EasyJet encyclopedia topics

History

The airline was established on 18 October 1995 and started operations on 10 November 1995. It was launched by Stelios Haji-Ioannou with two wet leased Boeing 737-200 aircraft. The aircraft were operated initially by GB Airways, and subsequently by Air Foyle as EasyJet had not yet received its Air Operator's Certificate. EasyJet initially operated two routes: London Luton to Glasgow and Edinburgh.

Business and financials

EasyJet was floated on the London Stock Exchange in October 2000.

In October 2004 the FL GROUP, owner of airlines Icelandair and Sterling, purchased an 8.4% stake in EasyJet. Over the course of 2005, FL increased its share in the company periodically to 16.9%, fuelling speculation that it would mount a takeover bid for the UK carrier. However, in April 2006 the threat of takeover receded as FL sold its stake for €325m, securing a profit of €140m on its investment.

In November 2005 Ray Webster stood down after 10 years as EasyJet's chief executive officer. He was replaced by former RAC plc chief executive officer, Andrew Harrison.

In 2008 the stock has declined 45%, and the company's market value has declined to 1.42 billion pounds; EasyJet Plc spokesman declared full-year earnings will fall short of company forecasts (Source: Easyjet, july 2008).

In june Lehman Brothers declared that easyJet’s margins of around 10% in 2007 will not be sufficient to absorb a doubling in fuel costs and that the company will move into loss in 2009 (Source: Lehman Brothers UK, june 2008).

In july Goldman Sachs advised investors to "sell" because of the significant risk to earnings and the company's exposure to the British consumer. Goldman Sachs declared that "EasyJet has high UK consumer exposure and a surge in data points highlighting deterioration in UK consumer confidence" (Source: Goldman Sachs UK, july 2008).

Deutsche Bank said in a note to clients there is no easy solution for easyJet, and revised the stock value from 352 to 289 pennies (Source: Deutsche Bank, juillet 2008).

On july 24 Easyjet issued a profit warning and announced cut backs in flights (between 4% and 6%) because of the high oil price. The budget airline revealed its profits will be much lower than expected (Easyjet, july 2008). The same day Easyjet was down 10.07% at 332.5p at London Stock Exchange FTSE 250. (Source: London Stock Exchange)

easyJet Financial Performance
Year Ended	Passengers Flown	Turnover (£m)	Profit/Loss Before Tax (£m)	Net Profit/Loss (£m)	Basic EPS (p)
30 September 2007	37,230,079	1,797.2	201.9	152.3	36.62
30 September 2006	32,953,287	1,619.7	129.2	94.1	23.18
30 September 2005	29,557,640	1,314.4	67.9	42.6	10.68
30 September 2004	24,343,649	1,091.0	62.2	41.1	10.34
30 September 2003	20,332,973	931.8	51.5	32.4	8.24
30 September 2002	11,400,000	551.8	71.6	49.0	14.61
30 September 2001	7,100,000	356.9	40.1	37.9	15.2
30 September 2000	5,600,000	263.7	22.1	22.1	11.9

Marketing

EasyJet's early marketing strategy was based on 'making flying as affordable as a pair of jeans' and urged travellers to 'cut out the travel agent'. Its early advertising consisted of little more than the airline's telephone booking number painted in bright orange on the side of its aircraft.

The Airline TV series created by LWT and filmed between 1999 and 2007 made EasyJet a household name in the United Kingdom. The series, while not always portraying EasyJet in a positive light, did much to promote the airline during this time.

EasyJet has used a number of slogans since its establishment. Its current slogan is 'Come on, let's fly!', a reflection on the airline's cheeky and cheerful image. EasyJet has previously styled itself as 'the web's favourite airline', a play on the British Airways slogan 'the world's favourite airline'. This was chosen as EasyJet had sold a higher proportion of seats through its website, easyJet.com than any other airline.

EasyJet has expanded rapidly since its establishment in 1995, driven by base openings both in the United Kingdom and continental Europe, and by a number of acquisitions. Its expansion has also been fuelled by a rise in consumer demand for low cost travel.

In March 1998 EasyJet purchased a 40% stake in Swiss charter airline TEA Basle for a consideration of three million Swiss francs. The airline was renamed EasyJet Switzerland and commenced franchise services on 1 April 1999, having relocated its headquarters to Geneva Cointrin International Airport. This was EasyJet's first new base outside the United Kingdom.

On 16 May 2002, EasyJet announced its intention to purchase rival airline, London Stansted based Go for £374 million. EasyJet inherited three new bases from Go, at Bristol International Airport, East Midlands and London Stansted. The acquisition of Go almost doubled the number of Boeing 737-300 aircraft in the EasyJet fleet.

In 2001, EasyJet opened its base at London Gatwick Airport and between 2003 and 2007, EasyJet opened bases in Germany, France, Italy and Spain, establishing a sizeable presence in continental Europe.

On 25 October 2007 EasyJet announced that it had agreed to purchase the entire share capital of GB Airways Ltd from the Bland Group. The deal was worth £103.5 million and was used to expand EasyJet operations at London Gatwick Airport and also to establish a base at Manchester Airport.

Strategy

EasyJet, like Ryanair, borrows its business model from American air carrier Southwest. Both airlines have adapted this model for the European market through further cost-cutting measures such as not selling connecting flights or providing complimentary snacks on board. The key points of this business model are high aircraft utilisation, quick turnaround times, charging for extras (such as priority boarding, hold baggage and food) and keeping operating costs low.

While the two airlines share a common business idea, EasyJet's strategy differs from Ryanair's in a number of areas. EasyJet flies mainly to primary airports in the cities that it serves, while Ryanair often chooses secondary airports to reduce costs. For example, EasyJet flies to Paris Charles de Gaulle Airport and Paris Orly, the primary airports in Paris, while Ryanair flies to the smaller Paris Beauvais Tillé Airport, a 75 minute bus journey from Paris. EasyJet also focuses on attracting business passengers by offering convenient services such as the option to transfer on to an earlier flight for free.

Destinations

EasyJet serves 103 destinations in 27 countries throughout Europe and the north of Africa. Its home base is at London Luton, however its largest base is at London Gatwick which offers 63 destinations. EasyJet maintains other bases throughout Europe, at Belfast, Berlin-Schönefeld, Bristol, Dortmund, East Midlands, Edinburgh, EuroAirport Basel-Mulhouse-Freiburg, Geneva, Glasgow, Liverpool, London Stansted, Lyon, Madrid Barajas, Milan Malpensa, Manchester, Newcastle, Paris Charles de Gaulle and Paris Orly.

On 17 December 2007, EasyJet announced that it would be significantly expanding its operations in North West England, by opening a base at Manchester Airport. This base was inherited from GB Airways on 30 March 2008 and over the next few years EasyJet plan to base more aircraft at the airport for route expansion.

EasyJet was prevented from launching its Milan Malpensa-Olbia route in April 2006 by the Italian aviation authorities. The route had been assigned to Meridiana as a public service obligation route. The Italian authorities had granted exclusivity in return for fixed low fares for Sardinian residents on routes from Milan and Rome to the Sardinian airports of Alghero, Cagliari and Olbia. This was however overturned and EasyJet commenced flights from Milan Malpensa to Olbia on 21 October 2007, and also to the Sardinian capital Cagliari on 29 October 2007.

New destinations for May 2008 are - Ajaccio, Bastia {Corsica}, Corfu, Crete, Cyprus, Dalaman, Gibraltar, Hurghada, Malta, Manchester, Montpellier, Mykonos, Nantes, Rhodes, Sharm el Sheikh and Tenerife South.

Fleet

The EasyJet fleet consists of the following aircraft (at July 2008):

EasyJet Fleet
Aircraft	In Service	On Order	Passengers
Airbus A319-100	118*	107	156
Airbus A320-200	9	0	174
Airbus A321-200	7	2	210
Boeing 737-700	30	0	149

^{* Includes 12 aircraft placed with EasyJet Switzerland.}

EasyJet is the largest operator of the Airbus A319.

The average age of the EasyJet fleet, at July 2008, is 3.3 years.

Fleet strategy and aircraft orders

EasyJet initially operated Boeing 737 aircraft exclusively. In October 2002 it broke with its previous philosophy of operating just one aircraft type (a strategy popularised by Southwest Airlines) by ordering 120 Airbus A319 aircraft (plus 120 options) with CFM56-5B engines.

Airbus A319 Orders
Date	Orders	Options	Notes
October 2002	120	120
December 2005	140	100	20 options converted
November 2006	192	123	52 options converted 75 new options
June 2007	227	88	35 options converted

EasyJet's Airbus A319 aircraft were first introduced to EasyJet's Geneva base in October 2003.

Due to their high density passenger seating, EasyJet's Airbus A319 aircraft have two pairs of overwing exits, instead of the standard one pair configuration found on most Airbus A319 aircraft, to satisfy safety requirements.

EasyJet has 88 outstanding options with Airbus which may be taken as any member of the Airbus A320 family.

EasyJet still operates the Boeing 737-700 from its bases at London Luton, Belfast and Newcastle, however from December 2006 the airline started to return the Boeing 737-700 aircraft to their lessors. EasyJet plan to have disposed of its entire Boeing 737 fleet by 2011.

Through the acquisition of GB Airways, EasyJet inherited nine Airbus A320 and six Airbus A321 aircraft. These aircraft will be operated by former GB Airways crew at London Gatwick and Manchester for the summer 2008 period. This gives the airline some time to evaluate the feasibility of operating these larger gauge aircraft. Based on this evaluation, EasyJet may decide to dispose of these aircraft or to retain them and integrate them into the existing fleet. EasyJet may also decide to convert its Airbus options to the larger gauge aircraft.

Previously operated

Boeing 737-200 - Operated by GB Airways and Air Foyle from 1995 to 1997.
Boeing 737-300 - Retired from EasyJet fleet in 2006.

Services

Booking

Initially booking was by telephone only, with all EasyJet aircraft painted with the booking telephone number. There is no incentive for travel agents to sell EasyJet bookings because there is no commission, a standard practice for the low cost carriers.

In December 1997, Russell Sheffield of Tableau, one of EasyJet's Design and Adverting Agencies, suggested to Stelios that he should consider trialling a website for direct bookings. Stelios's reply was 'The Internet is for nerds, it will never make money for my business!'. However Tony Anderson, EasyJet's Marketing Director saw the potential and approved a website trial involving putting a different telephone reservations number on the website, to track success. Once Stelios saw the results he changed his mind, and EasyJet commissioned Tableau to partner with them develop an e-commerce website capable of offering real-time online booking from April 1998 — the first low cost carrier to do so in Europe.

Internet bookings were priced cheaper than booking over the phone, to reflect the reduced call centre costs and the aircraft were repainted with the web address. Within a year over 50% of bookings were made using the web site, by April 2004 the figure had jumped to 98%. Now, flights can only be booked over the Internet except during the 3 months immediately before the flight when telephone booking is also available.

Cabin and onboard services

EasyJet's aircraft cabins are configured in a single class, high density layout.

The airline's main fleet, comprising the Boeing 737-700 and Airbus A319, carry 149 and 156 passengers respectively. A typical Airbus A319 carries approximately 140 passengers in a single class configuration, but as EasyJet do not serve meals the airline opted for smaller galleys and had a lavatory installed in unused space at the rear of the aircraft. The airline's 29 inch seat pitch allowed for the installation of 156 seats. Due to this high density seating arrangement, EasyJet's Airbus A319 aircraft have two pairs of overwing exits, instead of the standard one pair configuration found on most Airbus A319 aircraft, to satisfy safety requirements.

EasyJet's Airbus A320 and Airbus A321 aircraft, which operate as a separate fleet, were inherited from GB Airways. Passenger seating on the A320 aircraft ranges from 168 to 174, and on the A321 from 189 to 210. This is due to ongoing reconfiguration of the aircraft to a standard capacity. These aircraft retain the British Airways interiors.

EasyJet does not provide complimentary meals or beverages on board its flights. Passengers may purchase items on board from the 'easyJetshop'. Products include sandwiches, toasted sandwiches, hot meals, chocolate, snacks, hot drinks, soft drinks and alcoholic drinks. Onboard sales are an important part of the airline's ancillary revenue. EasyJet also sells gifts such as fragrances, cosmetics and EasyJet branded items onboard, as well as tickets for airport transfer services.

EasyJet provides in-flight entertainment on some flights operated by Airbus A320 and Airbus A321 aircraft. On shorter flights, silent comedy programmes are shown and on certain longer flights a movie is shown. EasyJet offers headsets for purchase on board. EasyJet provides an in-flight magazine, published monthly, containing articles of interest to its customers and destination guides.

EasyJetHotels and EasyJetHolidays

On 14 December 2004, EasyJet and Hotelopia, a subsidiary of First Choice Holidays, launched the co-branded EasyJetHotels accommodation booking service. EasyJetHotels offers accommodation products throughout the EasyJet network. Customers booking flights through the EasyJet website are provided with quotes for a number of hotels at their destination. Alternatively, customers can book accommodation separately at the EasyJetHotels website.

On 28 June 2007, EasyJet announced it would expand its relationship with Hotelopia by launching EasyJetHolidays, which offers Travel Trust Association protected package holidays made up of EasyJet flights and Hotelopia accommodation products.

Controversy

EasyJet's success arguably paved the way for the boom in cheap air travel in the late 1990s and early 2000s (though they were not the first no frills carrier, nor the first large one in Europe).

This has led to EasyJet being accused, amongst other no frills carriers, of contributing to global warming through the high carbon emissions of aircraft. Low-cost carriers (and their trade association, ELFAA) argue that they tend to operate newer, more fuel-efficient aircraft than many full-service network airlines, and also that their point-to-point services use less fuel than connecting flights through a hub. (Most of the hub-and-spoke systems run by traditional full-service network airlines, such as Air France-KLM, British Airways and Lufthansa as well as their US legacy carrier counterparts, generally rely on a range of mostly profitable long-haul flights being "fed" by a large number of often only marginally profitable or wholly loss-making short-haul connecting flights via their main hub airports. The reason the network carriers "feed" their long-haul services with short-haul connecting traffic is to shore up the profitability of the long-haul flights, most of which would not attract sufficient traffic on their own to be profitable.)

Apart from the initial pair of 737-200s leased from GB Airways and some 737-300s inherited from GO - the airline has only ever operated new aircraft, either 737-300s, 737-700s or Airbus A319s. The newer aircraft are advertised to produce lower emissions and be more environmentally friendly.

EasyJet has also come under criticism in Germany for not observing EU-law 261/2004. In the case of cancellation, passengers had the right to be reimbursed within one week. In 2006, EasyJet had experienced difficulties in refunding tickets in a timely fashion. Passengers occasionally had to wait longer for reimbursement of their expenses.

EasyJet is a major supporter of the plans to replace the Air Passenger Duty (APD) tax in the UK with a new tax that varies depending on distance travelled and aircraft type.

In May 2008 the Autorità garante della concorrenza e del mercato (Italy) fined Easyjet for misleading publicity on fares (Source: Autorità garante della concorrenza e del mercato, Italy)

In July the Advertising Standards Authority has criticised a press campaign by easyJet for a misleading environmental claim that its aircraft made 22% less emissions than rival airlines. The figures used were not based on emissions produced by an easyJet aircraft or emissions produced by easyJet airline overall as the ad implied, and ASA declared that airline had broken advertising rules. The judgement follows the airline being reprimanded in April 2007 after it made comments that it aircraft created 30% less pollution per passenger than than some of its rivals (Source: Advertising Standards Authority & guardian.co.uk, Wednesday July 2, 2008)