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. A higher capacity utilisation indicates efficient use of resources, while a lower figure suggests underutilisation.
Step 2
Application: Contextualised 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 plc's capacity utilisation fell from 91.5% in 2019 to 87.2%. This decline indicates that there were more empty seats on flights, leading to inefficiencies in their operations.
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 reduced capacity utilisation results in fixed costs being spread over fewer passengers. This situation leads to higher unit costs and average costs per passenger, negatively impacting easyJet's profitability.
