Competitor Analysis: Easy Jet

Current Strategy
EasyJet is Europe’s leading low cost airline and a new major competitor for Lufthansa. Since launching in November 1995, EasyJet has grown from its base in Luton offering two routes to Glasgow and Edinburgh, served by two Boeing 737 aircraft, to now offer 89 routes from 36 European airports, operating 64 aircraft in November 2002. Following its merger with Go-fly in August 2002, the combined company became Europe\'s Number 1 low cost airline. The EasyJet brand is strongly associated with its simple, \'no frills\' service. This is targeted at both the leisure and business markets. The company\'s staff has shed some light on what EasyJet stands for, in the form of a statement of the organization’s values: the so-called \'orange culture\'. This means being \'up for it\', \'passionate\' and \'sharp\'. EasyJet has no Business Class (Business Class can reduce seats from 149 to as low as 109 seats and increases cabin crew overheads), no agents (EasyJet was the first airline to cut out agents), no tickets (reduces delays for passengers picking up tickets etc), no free food (reduces costs and crew overheads), no congested airports (EasyJet avoids airports with big delays). They also make significant gains by reducing turnaround and increasing utilization.

EasyJet’s existing strategy can be characterized as low price/low value added concentrating on Luton and Liverpool hubs (not the main UK airports) and targeting routes with little direct competition from other airlines (which builds up elements of access and variety based positioning). The strategy is largely expanding upon existing capabilities in operating in a low cost airline. Expanding the fleet of aircraft potentially offers cost efficiency advantages in terms of economies of scale and scope across a bigger number of routes.

Future Objective

EasyJet\'s vision of the future is built on developing its strength as the largest low cost airline in Europe. Total revenue in 2002 was more than £500 million, an increase over the previous year of nearly £200 million. The purchase of Go Fly is expected to result in greater frequencies of flights on existing routes and infilling between existing destinations - what EasyJet calls \'joining the dots\'. So no new city destinations are expected to be added to their network. Increased capacity within the EasyJet network has to be met by making the existing fleet of aircraft work harder, or by adding more aircraft to their fleet. EasyJet has opted for this latter choice. In October 2002 the company selected Airbus as their chosen supplier of new aircraft. They propose to order 120 A319s over a five-year period, from the second half of 2003.

Lufthansa’s vision of the future is to restructure the company to focus on the continuity in management and the solidity of the organization with a simultaneous development in management effectiveness and quality. The restructuring will be directed on the customer and service processes of the airline business: \'Marketing and Sales\' (including Product Development), \'Services and Human Resources\' (with cabin and stations), \'Operations\' as well as \'Network management, IT and Purchasing\' (as well as fees). Quality, innovation, a high service and customer orientation as well as clear cost management will take precedence.

Volatility of the Airline Industry

Before September 11, 2001, the global industry was showing a net loss on international services of around (US) $3 billion. The impact of the tragic events of Sept. 11 was extremely harsh on an already frail operating environment. Terrorist attacks on New York City, the recent attacks in Madrid the Sars breakout in East Asia and the current war in Iraq have had a incredible effect on the airiline industry. Its decline in airtravel for 2002 has slowly turned around to produce margional gains in 2003 and continues to grow in 2004. Amid these worries of terrorism the forcast for air travel in Europe is quite good. The 10 countries set to join the EU in May are Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Eurocontrol has stated that it expects Easyjet and other low cost carriers to increase their market share to twenty four percent by 2010 and the sector is to increase flights by 20 percent per year over the next seven years.

easyJet, changes, and Growth

easyJet continues to change for the safety and comfort of the passenger.