1. easyJet
The Web’s Favorite Airline
Presentation Submitted by Group 8

2. Agenda
• History of easy Jet
• Market size and Profitability
• Cost structure
• Consumer expectance management
• Scheduling
• Value delivery
• Diversification to other business

3. Birth of easyJet
• Founder: Stelios Haji-Ioannou
– Serial entrepreneur
– Low cost model
• Internet Cafes, Rental Cars, Internet booking etc.
• November 1995
– Started with two leased aircraft
– Staff of reservation agents
– Advertized on
• “Fly to Scotland for the price of jeans”
• Early 1998
– Fleet size 6 Boeing 737-300
– Flight on 12 routes in 5 countries
• November 1999
– Fleet size 18 Boeing 737-300
– Flight on 27 routes in 5 countries

4. Market size and Profitability of
European Low cost carrier
US European
Total Market size X 1.4 X
Low cost passengers 0.24 X 0.03 (1.4 X) – 0.05 (1.4 X)
= 0.042 X – 0.07 X
With growth of 300% 0.168 X – 0.28 X
Business players left 0.021 X – 0.035 X
• Thus US market is more lucrative than European low cost market
• Other facts
• 60 of 80 carriers were bankrupted in 1992-96.
• Analyst predicted growth rate of 300%.
• Market of business traveler were 50% of total aviation market and left
out.

5. Cost compilation
• Cost structure
– Left size are common
cost
– On Right were cost that
were averted by easyJet.

6. Cost structure
Heading for cost reduction Savings
Meal services (per passenger) £14
Alternative airport (per passenger) £10
Internet Sales 25% of operating cost
Saving on agent commission £0.80
High Aircraft utilization
1. In terms of aircraft cost 6 / 11.5 = .52 aircrafts
(Less number of aircraft needed)
2. Same aircraft fleet Low maintenance cost
Income from missed flight on one route per flight
Cost of travelling on London – Glasgow = £29 (original fare) + £10 ( re-ticketing) = £39
Total revenue = £39 * 0.04 ( percentage of average miss flight) * 149 (capacity of aircraft) = £ 234
Profit margin (per passenger) £1.50 (seems less)
Cost of change in flight £10
No reimbursement for missed flights

7. Cost from London to Geneva
Cost Items £ % • Most of the activities
Airport Charges 600 15% including a few vital
Aircraft Ownership 560 14% activities were outsources
ATC 480 12% – Check in
– Consumer Information
Crew 400 10%
desk etc.
Marketing / Sales 400 10%
• Also the office and work
Fuel 400 10% place maintained low-cost
Maintenance 400 10% – No personal secretary
Overhead 400 10% – Paperless office
Ground Handling 400 10% • High turnaround time
Total 4000 100%

8. Customer expectancy management
(Exhibit 5)
• Price skimming is used Week Outbound Inbound
4 £ 49 £ 69 - £ 99
to tap in customer when
3 £ 49 £ 69 - £ 99
and where available (6 seats )
• Every available seat 2 £ 59 (sold out)
1 £ 64 (2 seats (sold out)
when ever available was left)
booked to increase load 1 day £ 69 £ 139
factor

9. Schedule to favor
London -Glasgow London -Zurich
100% 80%
80%
Percentage
60%
Percentage
60%
40% 40%
20%
20%
0%
0-15 16-30 30-60 60-180 0%
0-15 16-30 30-60 60-180
Late
Late
Easy Jet British airways
Easy Jet British airways Swissair
London -Mallorca
100% • Sticking to schedule allowed to
80%
turn around in short duration and
Percentage
60%
40% hence increase number of flights
20% required.
0%
0-15 16-30 30-60 60-180
Late
Easy Jet Go Virgin

10. Value for customer
• Low fare travel
– Due to high utilization of aircraft
– Low maintenance cost
– Low cost of distribution of tickets
– No frills
– On schedule
– And price skimming/ revenue management for
optimal price that can be charged
– High load factor

11. Diversification plans
• Low fare business
– Low fare business is risky because
• Can be eaten up by bigger players if don't put up high
volumes
• Some business like of air travel needed high sunk or
entry barrier to get into the business which takes time to
recover
• May be caught up with a niche market that may die
down soon