easyJetThe Web’s Favorite Airline      Presentation Submitted by Group 8
Agenda•   History of easy Jet•   Market size and Profitability•   Cost structure•   Consumer expectance management•   Sche...
Birth of easyJet• Founder: Stelios Haji-Ioannou    – Serial entrepreneur    – Low cost model        • Internet Cafes, Rent...
Market size and Profitability of        European Low cost carrier                               US       European     Tota...
Cost compilation• Cost structure  – Left size are common    cost  – On Right were cost that    were averted by easyJet.
Cost structureHeading for cost reduction                                        SavingsMeal services (per passenger)      ...
Cost from London to GenevaCost Items           £      %      • Most of the activitiesAirport Charges      600    15%      ...
Customer expectancy management             (Exhibit 5)• Price skimming is used    Week    Outbound        Inbound         ...
Schedule to favor                     London -Glasgow                                                        London -Zuric...
Value for customer• Low fare travel  – Due to high utilization of aircraft  – Low maintenance cost  – Low cost of distribu...
Diversification plans• Low fare business  – Low fare business is risky because     • Can be eaten up by bigger players if ...
Easy jet
Upcoming SlideShare
Loading in...5
×

Easy jet

1,249

Published on

Published in: Business
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,249
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Easy jet

  1. 1. easyJetThe Web’s Favorite Airline Presentation Submitted by Group 8
  2. 2. Agenda• History of easy Jet• Market size and Profitability• Cost structure• Consumer expectance management• Scheduling• Value delivery• Diversification to other business
  3. 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. 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. 5. Cost compilation• Cost structure – Left size are common cost – On Right were cost that were averted by easyJet.
  6. 6. Cost structureHeading for cost reduction SavingsMeal services (per passenger) £14Alternative airport (per passenger) £10Internet Sales 25% of operating costSaving on agent commission £0.80High Aircraft utilization1. In terms of aircraft cost 6 / 11.5 = .52 aircrafts(Less number of aircraft needed)2. Same aircraft fleet Low maintenance costIncome from missed flight on one route per flightCost of travelling on London – Glasgow = £29 (original fare) + £10 ( re-ticketing) = £39Total revenue = £39 * 0.04 ( percentage of average miss flight) * 149 (capacity of aircraft) = £ 234Profit margin (per passenger) £1.50 (seems less)Cost of change in flight £10No reimbursement for missed flights
  7. 7. Cost from London to GenevaCost Items £ % • Most of the activitiesAirport Charges 600 15% including a few vitalAircraft Ownership 560 14% activities were outsourcesATC 480 12% – Check in – Consumer InformationCrew 400 10% desk etc.Marketing / Sales 400 10% • Also the office and workFuel 400 10% place maintained low-costMaintenance 400 10% – No personal secretaryOverhead 400 10% – Paperless officeGround Handling 400 10% • High turnaround timeTotal 4000 100%
  8. 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. 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 andPercentage 60% 40% hence increase number of flights 20% required. 0% 0-15 16-30 30-60 60-180 Late Easy Jet Go Virgin
  10. 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. 11. Diversification plans• Low fare business – Low fare business is risky because • Can be eaten up by bigger players if dont 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

×