A good example of the capacity utilisation calculation
Friday, January 23, 2009
Print
Email
Tweet This!Save to Favorites
Recommend on Google+
Here’s a topical example of capacity utilisation in action…
Easyjet increased the capacity of its low-cost airline by 6.7% during the last three months of 2008. It did this by adding new aircraft to the fleet and by increasing the number of flights and destinations. That means an increase in operating costs.
The good news for Easyjet - it increased passenger volumes by 10% - i.e. more than the increase in capacity. That means that Easyjet increased its capacity utilisation - the proportion of total potential output that was actually achieved.
In the airline industry, capacity utilisation is commonly measured by a term known as “load factor”.
EasyJet’s load factor, or the amount of seats sold per flight, rose from 80.8% in the same period in 2007 to 83.4%.
Total revenue grew by 32% to £550m while the average revenue per passenger, a key indicator of whether easyJet is slashing prices and profits just to fill its expanding fleet, rose by 23% to £45.57.
A great example of capacity utilisation in action!
blog comments powered by Disqus
How to turn threats into an opportunity at Ryanair [31 Jan 2012]
Revision Presentation - Workforce Planning [26 Dec 2011]
McDonalds - Making a Meal out of the Olympics [20 Jul 2011]
Jaguar goes for NPD investment with £5bn plan [10 May 2011]
Lesson Worksheet - Capacity Utilisation [5 May 2011]
Capacity cuts at Toyota UK as production still hit after Japanese earthquake [20 Apr 2011]
CSR - The Mega Dairy, Economies of Scale and Cornflakes [25 Feb 2011]
Cutting costs - with a lick of paint? [15 Feb 2011]
Q&A - What are the main issues in operating a multi-site business? [29 Dec 2010]
Q&A - How important is location in determining business success? [29 Dec 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Would you stand for it? [14 Sep 2010]
Adding value…to the humble toilet roll [2 Sep 2010]
Recession Strategy - For Airlines it is all about Unit Costs [2 Jun 2010]
Strategy Case Study - Vauxhall/Opel restructuring [24 May 2010]
BUSS4 Research - a Corus of Disapproval [1 Mar 2010]
Flexible working thrives in the recession [1 Feb 2010]
Video case study - New Balance quality in a successful UK factory [28 Jan 2010]
Retrenchment and capacity cutting at Blacks Leisure - and then expansion again? [12 Jan 2010]
Revision Presentation - Capacity Management [19 Dec 2009]
Operations in Action - Video Tour of the Amazon Depot [23 Nov 2009]
Brompton Bicycles - Guardian Profile [9 Nov 2009]
Auto Warriors - the Capacity Management Reality Show [28 Oct 2009]
Q&A - How are businesses affected by unemployment? [27 Oct 2009]
Managing Cash Flow - Beware the Economic Recovery [26 Oct 2009]
Entrepreneur takes advantage of the postal strike [24 Oct 2009]
4 minutes with Stelios - insights into entrepreneurship [24 Oct 2009]
Strategic business decision-making - Network Rail [26 Aug 2009]
Standing room only - on Ryanair? [6 Jul 2009]
Spare capacity prompts a fall in business investment [4 Jul 2009]
U2 on Tour - Investment appraisal and capacity utilisation rolled into one! [2 Jul 2009]
Stock control - de-stocking was over £5bn in Q1 of 2009 [2 Jul 2009]
A stunning example of how wage costs can differ for the same job [10 Jun 2009]
Q&A - What is a sales forecast? [31 May 2009]
Q&A - What are the main things to consider when obtaining finance for a start-up? [26 May 2009]
Q&A - How can a business handle a loss? [26 May 2009]
Q&A - How is profit used by a business? [26 May 2009]
Swine Flu Vaccine - An Interesting Example of Batch Production in Action [1 May 2009]
Video case study - Wind turbine production is stalled [1 May 2009]
International trade in action - on board the container ship [14 Apr 2009]
Are we motoring towards electric avenue? [5 Apr 2009]
Football finances under the spotlight [5 Apr 2009]
Customer Service and Capacity Utilsation: Stenna Line versus Ryanair [3 Apr 2009]
Hotels feel the squeeze from low capacity utilisation and pricing [9 Mar 2009]
Revision Quiz - Capacity Management [8 Mar 2009]
Video case study - inside the Easter egg factory [27 Feb 2009]
How the car makers responded to the downturn [17 Feb 2009]
Cost-cutting made simple for small businesses [17 Feb 2009]
Flexible employment at Mini - the upside and the downside [16 Feb 2009]
Video case study - Living Salads [9 Feb 2009]
Could 2009 be a boom year for UK holiday destinations? [2 Feb 2009]
Q&A - What is meant by production capacity? [2 Feb 2009]
Cutting capacity in the service sector [17 Jan 2009]
Excess stocks build as car demand falls [17 Jan 2009]
Highest Productivity in the Industry - But Still Crippled by the Crunch [8 Jan 2009]
A Devastating Blow for the Irish Economy [8 Jan 2009]
Video case study - warehouse expansion for fashionable growth [21 Dec 2008]
Revision Quiz - Operational Decisions [9 Nov 2008]
For sale: airport with 1 runway and 35.1 million customers [17 Sep 2008]
Capacity management in action at Toyota [4 Sep 2008]
Cutting capacity to weather the housing slump [25 Aug 2008]
Marketing strategy - making the pier stand out from the crowd [13 Aug 2008]
Carry on camping to counter the credit crunch [4 Aug 2008]
The worst trading environment the airline industry has ever faced [1 Aug 2008]
BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!
Popular Topic Tags
recession, demand, prices, price, unemployment, profit, economics, costs, investment, inflation, supply, employment, trade, competition, gdp, risk, china, debt, euro, entrepreneur, capacity, production, downturn, innovation, tutor2u, revision, pay, exports, manufacturing, confidence, profits, food, incentives, banks, strategy, globalisation, aqa, expectations, oil, csr, usa, startup, retailers, housing, productivity, sterling, supermarkets, google, economies of scale, mortgage, takeover, cash flow, advertising, quiz, leadership, property, buss4, tesco, economic growth, video, efficiency, enterprise, motivation, stakeholders, apple, deflation, corporate social responsibility, ebea, market share, airlines, pricing, taxation, slowdown, bank of england, acquisition, merger, market failure, borrowing, competitiveness, sustainability, product life cycle, interest rates, credit crunch, budget deficit, aqa business studies, facebook, twitter, aqa business, bbc, nelson thornes, philip allan updates, starbucks, philip allan, monopoly, diversification, recruitment, organic growth, stocks, training, oligopoly, starter activity, shareholders, uk economy, poverty, emerging markets, dollar, government failure, management, retailing, suppliers, buss1, marketing mix, tim harford, cpi, branding, opportunity cost, breakeven, government spending, hodder education, vat, product, customer service, eu, losses, wages, evaluation, india, external growth, wealth, environment, edexcel, location, promotion, technology, information failure, business studies revision, sources of finance, franchise, aqa gce business, elasticity, regulation, spare capacity, welfare, jobs, economic cycle, marketing, zondle, strategic direction, british airways,View all tags for the Business Blog
