Easyjet Is A Low Fare Airline Marketing Essay

Published Date: 23 Mar 2015

The organisation's main base is a Luton airport from where flights to European destinations such as Amsterdam, Geneva, Nice, Barcelona, Palma and Athens are available. The airline also flies UK domestic routes from Luton to Edinburgh, Glasgow, Belfast and Liverpool. Liverpool allows the company to gain access into the lucrative North of England market and is becoming a growing centre of activity for easyJet. Flights can now be taken from Liverpool to Nice, Amsterdam and Belfast.

Luton airport is around 30 minutes by road from north London and only 15 minutes away from London's main orbital motorway, the M25. The airport is ten minutes away from Luton railway station from where a 27-minute rail connection to London is available. A shuttle bus to the station is available every 10 minutes. A return rail journey for easyJet passengers is available at around £8 (sterling). Liverpool airport also has a good motorway connection.

Connecting flights are not part of easyJet's product offering. The airline merely carries passengers to and from single destinations. This allows the airline to eliminate costly ticketing processes as well as intermediaries, such as travel agents. The company operates a paperless office policy and non-ticket flights. Simply by ringing the company's telephone number or using the company's internet site customers can book a seat immediately by credit card. In autumn 1998, 40% of bookings for a major promotion in The Times newspaper with via the Internet. Although a confirmation of the booking will be sent if requested, customers only have to produce identification at the airport and quote the booking reference number to be given a boarding pass for their flight.

EasyJet flights are "free seating". Passengers are not allocated a specific seat when they check-in, instead they are given a boarding card that carries a priority number. The first person to check-in gets boarding card no 1, the next passenger, boarding card no.2 and so on. Customers are then asked to board according to the order in which they check-in occupying whichever seat they wish. The result is that passengers board the plane faster and tend to sit down faster than is the case when they have to search for an allocated seat, as I the situation in the more traditional airline operations. The faster passengers board an aircraft the quicker the plane can take off and the less time its spends on the tarmac. This results in reduced airport fees.

The fact that easyJet is not hindered by connections to other flights allows it to operate out of cheaper secondary airports such as Luton and Liverpool, rather than larger airports like Heathrow or Manchester. EasyJet also exploits the lack of competition for time slots at Luton and Liverpool to keep the length of time its aircraft are on the tarmac to a minimum. EasyJet' aircraft are therefore airborne longer, creating more hours of revenue earning per aircraft, than companies operating out of larger and busier airports.

Premium priced airlines offe business class seats, which take up more room on an aircraft, and will normally operatie with 109 seats on a Boeing 737-300. These airline also require additional cabin crew in order to provide the level of service business class passengers demand. EasyJet operates without offering business class seats, which allows it to create 148 passenger places on a Boeing 737-300. Catering consists of a trolley from which cabin staff with sell drinks and a limited range of snacks to passengers. The only "freebie" on the flight is a copy of the airline-in-flight magazine called "easy Rider", which is printed on recycled paper. Cabin staff look more casual in orange polo shirts and black jeans than traditional airlines and have a more relaxed attitude. They appear equally safety conscious as staff on other airlines.

EasyJet's telephone number is promoted widely. The company's telephone number, in bright orange, dominates the sides of the aircraft, where it has almost become part of the easyJet corporate image. The organisation's approach to advertising has been described as a "guerrilla promotional approach", distinguished by attacks on the airline establishment and a series of PR stunts. Press and magazine advertising is widespread. Sales promotional activity has included joint promotions in national UK newspapers such as The Times and the Independent. The airline has also been the focus of a documentary series on UK television. The owner, Haji-Ioannou, has been featured in many business articles in the press particularly for his high profile campaign against British Airways launch of its own low cost airline operation which was called "GO".

EasyJet has also started targeting companies that wish to keep travel budget under control. EasyJet emphasises that they do not offer a loyalty scheme where business customers can build up loyalty points and gain free flights. The suggestion is that although executives may like this perk the executive's company could be saving hundreds of pounds per trip by sending their staff on easyJet flights.

The organisation's latest plan is to develop a family of companies with a common theme, beginning with the launch of a chain of cybercafes. Although the branding for this venture has yet to be decided, the working title is "easyCafe". The company still has to make decisions , such as whether easyJet's trademark bright orange colour is made a prominent feature of the cafes. Tony Anderson, who will oversee this new development, is quoted as saying that with these cafes "We are targeting Joe Public, not the middle classes."

Question: Identify the core capabilities of easyJet that can be used to grow the familry of easy companies. Look particularly at the value chain as part of this analysis.

Answer:

EasyJet's core capabilities are made up of its assets and its competencies. Davidson has suggested that an organisation's assets will be found in a number of discrete areas, and in the case of easyJet, the most important of these can be analysed as follows:

Scale advantages

EasyJet has made a clear decision to drive for scale and has developed to a size where it is able to offer regular services to a number of destinations. This operational scale is key to its aggressive pricing policy.

Processes

The compnay has developed innovative processes (seatp pricing and booking procedures) that allow it to both differentiate its offer and improve efficiency.

Customer franchises

The company has worked hard to develop a service that meets customer needs and, like Virgin, to position itself has a value-for-money operation. Focussing on particular segments, easyJet has developed offers that are designed to increase retention.

Sales and distribution network

Again, easyJet has reengineered the traditional sales and distrubution systems. It does not work with interconnecting flights and uses the internet for bookings as far as possible (40 per cent stated in case study). In this way it has managed to cut out intermediaries from the process as well as much of the costly ticketing process.

Property/Location

The company works out of secondary locations rather than major "hub" airports. This enables the communication of a low-cost image while remaining reasonably convenient (Luton is just 27 minutes from central London) and to use smaller airports that are often more convenient for travellers who are starting to see the plane as an alternative to rail and bus (Liverpool airport).

EasyJet's competencies can be assessed by considering the following three key areas:

Marketing

EasyJet is clearly a market-led organisation. It has considered (and continues to consider) customer needs above accepting working practice in the industry. Understanding customer needs in this way has allowed the company to develop a business that both better meets the needs of the target segments of the travelling population as well as differentiate it from the established competition. For example, booking processes, free seating, refreshments on board, etc.

The development of the operation shows that customer needs are constantly considered and used in deciding on new services and destinations.

Selling

The use of the internet and ticket-free processes are key. Also the disintermediation of the travel agents has served to differentiated easyJet's offer. The telephone number is also promoted widely.

Operations

Have been designed to both save costs and to differentiate the offer. The amount of time spent on the tarmac, the locations and airports selected as well as the booking and boarding systems are innovative. They serve to create efficient operations allowing scale and cost advantage. They are also effective in that they meet the needs of the segment approached for a no-frills approach to getting around the UK and Europe.

Consideration of the Value Chain:

The key elements to the value chain, and the ways in which this analysis can identify possible competencies for competitive advantage are:

In-bound logistics;

Operations;

Out-bound logistics;

Marketing;

Service.

Many of these items have been highlighted above. They key to the value chain however is the interrelationships between the elements. EasyJet has produced a system of delivering customer benefits than integrate the elements of the value chain to a full extent. For example, easyJet's low fare airline image is supported by integrating the inbound logistics (more seats on the plane) with operations (ticketing and boarding) with out-bound logistics (locations) with marketing (plane livery and uniforms) with service (in flight refreshments).

The support activities of the value chain are also used by the company. These are:

Procurement;

Technology development;

Human resource management;

Organisational infrastructure.

In this case, easyJet also uses the value chain to support and reinforce its low-fare image and create a coherent market position. These elements are directed at procuring the correct items (planes, etc) as well as using technology (internet) and human resource management (younger, casually dressed) to deliver on the promise made to customers.