The Web's Favorite Airline - EasyJet Case Summary

The case pertains to the growth and sustenance of easyJet airlines, a low-cost carrier operating in the European skies. EasyJet’s concentration has so far been on low-cost airline services to the masses, and although it faces competition from other low-cost carriers as well as major carriers, it has been able to successfully sustain its business and turn around an initial loss into profits of £2,318,938 [exhibit 2].

EasyJets’s value proposition has been to offer a cheap, punctual, safe, no-frills method of travel to people who generally paid out of their own pockets. This has been possible thanks to an efficiency-driven operational model, high brand awareness and a sustained focus on satisfaction of customer expectations, often exceeding them. The emphasis has been on “value for money” and affordable quality travel with an added emphasis on customer satisfaction. Being a low-cost carrier, customer expectation were minimal and thus brand new planes with the best of pilots and punctual flights was clearly successful in delighting the customer, as evidenced by the high number of repeat fliers. A lot of emphasis was given to customer satisfaction offering better customer flexibility and punctuality.

EasyJet’s competitive advantage has been derived from a policy to cut down on costs and hence frills in every aspect of short distance travel. EasyJet has been modelled after a very successful South-West airlines and it also managed to enjoy first-mover advantage in the European aviation industry as a low-cost carrier. However the trick to being successful for easyJet has been the manner in which it has adapted its model to the specifics of the European market. No in-flight food was offered; booking was mainly internet-based thus bypassing travel agents and their attached commissions. easyJet flew from London’s Luton airport and not the more popular and expensive Gatwick. Operating at capacity using high-density passenger seating with higher turnaround times, easyJet could fly more hours with fewer planes [11.5 hours], and thus high aircraft utilization facilitating a volume based model with thinner margins. easyJet also used a variable “yield management” based pricing strategy that made the most of increased demand for certain flights and translated into higher prices for those. To help keep costs down, easyJet also out-sources most aspects of running an airline; however this has some added disadvantages, ground handlers often didn’t not place the same emphasis on customer satisfaction.

It is not the low-cost nature of its operation that drives the sustainability of easyJet’s competitive advantages. On the contrary, easyJet’s competitive advantage is largely sustainable due to its rapid speed of expansion and its bid to quickly attain the benefits of operating at the optimal scale for greater profitability. Instead of taking its larger competitors head-on in a “red ocean”, easyJet created its own “blue ocean” within the European aviation industry. easyJet’s owner Stelios has a policy of “not spreading (his operations)too thin” thus allowing for easyJet to avoid head-on competition with similarly modelled competitors such as Ryan air, operating on largely different routes using different airports [exhibit 9]. However, with the emergence of several competitors in a similar bracket, easyJet’s cost advantage stands to be tested. They were the first enter an uncontested market space. Now they have significant brand value creating a high exogenous entry barrier. Copying them will now involve huge costs and organizational changes. Therefore, on account of high brand value, they enjoy a competitive sustainable advantage