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Easyjet

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easyJet is a low cost airline officially known as easyJet Airline Company Limited, based at London Luton Airport. The airline operates frequent scheduled services for leisure and business passengers and serves more than 200 routes between more than 65 European airports. It was founded by easyGroup entrepreneur Greek Cypriot Stelios Haji-Ioannou, but it is now a plc listed on the London Stock Exchange and easyGroup owns only a very small minority stake. It is a constituent of the FTSE 250 Index.

Contents

Strategy

Borrowing their business model from American air carrier Southwest, easyJet and its Republic of Ireland-based rival Ryanair are by far the largest low cost airlines in Europe, and the rivalry between them is intense and sometimes vituperative (especially on Ryanair's side from its high profile chief executive Michael O'Leary). The two companies have slightly different strategies. easyJet flies mainly to leading airports while Ryanair uses far more secondary airports to reduce costs. easyJet places more focus on attracting business travellers as well as leisure travellers, although all its aircraft have single-class cabins.

Ryanair makes much of the fact that easyJet's average fares are higher and its average punctuality is consistently lower. This is mainly due to the different range of airports used and Ryanair routinely scheduling flights to take thirty minutes longer than required. As of September 2005, Ryanair flies more passengers, but easyJet has a higher turnover, leading both of them to claim to be "Europe's number one low cost airline". Ryanair has come under criticism for using aggressive advertising techniques to inform consumers of their low fares. The Irish airline claims to be 50% cheaper than easyJet, despite their fees and taxes being up to three times more expensive than those of easyJet's.

On the other hand, easyJet has recently come under criticism in Germany for not observing EU-law 261/2004. In the case of annulment, passengers are granted the right of being reimbursed within one week. EasyJet does not return the money payed for a ticket unless massive pressure is exerted, e.g. by the media. So passengers regularly have to wait for months for reimbursement of their expenses.

History

The airline was established on 18 October 1995 and started operations on 10 November 1995. It was launched by Stelios Haji-Ioannou with two leased Boeing 737-200 aircraft wet leased from GB Airways and operating two routes: London Luton to Glasgow and Edinburgh. Its early marketing strategy was based on 'making flying as affordable as a pair of jeans' and urged travellers to 'cut out the travel agent'. This caused much outrage among travel agents. In March 1998 it purchased a 40% stake in TEA Switzerland, renamed EasyJet Switzerland. easyJet was floated on the London stock exchange in October 2000. Operations were boosted in 2002 with the acquisition of rival airline, London Stansted based Go Fly. In December 2003 easyJet announced it would open a new hub in Berlin, at Schönefeld Airport, from which it started flying on 11 routes from May 2004. easyJet's main shareholder is Stelios Haji-Ioannou whose family owns 17%. It also holds a 49% stake in easyJet Switzerland.

In October 2004 the FL GROUP, the owner of airlines Icelandair and Sterling, purchased an 8.4% stake in easyJet. Over the course of 2005, FL increased its share in the company periodically to 16.9%, fuelling speculation that it would mount a takeover bid for the UK carrier. However, in April 2006 the threat of takeover receded as FL sold its stake for €325m, securing a profit of €140m on its investment.

In November 2005 chief executive Ray Webster stood down after 10 years at the helm. He was replaced by ex RAC/Lexx Group chief, Andy Harrison.

It has been prevented from launching its Milan Malpensa-Olbia route in April 2006 by the Italian aviation authorities. The route has been assigned to Meridiana as a public service obligation route. The Italian authorities have granted exclusivity in return for fixed low fares for Sardinian residents on routes from Milan and Rome to the Sardinian airports of Alghero, Cagliari and Olbia.

easyJet is claimed to be a more business-oriented airline than Ryanair, since it flies to major airports (as opposed to secondary airports) and has removed limits on hand luggage weight, provided the passenger is physically capable of placing luggage in the overhead lockers unaided.

easyJet Airbus A319 waiting for take-off clearance at Gatwick Airport, England
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easyJet Airbus A319 waiting for take-off clearance at Gatwick Airport, England

easyJet Boeing 737 at Amsterdam Schiphol Airport
Enlarge
easyJet Boeing 737 at Amsterdam Schiphol Airport

easyJet Boeing 737-700 lands at Bristol International Airport, England
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easyJet Boeing 737-700 lands at Bristol International Airport, England

Hubs

easyJet's main base is London Luton (LTN), although its largest is now at London Gatwick (LGW). It also has hubs at:

Destinations

A detailed list of cities served can be found in easyJet destinations.

Services

It will inaugurate nonstop service London Gatwick-Glasgow on October 2, 2006. It will operate 3 flights a day. It will also increase the frequency from London-Gatwick to the following destinations from the winter season as follows to :

Bristol-Hamburg ends October 29, 2006.

Geneva-Hamburg starts December 1, 2006.

Fleet

The easyJet fleet consists of the following aircraft (at June 2006):

Aircraft # Seats Notes
Airbus A319-100 82*
156 (58 on order)
Boeing 737-300 6
Boeing 737-700 32 149
* Includes 11 aircraft placed with easyJet Switzerland.

In March 2006, the easyJet fleet average age was 3.1 years.

easyJet initially operated exclusively Boeing 737 aircraft. In September 2003 it broke with its previous philosophy of operating just one aircraft type by ordering 120 Airbus A319s (and 120 options) with CFM56-5B engines [link]. These were first introduced to easyJet's Geneva base, UK bases followed in 2004. Easyjet converted 20 of its options into orders in December 2005[link].

When the last of the Airbus A319s has been delivered in 2007 easyJet still expects to be operating all its 32 Boeing 737-700s and to have completely retired its 737-300s. [link]

Booking

Initially booking was by telephone only, with all planes painted with the booking telephone number. There is no incentive for travel agents to sell easyJet bookings because there is no commission, a standard practice for the low cost carriers. When asked about the possibility of Internet sales, Stelios had replied that the Internet was "just for geeks". Later he changed his mind, and easyJet started to offer online booking from April 1998. Internet bookings were priced cheaper than booking over the phone, to reflect the reduced call centre costs and the planes were repainted with the web address. Within a year 15% of bookings were made using the web site, by April 2004 the figure had jumped to 98%. Now, flights can only be booked over the Internet except during the 2 weeks immediately before the flight when telephone booking is also available.

Passenger numbers

easyJet has published the following passenger numbers:

These are "earned seat" numbers. Earned seats is a method of counting passenger numbers which includes all seats sold whether the passenger turns up or not, and also seats used for promotional purposes and staff business travel.

Controversy

easyJet's success arguably paved the way for the boom in cheap air travel in the late 1990s and early 2000s (though they were not the first budget carrier). This has led easyJet to be accused, amongst other budget carriers, of contributing to global warming through the high carbon emissions of aircraft. Certainly in the early years when the company was owned by Stelios Haji-Ioannou it used second hand high polluting aircraft. Calls for an aviation tax have been made - the impact of this would likely be to cripple easyJet's business model. It should be noted that in most Western countries, the aviation industry currently enjoys extensive financial incentives in the form of tax breaks and lack of overall aviation tax.

Other facts of interest

External links

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