Executive Summary

The organization is a small budget airline called Jet2 which operates in the UK and EU region. The organization faces a problem of handling capacity. It is facing increased demand in the market. However, it is unable to handle it which is causing it severe losses. The external environment of the organization is posing several threats. There are far more negative factors surrounding the organization like legal, political and economical than there are external opportunities. The internal aspects are the strongest for the organization. Their services are high quality, prices are competitive, hence the increased demand.

The strategy that is proposed will consistently allow the company to expand. As the increase in demand is the only opportunity for the airline, it needs to keep expanding and increase its market share. The strategy that has been proposed is a very common strategy utilized by different airlines to expand, hence it is effective in providing the required results. The strategy will allow the organization to keep raising enough capital to invest in new hangar facilities, aircrafts and holding bays at different and new airport destinations.

1 Introduction

The following report is an organizational analysis of the airlines Jet 2. The report will analyze various aspects of the organization and then will attempt to identify the market position of the company. The report will carry out an environmental analysis of the company to evaluate the external factors that impact the organization. Finally, utilizing all the information gathered the report would assess the strategies of the company and evaluate their effectiveness. The report will conclude by providing any credible recommendations to the company which can improve its market position.

1.1 Key details about the company

Company Profile

Jet2 is a British budget cost airline which is based in and operates from Leeds Bradford Airport England. The organization is officially known as Jet2.com Limited. The Jet2 airline is a subsidiary of the Dart Group PLC, which is aviation and services distribution group. The carriers began its operations in 1983, however under the name Channel Express (Jet2, 2017).

The airline is ranked as the fourth largest airlines based in the United Kingdom. While the head of the operation for the carrier is Leeds Bradford International Airport, other essential bases for the airline are Manchester, Belfast International, Edinburgh, East Midlands, Newcastle, Glasgow, Alicante, London Stansted Airports and Birmingham. The carriers under the United Kingdom Civil Aviation Authority holds a type A operating licenses, which corresponds to carrying passengers and cargo on aircraft with 20 or more seats (Jet2, 2017).

Jet2.com limited also offers several other services from a branch of different brands. The company has a charter service which it provides through its Jet2charters brand. Furthermore, the organization has a sister company called Jet2holidays which offers ABTA and ATOL protected package holidays as well as accommodation, transfers and relevant flights through Jet2.com.

Operational Size

The organization has almost 4000 employees, with a fleet size of 73 aircrafts. Majority of the planes of Jet2 are Boeing 737-800, which can carry almost 200 passengers. The organization has placed in order of 43 more aircrafts of the same class in 2016. Analysing the extent of operations, Jet2 in the previous years on average have operated almost 40,000 flights, carrying over 6.5 million passengers (Dart Group, 2016). The airlines have extended their operations towards international flights. However, the flights are only short to medium range.

1.2 Key Factors as to Why a New Strategy is Needed

The organization has grown steadily in the last decade. In 2003, the airline carried only 500,000 passengers. The numbers for the previous three quarters of 2017 are hitting almost 7 million passengers. Similar is the case for its financial aspects, Dart Group, which reports the financials for Jet2 have displayed a steady growth in the airline’s revenues and profits. However, the organization is facing the problem of diminishing returns due to lack of resources and operational capability.

The demand for Jet2 airlines has outgrown the organization’s capacity. In the first quarter of 2017, the organization reported a 10% decline in their profits (Dart Group, 2016). The reason for this drop was because of the inhibited growth of the airlines and limited operational capacity. Similar was the case for the previous financial year, Dart Group announced a 23% growth in the revenues of Jet2 airlines, with a record-breaking passenger carry of almost 7 million (Dart Group, 2016). However, the pre-tax profit was reduced by almost 15% because of the immediate investments that the organization had to make at Birmingham and London Stansted Airports to increase operational capacity.

The present situation poses a significant opportunity for the Jet2 airlines. The problem that is being faced by the organization is that it is growing faster than it can be operated effectively. The increasing passenger base for the organization overloading the handling bases at the airports at which Jet2 operates, which are causing the handling and operational costs to rise faster than the profits. In the financial year 2015, the organization reported an underlying profit of GBP 47 million, which was only a 3% increases from the financial year 2014, in spite of the sales revenue of the organization going up by 15% in the same year (Dart Group, 2016). The reason was the spike in operational and handling cost. The trajectory on which the organization currently is will lead to significant losses.

Operational costs in general for the whole aviation industry are on the rise globally (Vespermann, 2011). With higher fuel costs and increased competition and traffic on airports. The costs incurred are rising compared to the past. On top of that, growing demand, which is a favorable aspect of any organization is currently a negative one for Jet2 airlines. The organization cannot handle an influx of demand. So in conclusion, the group is in dire need of a new business development and expansion strategy to turn the new levels of demand into profits and effectively control its operational and handling costs (Vespermann, 2011).

Another factor which will eventually inhibit the growth of the airlines is brand identity. Over the years, the brand image of Jet2 airlines has become as of a holiday airline. The organization is highly dependent upon their holiday packages. And the majority of the bookings for the airlines are directed from their holiday package brands. To sustain the current level of growth the organization needs to diversify their brand image. So it is not only actively sought by customers in the holiday season but is considered as a good budget airline for regular travel as well.

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