easy jet_ low cost carrier
DESCRIPTION
This presentation is about how a low cost carrier achieved faster success with various strategies optimizing the cost and competing with bigger players in the marketTRANSCRIPT
Easy JetTHE WEB’S FAVOURITE AIRLINE
Easy Jet: Profile
• Founder : Stelios Haji-Ioannou
• CEO: Carolyn McCall
• Started operations in Novemeber 1995, with a capital of £50 million.
• Headquarters: Luton, Bedfordshire, United Kingdom.
• Started with 2 leased aircrafts and now has 217 aircrafts(A319 and A320) as of September 2013.
European Market
• Deregulation in 1992, more new airlines were created.
• 1999, only 3% - 5% flew on low-cost carrier in Europe whereas it was 24% in U.S.
• Competition from High speed rail service
• Cost of running an airline was 40% higher than in U.S.
• 60 out of 80 had gone bankruptcy by 1996.
• One type of aircraft
• Point-to-point short haul travel
• No in-flight meals• Rapid turn around
time• Very high aircraft
utilization
South west airlines
• Avoided travel agents
• No tickets• Direct sales over
internet• New Boeing 737s
with max seat capacity 149
• No frills• Paperless office
Easy Jet
Emphasized on
• Safety
• New Boeing 737s
• Experienced pilots
“ If you create right expectations and you meet or exceed those expectations, then you
will have happy customers”
Competing on cost
• £14 per passenger by not offering meals
• £10 per passenger by flying into London’s Luton Airport instead of Gatwick.
•No business class- more overall seating capacity
• Internet sales
•Avoided computer reservation systems and travel agents (added 25% of total operating costs)
• Increased the flying hours from 6 hours per day to 11.5 hours.
SERVICE COMPETENCIES
• Approach to customer satisfaction
• Internet and on telephone sales and no reimbursement for missed flights.
• Credit card payments and acknowledgement through six character booking reference number.
• No pre-assigned seating, first come first serve basis.
• Target group: travelers, entrepreneurs and managers of small firms.
• Ignored business travelers on some routes who accounted for 50% of passengers.
• Yield management – fill as many seats as possible
• Lottery system
% of seats sold Price of the seat
•Drew potential customers who were in search of cheap fares.
• Punctuality
Outsourcing• Lowered costs and increased efficiency
• Airline provided only Planes, Pilots, Cabin crew, marketing and sales people.
• All other responsibilities from check-in to the on-site customer information desk were handled by Subcontractors.
• Early 1998, owned operating certificate.
• Workshops, role-reversal exercises and simulations
• Not only quantitative criteria(on-time flights) but also qualitative criteria (understanding of easy-jet concept).
Brand Awareness
• 10% of revenue were spent on newspaper, magazine and radio advertising.
• By 1998, recognition rate was 88% in London and 82% in Geneva.
• “Say no to Swissair monopoly”
Corporate Culture• Strong, inclusive employee-culture – EasyJet Culture Committee
• Company-sponsored barbecue
• Complete transparency in the data (excluding payroll information)
• “The fight with Go”
• Acquiring of TEA, a Swiss charter airline.
Competition
RYANAIR GO VIRGIN EXPRESS
BUZZ
Established 1985 1998 1996 1999
Headquarters
Ireland London’s Stansted Airport
Belgium London’s Stansted Airport
Challenges• Privately held company to public
• Subcontractors- outsourcing of vital functions
•Becoming more corporate
•Relative youth and inexperience of employees
• Stabilizing internally
Other ventures• Creation of a cyber café business called easyEverything Café in 1999.
“ to offer the Internet to the masses” and
“to be the cheapest way to access web”
• First debuted in London on June 21, 1999 near Victoria station.
• First café – 400 terminals and fibre optic communication lines that offered faster connections.
• Rental car business and Internet based bank.
THANK YOU