Explain one effect on easyJet plc of the reduced capacity utilisation of its aircraft in 2020.
- Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Explain one effect on easyJet plc of the reduced capacity utilisation of its aircraft in 2020.
Worked Solution & Example Answer:Explain one effect on easyJet plc of the reduced capacity utilisation of its aircraft in 2020.
- Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Knowledge: Understanding Capacity Utilisation
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Capacity utilisation is a measure of the extent to which the productive capacity of a business is being used. In airline operations, it indicates the percentage of available seating that is filled with passengers.
Step 2
Application: Contextual Example
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
In 2020, easyJet's capacity utilisation fell from 91.5% in 2019 to 87.2%. This decrease signifies that there were more empty seats on each aircraft.
Step 3
Analysis: Explaining the Effect
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The fixed costs of operating flights, such as fuel, staff salaries, and maintenance, are spread over fewer passengers, resulting in higher unit costs. Consequently, the airline faces increased average costs per passenger, which can negatively impact profitability.
