EasyJet-THE WEBS FAVORITE AIRLINE.ppt

1. EasyJet:
THE WEB'S FAVORITE
AIRLINE

2. Company Background
• Started by Stelios Haji-loannou in November
1995 .
• Headquarters “easyLand” @ Luton airport,
London.
• Initial investment - £ 5 million.
• Began operating easyJet with 2 leased aircraft.
• Staff- Mostly teenagers.
• Most airline operations were outsourced.
• Followed the concept -"to offer low-cost airline
service to the masses“.

3. Outsourcing
• Done for lowering costs and increasing
efficiency.
• Apart from planes, pilots, cabin crew,
marketing/sales people all other functions were
subcontracted.
• Helped in maintaining 20 minutes turnaround
and remaining ticketless.
• Workshops/simulations were held for
subcontractors and were evaluated on
quantitative and qualitative grounds.

4. Initial Days
• Started services from Luton instead of
Heathrow/Gatwick airports.
• First flight was from London – Glasgow @ £29.
• Advertising campaign – “Fly to Scotland for the
price of a pair of jeans!”
• Stelios was inspired by the business model of
Southwest Airlines:
▫ Single aircraft model
▫ Point to point short haul travel
▫ No in-flight meals.
▫ Rapid Turnaround time
▫ High Aircraft utilization

5. Initial Days contd.
• Added customization to the business model:
▫ Avoided travel agents
▫ Issued no tickets
▫ Encouraged direct sales over internet
▫ Used Brand “Boeing” having 149 seats.
▫ No frills travel
• Suffered losses of £3.3 million in 1996/97.
• Reported profit for the first time in 1998
amounting to £2.3 million.

6. Impact of Deregulation of EAI
• Deregulation of EAI took place in 1992.
• Meant any European carrier could fly to any
destination and demand landing slots.
• Increased competition from low cost carriers
reduced aircraft fares.
• However, no. of competitors spawned after this were
less in comparison to US.
• Low cost carriers had to compete with high speed
rail service.
• Of 80 carriers that started after deregulation, 60 got
bankrupt by 1996.

7. Cost optimization techniques – To
deliver low prices
• Saved £14 per passenger by eliminating meal
service.
• Saved £10 per passenger by flying into London’s
Luton airport.
• Saved costs by not offering business class seats.
• Encouraged internet sales by offering discounts.
• Decreased flight turnaround time (Each plane
was flown for 11.5 hrs per day)

8. Creating Brand Awareness
• 10% revenues spent on newspaper, magazines
and radio adv.
• Helped differentiate from competitors.
• Improved sales and fostered growth.
• Resulted in High Brand Recognition Rate of 88%
in London and 82% Geneva.
• Involved in Full Scale attacks on competitors.

9. Company strategy for providing
competent services – Creating Value
• Customer satisfaction was given significance.
• Customer safety was not compromised even
though it meant higher costs.
• Experienced pilots were hired.
• Punctuality was given utmost importance.
• Stelios portrayed image of Man of the people by
personal interaction with customers.
• No reimbursement offered for missed flights.
• Cost for changing flight - £1o + fare difference.

10. Company strategy for providing
competent services contd..
• No pre-assigned seating offered. Allotment was
based on first come first serve basis.
• Target customers were “People who pay for
travel from their own pockets.”Which meant loss
of 50% customers.
• Used Yield Management:
▫ To maximize seat utilization.
▫ To draw customers in search of cheap fares.

11. Competition
• Ryanair
▫ Established in 1985
▫ No Frills Carrier
▫ Used services of Travel Agents, issued tickets,
participated in global distribution system
▫ Fleet of 20 Boeing servicing 26 destinations.
• GO
▫ Established by BA in 1998
▫ No Frills Carrier
▫ Was founded when acquisition offer to easyJet turned
down, to defend BA market share
▫ Copycat of easyJet and considered to be subsidized by
BA

12. Competition contd.
• Virgin Express
▫ Established in 1996
▫ Formed alliance with Sabena Airlines, flag carrier
of Belgium.
▫ Provided short to medium haul jet service.
• Buzz
▫ Established in 1999
▫ Started by KLM based at Stansted airport.
▫ Covered new destinations.

13. Challanges
• Whether to take privately held company public?
▫ Management style of Stelios not suited for this
• Maintaining quality of “easyJet” brand by
Subcontractors
▫ Did not attend customers’ needs effectively.
• Needed to become more corporate
▫ Lack of senior managers.
• Relative youth and inexperience of some
employees.
▫ High rates of absenteeism.

14. Analysis
• Is budget airline segment attractive place to
compete?
▫ Budget airlines charge less so profit margin is less
▫ Employees have to be paid as per industry std.
▫ But cheaper tariffs help steal greater no. of
customers compensating low profit.
▫ However, as per the case 60 out of 80 low cost
carriers got bankrupt.
▫ So , in order to leverage this segment companies
have to operate effectively.

15. • Should Stelios extend the easy brand?
▫ Brand Awareness of Easy was high ( 80%)
▫ Stelios was the Man of the people
▫ People could relate him to the brand
▫ Satisfaction of easy Jet customers was high
(resulted in repeat bookings)
▫ USP’s included high punctuality, quality , safety,
customer value and satisfaction
▫ So current image of Easy brand was positive and
should be used to diversify business.