EasyJet proposes in Europe a low cost business model similar to the one pioneered by Southwest Airlines in the US. Its vision is to be the Europe’s preferred short-haul airline by combining a leading network of primary airports with great fares and friendly service.
Point-to-point operations allow airlines to better stager flights over the day, something impossible in hub and spoke operations, which require passengers to change aircraft at some point in their itinerary. As a result, ground staff are better utilized under point-to-point operations.
Enabled by the point-to-point model, EasyJet can use a single aircraft type in its fleet. It currently operates Airbus A319 and Airbus A320 (larger than the former but similar in many aspects). These aircraft are well known for their fuel efficiency and reliability. This combined with a very young fleet, EasyJet’s average aircraft is 6.3 years old compared to 12.7 for the British Airways’ one, offers significant maintenance expenses savings.
EasyJet’s aircraft cabins are configured in a single class with high density layout. Aircraft utilization of near 90% compared to 70% of other traditional carriers combined with a higher number of seats per aircraft (156 seats rather than the standard 140 seats for the A319) offers EasyJet significant cost advantages. EasyJet achieves such a high utilization by using triangle patterns and multiple bases to offer the most appropriate flight times for different customer types (Figure 1).
To be able to scale its fleet according to business requirements, EasyJet targets an owned to leased split of aircraft of 80:20.
EasyJet has a policy of charging for extras such as priority boarding, check-in baggage, snacks and drinks. Over the last years, EasyJet has been very efficient in developing partnerships to offer products such as Starbucks coffee. Onboard sales are an important part of the airline’s ancillary revenue.
Cost advantages also come from higher asset allocation. EasyJet’s aircraft are in the sky an average of 11 hours per day compared to 9 hours per day for a typical traditional carrier (including long-haul flights). Among other reasons, this is enabled by quick turnaround times, typically under 30min.
Initially EasyJet did not allocate seats to passengers except for those that paid for “Speedy Boarding”. However, since 2012 all passengers are allocated numbered seats before boarding commences. This measure has proven not only not to slow down boarding times but also to be a source of revenue. New passengers are more likely to pay for extras such as more legroom, fast track access through an airport as well as purchase more food and drinks onboard.
Flight booking can happen via phone and internet. EasyJet was one of the first airlines to skip the travel agent and to start advertising on its planes. EasyJet’s distribution channel heavily rely on its IT system. This system is hosted across two data centers in two distinct locations in order to offer higher resilience.
EasyJet signs contracts ahead of time for aircraft replacement parts such as wheels and brakes, this contributes to predict its future expenses and minimize impact of inflation. Good practices such as delaying engine starts, using a single engine while taxing and installing lightweight seats and trolleys contribute to further reduce costs through fuel savings.
EasyJet reduces labor costs by hiring junior employees (pilots at EasyJet earn typically a 25% lower salary) and by making a better use of its employees’ time (pilots fly as much as 50% more than pilots of other carriers). Effective recruitment process, orientation programs for new hires, and a commitment to growing and developing employees has led to a 6.7% employee turnover and a 97% employee attendance rates. To mitigate negative effects of union actions, EasyJet has localized employment terms and conditions in each one of the country it operates, in this way it mitigates the risk of a large-scale union action.
EasyJet has recently shown interest in initiatives to reduce the carbon footprint per passenger as well as technologies that can offer fuel savings. Investment in customer service improvements coupled with lower fares and flights to primary airports has increased business travelers demand. EasyJet has reacted by creating a frequent flyer program.
Keeping EasyJet’s low cost operating model while increasing the number of business passengers (currently at 20%) seems to be the biggest upcoming challenge. Management is confident that these changes favoring higher class travelers will not harm its focus as a budget airline.