Easy Jet Case Study

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Date Submitted: 01/05/2011 07:48 AM

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Case Study- EasyJet: Easy Come, Easy Go

1) The most important factors that stimulate the growth of budget airlines are increased demand and low prices that attract customers. Both companies presented in the case study- Ryanair and easyJet in their pricing objectives are profit oriented. They sell to the large amount of customers and charge less for tickets. As for the price policies, Ryanair and easyJet use penetration pricing and do not really differentiate their customers, except that easyJet tries to attract business and leisure passangers.[1] However, it is hard to say what comes first- the increased demand or effective cost management and marketing followed by increased demand. With more rapid world development and increased value of time, the demand for using airlines also has gone up. On the other side, companies are able to research the situation in the market and push their offers and prices to the customers. One of the researches have found that people are concerned with on-time performance and convenience of schedules rather that food on the board.[2] For easyJet and Ryanair this is one of the ways to decrease costs and increase the revenues. The demand for the airline services is then elastic. Increased competition also plays a role, with an ability to change supply, and making companies to lower prices. As people’s earnings grow, they are ready to spend more on their travelling. More customers are interested of going to the unknown places, which can possibly stimulate the growth of the budgets. And these places do not necessarily have to be the Timbuktoo islands in the middle of nowhere, but even very close, with low charge for the airport and less costs for the fuel.

In his speech, O’Leary claims that his company could fly people in Europe for nothing seems to be a marketing trick. Let’s look at the breakeven analysis from the economics. The company has to cover its costs with a particular price.[3] Fuel prices have also gone up, and they...