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EasyJet reports demand still strong

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Introduction

Coursework 1 EasyJet reports demand still strong This year, oil prices is affecting negatively EasyJet and other airlines, since they cannot make a profit if the oil price stays at current levels. Strong demand is the only positive side of the unprecedent rise in costs due to the high prices of oil, $140 a barrel, which could lead to a loss of nearly 6$ billion this year. Those airlines which will be in the market this summer will have a very high revenue and costs because of the rise of petrol, which will lead to a very low profit. In September, when the peak summer season has finished, the revenue will dicrease drastically, as a result, the profit will turn negative. ...read more.

Middle

The quantity demanded in the summer season increased because of the vacations and the high demand in trips over the world. This won't help as much as the airline might think, as EasyJet's director of communications, Toby Nicol, said: "Those airlines which are in the market this summer will have another good few months in terms of revenue, but it will not be enough to cover the costs," The demand in quantity increase because of the summer season can be seen in the following graph: In this graph, we can see how the demand affect the price of the service. As the demand for the service increases, the price and the quantity supplied increases as well. In this case, the price increased won't be enought to cover the high costs. ...read more.

Conclusion

This method will lower their costs in a huge way, taking into account the thousands of flights that the company has each month. Also as they lower their costs, they woun't need to increase their prices to cover the costs, as a result EasyJet will have a higher demand because of low prices, and will continue growing. In conclusion throughout this analysis I understood the importance of having low costs in a company, and the difficult problems that most airlines are having with oil. Also I realise that the summer seasons are very helpful for airlines, but now a days, even high revenues in summer vacations can't afford extremely high costs of companies, which are centralized in oil. EasyJet has found a little solution to this problem, which consists in lowering by a low percent the airplanes velocity, so that costs care lowered. ?? ?? ?? ?? Alexandre Malisani Page 1 of 3 ...read more.

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