services geographical coverage , number of market segment

II .2 Managerial Strategies

II .2 .1 Ownership

Easyjet has a relatively simple ownership history . The company was founded by Stelios Haji Ioannou , and the family remains the major shareholder . The owner of Easyjet also controls separate EasyGroup companies such as EasyInternetCafe , EasyCar .com , EasyMoney and EasyValue , however , there are no cross-shareholding between easyjet and other EasyGroup companies

On the other hand , the British Airways has a long and considerably complicated history , due to its existence which goes back to the birth of civil aviation in the early 1900 . The company formed from a merger of several smaller UK air transport companies , with the support of the British government . The company was nationalized in 1939 and privatized again in 1987

II .2 .2 Size of Operations

In terms of size , the British Airways has the obvious advantage . The company is the largest in United Kingdom and the second largest in Europe . The main hubs of the company are London Heathrow and London Gatwick , with wide reaching European and domestic short haul networks including smaller hubs at other UK airports . At December 2005 , the company has more than 250 operational aircraft around the world consist of Airbus and Boeing . Easyjet on the other hand , has a smaller size fleet with 82 Airbuses and 38 Boeings at June 2006

II .2 .3 Relationship to Interest Groups and Vertical Structure

As mentioned previously , Easyjet prefer to focus on small numbers of segments and provide their customers with the highest possible value Their partnership philosophy also stands on top of the focused strategy For example , in its leisure segment , the company often partnered with holiday services companies , like the Hotelopia , in providing sets of vocational services . Other partnership arrangements are also made in such model of serving a segment 's purpose . The company is vertically integrated as other low-cost carriers are 'Future Vacations , 2003

On the contrary , British Airways has a less vertical integration structure and a rather vast range of network . The company cooperates with other airlines forming different types of alliances to extend the number of destinations and benefits offered to customers . The alliances are divided to three segments , the One-World Alliance program , the Codeshare Carriers , and the franchise programs . The One World Alliance consists of members like the Aer Lingus , American Airlines , Cathay Pacific , Finnair , etc . The company franchises its services under the following brands , British Mediterranean Airways , Comair , GB Airways Loganair , and Sunair

II .2 .4 Technology and R D

Generally , all low-cost carriers vouched to never put passenger safety second after cheap prices . Most of them , including Easyjet , have gone through evaluation stages due to the previously loud gossip of insecurity in low-cost carriers . However , due to their policy of keeping prices low , technological facilities inside the aircraft cabin as well as inside the aircraft 's machinery are not to be compared with the premium services like the British Airways . Easyjet has been accused among other low cost carriers , of contributing to global warming through the high carbon emissions of aircraft

The British Airways on the other hand , had never been addressed with such accusation , despite several accidents and incidents that involves aircraft 's machinery . Moreover , the company has advanced check-in stations in airports that provides customers with various services like choosing seats electronically and choosing baggage handling systems (Leonhardt , 2003

When it comes to R D , both companies has considerable share of their resources devoted to research and development . However , the goal of their research is somewhat different from one another . While the British Airways are focusing on finding improved ways to deploy their premium services , Easyjet 's researches are designated to discover ways to deliver cheaper prices to customers

II .2 .6 Capacity Management

In terms of capacity , Easyjet has the higher efficiency level . Because the airline serves only the route that contains economics of scale within it so EasyJet is able to survive with low flight charges . The company has strategies that will put their planes in the most profitable routes in Europe . On the contrary , The British Airways strives to expand its services to new regions across the Atlantic . The company has more flight numbers that serves to cross the Atlantic more than any other airlines in Europe . Because of that , having less than full capacity in some number of flights is common for the airline

II .3 Financial and Marketing Strategies

Easyjet and British Airways have considerably different marketing strategies . The most obvious is their pricing policies . British Airways has the more common pricing policy with a range of price from economic to premium classes . On the other hand , Easyjet , is performing a pricing strategy that many considered as the future of the airline industry . In one of their reviews , the company stated that they intend to make flying as affordable as a good pair of jeans . They intend to achieve that by eliminating unnecessary costs and frills which characterize traditional airlines , like using the internet to reduce distribution costs , maximize utilization of aircraft , ticket less travel , no free lunch , efficient use of airports , etc

Easyjet uses internet as its main distribution channel . The company has received awards for the best internet services facility in the industry More than 90 of the bookings in Easyjet are made via the internet Other channels are through business and leisure travel agents . British Airways on the other hand , uses its wide range of network as their ultimate distribution channel . The company takes pride in its worldwide affiliates . Corporate slogan is `The world 's favorite airline ' The Company provides internet services also , but most flight is booked through telephones rather than internet

Financially , Easyjet has the upper hand compare to the British Airways Despite the smaller scale of structure compare to British Airways . Easyjet has a lower gearing ratio and a lower debt-to asset ratio compare to the British Airways . This is due to increasing market share that goes to the low cost carriers business within the last decade

III . Corporate Analysis

III .1 Operational Efficiency and Quality

Both companies have a considerably different views regarding customer value . British Airways and other premium airlines have once d a protest to the FAA regarding the low-cost carriers and security issues The protest is about decreasing standard of service and security in low-cost carriers ' aircraft . They claim that the low cots carriers are degrading the standards of flying by placing such low fares (Jenkins 1995

On the other side , the low cost carriers , with Easyjet among them denied the safety claim by displaying that their planes are operating within international requirements of safety and security . Furthermore they stated that delivering value to customers means a lot more than providing customers with expensive meals and wine during flight . They believe that `price ' is an important component of the value of flying Providing people with low fares means providing them with greater customer value (Skytrax , 2003

Thus , taking account of the arguments above , there is a sound necessity to view quality in the larger perspective . The perspective should include routes and area coverage , the quality of services within the cabins , costs , booking services , on time services , etc . The British Airways has a good quality in the range of coverage category . The company has a wider coverage and they continue to grow as corporate affiliates enhance . The company also has a better quality of service in terms of in-cabin facilities . The average services include free lunch snacks and drinks and the premium services provides one of the highest class of flying services in the industry

Nevertheless , British Airways has a higher degree of late services or cancelled flights . Some of these delays are due to supplies management that takes extra time to prepare for the next flights and has larger chances of encountering problems that require delays . On the contrary Easyjet put their on-time reputation in high regards . Despite having no special in-flight bonuses or services , the company is known by its on time management . Low cost carriers are recorded to have the lowest rate of delays or cancelled flights in the industry

In terms of effective use of aircraft , Easyjet also has the lead . The company has a way of designing their flight routes to cost the least and obtain the highest amount of passengers . Unlike premium flying services low cost carriers like Easyjet uses most of their aircraft in crowded routes to provide customers with frequent travel in a single day . For example , Easyjet flies from London-Gatwick to Amsterdam 5 times a day to Berlin 2 flights a day , to Madrid 4 flights a day and Athens 11 flights a day . Other strategy is by charging customers only half price in a late night going-home trip . A going-home trip is when an aircraft fly home from its destination to its main airport . Analyst considers this as a good strategy to gain the most out of the fleet

III .2 Innovation

As mentioned previously , both companies invest considerably in efforts of enhancing corporate services . However , their desire for innovation is directed into a different goal . The British Airways gain recognition by its high tech booking services in numerous airports in United Kingdom while Easyjet strives to discover new ways to cut cost . Overall , Easyjet has more innovation in its cost cut efforts compare to the British Airways . Quick internet booking , ticket less flights are examples of corporate discoveries to support corporate performance philosophy (Esler , 2003

In terms of looking into the future , Easyjet is considered to have the advantages over British Airways . The philosophy of flying cheap is gaining increasing market share and analyst predicted the concept to be the way of flying in the future

III .3 Customer Responsiveness

In comparing which company has the best `ear ' to listen to customer 's needs , there is a dual perspective among analyst . The traditional way of flying tends to be in favor of the British Airways because the company provided better in-flight hospitality services . This is in tune with the classic modern taste for luxury and convenience in flying . However after the September 11th tragedy , the low cost carrier has become the new trend of flying . The new age is not like the old ones . People are more concern of price compare to premium services . Thus , in terms of price , analysts often stated that Easyjet is better in-tune with customers ' preferences (Eugene , 2000

In other respect , Easyjet also has the better side of customers opinions . As mentioned before , the company is very proud of its on-time services and strives to maintain it . It turns out that the on-time quality is very important in consumer 's preferences . Most of Easyjet 's passengers are frequent fliers satisfied with corporate services IV . Strategic Adjustments Suggestions

The companies live inside of a single industry but a different realm of competition . The British Airways is generally a premium airline in competition with other large and multinational companies like the United Airlines , while easyjet is often compared to other low cost carriers like Ryanair and Southwest 'Yahoo , 2003 . In the premium segment , The British Airways should pay attention to its worse qualities that could encourage people to shift to low cost carriers . For instance , low cost carriers generally have a better management of their time that allows them to provide better on-time services . Some low cost carriers invest a considerable share of its resources for Information Technology equipment to maintain all aircraft within their schedule , or quickly change to substitute aircraft in case of a problem

Other qualities of the low cost carriers that must be paid-attention to is their ability to provide customers with easy and short ticketing and checking-in process . They have high regards upon practicality and how the business should provide the quickest way to obtain corporate services . The British Airways has several innovations that supported its customers the same way , but the extent of the creation is insufficient to compete with the practicality provided by Easy jet and other low cost carriers

For easyjet , the highest challenge is its competition with Ryanair , its biggest rival , and other low cost carriers . The company should perform a more aggressive marketing strategy in to gain increasing market share from customers of the low cost carriers . Furthermore , the company must be superior from Ryanair and other low-cost carriers in every aspect they can . For instance , Easyjet has frequently been protested due to its aging aircraft and 'environmentally unfriendly ' jets . Managing this issue along with other problems will enhance corporate image within the society

V . Conclusion

British Airways has a larger area coverage and larger number of segments . The company has a wider range of services and one of the largest fleets in the industry . Easyjet on the other hand , has a smaller area of coverage and smaller fleet . The company also has fewer segments and narrower range of services

The British Airways gain its strength in the market because it flies across the Atlantic more times than its competitors . The company also has a high-tech ticketing and checking mechanism in most airports of the United Kingdom that provides customers with convenient processes

Easyjet , on the other hand , gain its strength from its pricing policy The company provides one of the cheapest airplane tickets in the industry . Moreover the company has the highest reputation for ensuring easy-via-internet ticketing activity and maintaining on-time flights The company won several awards or the best technological innovation in the airline industry

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