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
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Answer
Capacity utilisation is a measure of the extent to which the productive capacity of a business is being used. In the case of easyJet plc, this refers to how many of the available seats on their aircraft are being occupied by passengers.
Step 2
Application: Contextual examples
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Answer
In 2020, easyJet plc's capacity utilisation fell from 91.5% in 2019 to 87.2%. This decline indicates that there are more empty seats on each plane, resulting in fewer passengers per flight.
Step 3
Analysis: Explaining the effect
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Answer
The fixed costs of operating the aircraft, such as fuel, maintenance, and crew salaries, are spread over fewer passengers. This leads to higher unit costs or average costs per seat, impacting the profitability of easyJet plc.
