EasyJet

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THE WEB'S FAVORITE AIRLINE
Group 5 Abhishek Garg Deepti Kanodia Eshwarya Pathak Manchit Kalani Pranjal Singh Saurabh Bansal

Mostly teenagers. ‡ Initial investment . ‡ Began operating easyJet with 2 leased aircraft. ‡ Headquarters ³easyLand´ @ Luton airport. ‡ Most airline operations were outsourced. ‡ Staff.£ 5 million.Company Background ‡ Started by Stelios Haji-loannou in November 1995 . . London. ‡ Followed the concept -"to offer low-cost airline service to the masses³.

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

‡ Advertising campaign ± ³Fly 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 .Initial Days ‡ Started services from Luton instead of Heathrow/Gatwick airports. ‡ First flight was from London ± Glasgow @ £29.

‡ Added customization to the business model: Avoided travel agents Issued no tickets Encouraged direct sales over internet Used Brand ³Boeing´ having 149 seats.Initial Days contd. . 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.

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

Cost optimization techniques ² To deliver low prices ‡ Saved £14 per passenger by eliminating meal service. ‡ Saved costs by not offering business class seats.5 hrs per day) . ‡ Encouraged internet sales by offering discounts. ‡ Saved £10 per passenger by flying into London¶s Luton airport. ‡ Decreased flight turnaround time (Each plane was flown for 11.

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

Company strategy for providing competent services ² Creating Value ‡ Customer satisfaction was given significance. ‡ Customer safety was not compromised even though it meant higher costs. . ‡ Cost for changing flight . ‡ Stelios portrayed image of Man of the people by personal interaction with customers. ‡ No reimbursement offered for missed flights. ‡ Punctuality was given utmost importance.£1o + fare difference. ‡ Experienced pilots were hired.

To draw customers in search of cheap fares.´Which meant loss of 50% customers. ‡ No pre-assigned seating offered. .. Allotment was based on first come first serve basis. ‡ Used Yield Management: To maximize seat utilization. ‡ Target customers were ³People who pay for travel from their own pockets.Company strategy for providing competent services contd.

issued tickets. to defend BA market share Copycat of easyJet and considered to be subsidized by BA .Competition ‡ Ryanair Established in 1985 No Frills Carrier Used services of Travel Agents. 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.

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

‡ Needed to become more corporate Lack of senior managers. . High rates of absenteeism.Challanges ‡ Whether to take privately held company public? Management style of Stelios not suited for this ‡ Maintaining quality of ³easyJet´ brand by Subcontractors Did not attend customers¶ needs effectively. ‡ Relative youth and inexperience of some employees.

But cheaper tariffs help steal greater no. in order to leverage this segment companies have to operate effectively. of customers compensating low profit. So . However. as per the case 60 out of 80 low cost carriers got bankrupt.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. .

safety.‡ 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. . customer value and satisfaction So current image of Easy brand was positive and should be used to diversify business. quality .

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