SWOT analysis

SWOT is a structured planning method that used to evaluate the strengths, 

weaknesses, opportunities and threats involved in a project or company.

In applying SWOT analysis, we should minimize or avoid the weaknesses and threats. Specifically, threats should be converted into opportunities, and weaknesses should be converted into strengths. SWOT analysis is particularly useful in mid-term evaluations as it can provide useful information about the intermediate objectives of the program. Moreover, it is useful to summarize the relationship between environmental influences and core competencies and hence framing the agenda for developing new strategies. I would like to take Easyjet which is a UK airline company as an example into the SWOT analysis.

Strengths

There 3 main strengths of Easyjet. First of all, easyjet enjoy a low cost advantage because of  high seat density, high load factors, a point -to-point strategy that allows high aircraft utilization, a young and efficient fleet, lean overheads, labour productivity and a lack of legacy pension costs. Therefore, they can provide a 50% lower price than those of the major carriers on short haul routes and 20% to 40% below those of most other lower cost competitors. There is no doubt that is a significant attraction to customers put Easyjet as priority.

Moreover, Easyjet has a big market share in Europe which more than any other carriers.

Thirdly, Easyjet has improved the brand perception in recent years even to other countries, since they are keep improving customer satisfaction.

Weaknesses

As a airline company, easyjet’s earning is very seasonal, they are unhappy to use the increasing profit in summer to offset a loss-making winter as summer is a hot season for travelling. This makes it vulnerable to any unexpected problems in the summer.

In addition, although Easyjet is much stronger than many LCCs competitors, LCCs as a whole still suffer from brand weakness relative to major legacy carriers. This means price will remain a key dimension of competition.

Opportunities

It is possible for easyjet to get a bigger market share in the future, because of its low cost and price advantages and current capacity cuts from most of its legacy carrier competitors. As carrier is cautious about connecting with other airlines, the partnership opportunities will also open new doors.

Secondly, easyJet also can look at cost reduction further, such as airports, ground handling, engineering and fuel, in order to maintain the price advantage to compete with legacy carriers.

Threats

As with any labour-intensive service industry, airlines are vulnerable to labour unrest, not only among their own staff, but also among key airport-based suppliers. While easyjet has a much better history of labour relations than most legacy carriers, some factors still increase the risk of internal labour disputes.

Another factor that brings a negative impact to Easyjet is the airline tax. Due to the price elasticity, the increase of airline tax would reduce the demand of customers. And generally the tax charges higher percentages of short haul tickets than long haul tickets, which influence the profit of easyjet.

Now, I want to focus on the strength of Easyjet, since it is fairly important for it to succeed in UK. Easyjet has considerable strengths in its cost base and ticket pricing against the legacy carriers and a strong airport network across Europe, so they can have power to keep improving their market share by obvious financial power. It has a presence in 49 of the top 100 market pairs in Europe, which much more than another company in this industry. Also, 46 of these involve primary airports, versus 24 primaries for Ryanair and 34 for IAG. Those was amazing data to make it to be strong.