EasyJet Essay

EasyJet was lunched in November 1995 with a fleet of two Boeing 737-300 aircraft flying from London to Glasgow and Scotland. Its mission was to offer low-cost airline service to the masses. This was successfully achieved by offering customers low fares with its no frill flights and adopting an efficiency-driven operational model; high brand awareness, maintaining a high level of customer satisfaction making it one of the leading low-cost airlines in Europe.

Companies identified as comparator companies to easy jet include; Ryanair, British airways and Flybe. Ryanair is

The essay will firstly introduce the organisation easyJet. Secondly the essay will explain about how easyJet uses its operation strategies and its competitive priorities. Finally the essay will discuss the most important operation decision and explain it further in detail. easyJet is a well known low-cost airline which operates in several European countries and has been founded by serial entrepreneur Sir Stelios Haji-Ioannou in 1995. easyJet undertook intensive research of a United States owned low-cost airline ‘Southwest Airline’. Most of the concepts for easyJet were adopted from Southwest airline; however easyJet added its own touch which reduced operating costs even further. EasyJet was strategically located at London's Luton airport.

These are some of the strategies that “traditional” airlines use to eliminate the unnecessary costs and “frills”.

More business travelers are now traveling on low-cost airlines. Business travelers are valued due to the frequency in which they fly. Large, network carriers have traditionally served most of this market.

Not only does Ryanair have to compete against existing budget airlines, but they also have to compete against chartered airlines and mainstream airlines such as British Airways and Luthansa. Due to the competitive nature of budget airlines, companies generally would rather return lower profits but obtain the majority of market power.

But, these airlines companies also have similar strategies. They all focus on low-fare strategy, customers and services.

Easyjet’s main competitors in the market are legacy carriers: Air France KLM, IAG, Alitalia, Lufthansa Group and Air Berlin. The main structural advantages of the company against legacies are: seat density, load factors, fleet, point to point vs. feeder, pensions/ crew costs and overheads. As opposed to Easyjet, the legacy has to charge the double amount of Easyjet fare to get same revenue for the aircraft. The cost advantage and the ability to offer affordable fares to the customers helps Easyjet to grow further taking shares from the legacies and generate higher levels of profits. During one year, to September 30, 2014 the number of European short haul seats was increased by 4.3% and by 3% on Easyjet markets. Besides, Easyjet was ahead in the market by seat growth of 5.1% in the 2014 financial year, which was a result of short-haul European fleets and GDP growth. The advantages of Easyjet against lower-cost competitors is important to mention the strength of the network, including market presence and Pan-European network, strong balance sheet, scale and purchasing power, easyjet.com

The development of Ryanair’s low cost strategy comes down to Michael O’Leary. O’Leary was persistent in implementing the low cost model of Southwest Airlines and set out a long term goal for Ryanair to achieve. His philosophy was and remains to be, “ reduce cost in all operations, eliminate non-value added operations and provide the lowest possible air fare to the customer”. His use of standardization was vital in achieving the low cost strategy. Providing a basic uniform routine for the workers minimised work time and kept the cost downto a minimum allowing them to offer lower prices. The success of Michael O’Leary’s low cost strategy can clearly be seen in the statement, “Ryanair are the leading carrier in Europe with every increasing profits.”

Easyjet Plc. was established in 1995 and has grown from flying from London Luton to Edinburgh and Glasgow to 2015 where Easy Jet now flies over 600 different routes and operates across over 30 countries. Easy jet expanded its business activities to include the sale of package holidays and hotel bookings.

When LCA companies implemented a price war, easyJet confronts a fierce competition. The most threatened competitor is Ryanair, the largest LCA in Europe offering more than 800 low fare routes all around Europe (Poulsen and Fowler, 2012). Meanwhile, British Airways (BA) also offers similar flights with free drinks in the UK and Europe. Besides, fastest train like Eurostar is the biggest threat and substitute of LCAs (Dunn, 2009). As for LCAs companies, stable suppliers of fuel are key to lower costs. The fluctuated fuel price will increase the cost of easyJet and erode the profit margin.

Analysis of Ryanair’s market position as ‘Europe’s largest airline carrier’ shows that the airline is currently market leader and cost leader. This is in sync with the business operation of the ‘no frills’ concept extrapolating a low cost, high volume market yield.

Contents1. Background22. Theoretical framework33. SWOT analysis of Ryanair44. Challenges and recommendations for the future75. References81. BackgroundThe subject of this report is Ryanair - the first Low Cost Carrier in Europe - which was founded in 1985 (Ryanair.com History 2008). The firm began operations with a staff of 25 and a single 15-seat airplane flying between Waterford and London. In 1986 Ryanair received permission to begin flying four flights a day on the Dublin-London route. In doing so, they challenged the monopoly of British Airways and Aer Lingus with fares that were much lower. Ryanair's strategy was to offer simple, low-cost fairs and exemplary customer service. During the later part of the 80s Ryanair continued to

Ryanair has been one of the Britain’s best low cost airlines for around 25 years since being established in 1985 by the Ryan family. Ryanair have always aimed to show their customers their statistics and monthly reports;

Remember when you are answering that easyjet are a budget airline and so their competitors are people like Ryan air - not Virgin...