Easy Jet E-Business Strategies

Management Summary

The economy is global and organizations need to develop strategies based on the advanced level of communication technology. Communication technologies and information have revolutionized the relationships between organizations. The advent of the internet has created e-business that enhanced productivity and this has enabled the customer to participate. Communication of this type has helped greatly in reducing the costs. E-commerce has helped the companies and the airlines companies in particular. Europe’s low-cost airlines Easy Jet has explored the opportunities available in e-commerce and it is one of the biggest, profitable airlines in Europe. The present paper discusses the e-business strategies followed by the company that contributed to its rapid growth and success.

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Introduction

Background

The economy is emerging globally and it became necessary for organizations to incorporate business strategies basing on e-business and e-commerce. The information and communication technologies (ICT) are interwoven with the business in such a way that there is a revolution in the relationships between the organizations, and between the individuals and the organizations. ICT has enhanced productivity, customer participation by enabling mass communications that helped in reducing costs. In this global marketplace, it is possible now for small and medium scale enterprises to compete with larger organizations. This is made possible by e-commerce along with the appropriate strategies and policy approaches. The ICT in e-commerce is utilized for the transactions between the organizations and between the organizations and customers. E-business on the other hand is the utilization of the ICT to enhance the business of the organization. The transaction between the companies and the consumers, wherein the consumer can be able to get information, purchase the goods and receive the goods via the electronic network is referred to as B2C e-commerce.

B2C commerce increases the access of the consumer for the information on the product, and besides reducing the barriers to the market entry it reduces the transaction costs. Organizations become efficient economically by B2C commerce as it greatly reduces the costs of communication. It is Easy to promote the product in the international markets whether the organization is large or small, and the customer service can be improved to a large extent through communication through the internet. A successful e-business model should be having a digital infrastructure that can be shared, a sophisticated model for operations, an e-business model that contains partnerships and management, a model that has policies that are consistent with the e-commerce laws, distance learning, virtual network, and incentive schemes. Online marketing via the internet is growing rapidly which is nothing but e-tailing. In this era where the economy is global, many companies having their own websites use the internet to communicate with the customers and business transactions. (Dave Chaffey, 2007)

Overview of the company

Founded by Stelios Haji-Ioannou in 1995, Easy Jet is one of the most successful low-cost airlines in the UK. Termed as the favourite airline of the web, the aim of the Easy Jet airline is to provide air travel with reliable schedules at low costs on the major routes. A larger percentage of the sales of the company comprises of the sales through the internet. The company is successful because of its strategy that focuses mainly on the needs of the customers by using the available technologies of the internet such as e-retailing that help in improving the business processes. The survival of the airlines can be attributed to its understanding of the essential requirements that influence the network environment. Listed in the London Stock Exchange, Easy Jet airlines are a public limited company and its rapid growth from 1995 has recorded a combination of acquisitions and making the efforts to meet the demands of the customer. The marketing strategy of Easy Jet airlines is to make air travel affordable. The adaptability and the vision of the founder supported by the market operations and the business model chosen by the company are the factors for the success of the company. (Dave Chaffey, 2007)

Business Description

The business strategy of the company focuses on six important points that include

  1. strong commitment to the safety and customer service
  2. fares that are simple
  3. unit costs that are lower
  4. branding that is strong
  5. multi base network
  6. Strong corporate culture.

To manage the unnecessary expenses, the company does not offer any business class and the customers have to book their tickets directly from the company. To maintain the low fares, the company will not provide free in-flight meals, uses airports that are lower in costs and operates a ticketless system. The company’s turnaround procedures are very efficient in such a way that it substantially increases the utilization of the aircraft. The airlines allow the checked baggage of up to 20kg for each passenger, food and drinks are available on the flights for purchasing. The company gives priority to the passengers who check-in online and the passengers who purchase speedy boarding options. Airlines are one of the first among the companies, which embraced the opportunity of using the internet. The impressive aspect of the Easy Jet Company is its management to incorporate e-commerce into its business. The company has encouraged online ticketing by offering discounts and displaying the website address “www.Easyjet.com” on the side of the fleet of the aircraft and with its slogan “web’s favourite airline.

Historic information on the company’s formation

Being one of the largest low-cost airlines in Europe, Easy Jet Air Line Company was originally founded by Stelios Haji-Ioannou, the son of a Greek shipping tycoon in 1994. The airline started its operations in November 1995 and was operated by GB Airways and Air Foyle, till it received the airline’s operator certification. The airlines initially started its operations on two routes is from London Luton to Glasgow and Edinburgh

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(Sager. E,1998). It was necessary for the company to create lean operations as it has to undercut the traditional carriers such as British Airways, and for the survival of the company Haji-Ioannou, decided to use a single channel for sales; the phone was the channel for sales. Companies like Direct Line insurance, encouraged this phenomenon as this is economical and time-saving. As the sales of the company grew rapidly and the sales over the phone were 100 per cent, the web was integrated into the central booking system relatively easily. (Dave Chaffey, 2007). Internet became important for the company and sales of the company over the internet started in 1998. The marketing strategy of the company was to make flying affordable without the intervention of travel agents. The airlines expanded rapidly from 1995, with its airbases in the UK and continental Europe by several acquisitions. It floated its company’s shares in the London Stock Exchange. (Jones.L, 2007).

Financial performance

The goal of the company is to provide the customer, safer, high-value and point-to-point services. It has made a successful effort in reducing the costs by the elimination of unnecessary costs and frills that are the characteristics of traditional airlines. The airline’s remarkable growth in a decade as one of the largest low-cost airlines of Europe can be attributed to its efficient use of internet technology. The company has floated its shares on the London stock exchange in October 2000. The annual turnover of the company by September 2007 is 1,797.2 million pounds when compared to 263.7million pounds in September 2000.

Major products and services

Major services of the company include air travel, for which booking was done by telephone earlier. The e-marketing strategy of the company has completely changed the mode of sale of tickets, and the major part of the booking at present is online. Booking through the internet for a customer is cheaper for a customer. The company provides the facility to passengers to purchase the food and beverage items on board. In addition to this, the company sells onboard some products such as fragrances, and cosmetics and the onboard sales of the company are an important part of the revenue of the company. Other products of the company include accommodation booking service, and the booking can be done through the EasyJet network. (Matthew.G,2004)

Situation analysis

It is important for any business or organization to specify its objective, and it is important to analyze the internal and external factors in achieving the objective. A strategic planning tool is required to evaluate the strengths, weaknesses, opportunities and threats involved in achieving the objective. SWOT is the strategic planning tool that can analyze the situation. (Hill, T. & R. Westbrook, 1997, Menon, A. et al. 1999)

Analysis of the present position

Analyzing the situation internally and the external situation can give a lot of relevant information.

Internal analysis

This analysis is a comprehensive evaluation of the potential strengths and weaknesses within the organization. The strengths of the organization include

  • Strong corporate culture and the brand image of the company: the company has a strong corporate culture; the innovativeness of the company is its brand image as it provides the services at low costs with various incentives without wasting the valuable time of the customer.
  • Operational efficiency and Operational capacity: The Company adheres to the standards and maintains a coherent IT infrastructure at their main office in Luton. The company has a good infrastructure that links all the check-in destinations that allow them to run a ticketless system and in the end a real-time purchasing of tickets online. The web of the airlines is completely integrated with the back-office systems that reduce the costs.

Market Share of the Company

It is positioned in the London stock exchange, and with its mergers and acquisitions, the company has a substantial market share.

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Financial resources

With its profit margins and the policy of the company that prefers to reduce the costs by its technological innovation, the financial resources are also a source of strength.

Organizational structure and key staff

The success of the company is attributed to its organizational structure and key staff who are innovative, techno-savvy and efficient. The policy of the company to encourage innovative people with appraisals is responsible for its rapid growth.

The areas where the company needs improvement for its further growth include

Position on the experience curve

Even though the company has its rapid growth, it needs some people to experience in certain areas for strategic planning.

Exclusive contracts

The company needs to examine its contract with some partners which later lead to some downward trend in the market for the company.

Industry analysis “Air Travel”

It is a historical fact that the airlines have survived through support from the government in the form of subsidies or equity. The higher growth of the airlines in recent years is attributed to globalization that outweighs the microeconomic losses.

Product

According to the analysis, the players in the air transport chain gain more profits than airlines. Some of the low-cost airlines of the turn of the century are high performers as they have the consistency of the product and cost control. (Myron J. Smith, 2002, Rigas Doganis,2000)

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Price

Many countries operate state-owned airlines and many larger airlines are owned by private people and they are governed by the macroeconomic principles for maximizing their profit in shares. The form of price discrimination used by most airlines is differentiated pricing, and the factors such as load factors, the forecast of total demand by price point and competitive pricing in force. The airlines accomplish this by dividing the cabin of the aircraft into different travel classes. Airlines with full service have fixed operating costs to maintain the services. (Myron J. Smith, 2002)

Place

Airlines with an established engineering base at the airport have considerable advantages. The increasing trend of business combinations of the different airlines that include the cross equity arrangements for products, services, and facilities at the airports results in higher efficiency. The airlines of today mostly follow a corporate structure. (Myron J. Smith, 2002, Rigas Doganis,2000)

Promotion

Most of the airlines particularly follow a particular promotion strategy. With an innovative IT infrastructure, many low-cost airlines are successfully operating a ticketless system and the web that is efficiently linked to the back office. The product promotion is through their website that is highly developed for e-tailing to attract customers.

Distribution

The techniques of e-commerce play a major role in the distribution of the product. Most airlines sell the tickets for the passengers through the internet which improves performance and reduces the costs to the customers and the company as well.

E-Marketing strategy

The empowerment of the customer brought out by E-business, and the economists are compelled to call this market a perfect market. The internet allows the customers to find the information easily, and also reduces the barriers in purchasing a product. The customer can give immediate feedback in the e-business market; moreover, branding and trust play an important role in the heterogeneity of the e-business. The e-business strategies adopted by Easy Jet are thus customer-focused that helped in the rapid expansion of the company.

Innovation and Integration

E-retailing and the integration of other similar processes have made the Easy Jet a successful company. The company is appreciated for its performance as understood the e-business as a process that is about integration, innovation, good infrastructure and the adoption of the basic standards that are the requisites for a network environment. With its dare attitude toward innovation the company has totally changed the market place with simple fares, providing a wide choice to the customer, and actively encouraging the sales via internet. The current strategy of the company is to completely eliminate telesales so that it becomes the world’s first completely online airline. The company is keen to follow a strategy that helps customers and saves money.

Co-operating and outsourcing

Any company that follows the strategies of the e-business seriously has its strategic partners. Some of the companies with related services do collaborative advertising through the website of the company. Recently the company started its own services in the loading of the baggage and flight dispatch. This will improve the service levels of the company.

Infrastructure and standards

The company has maintained the standards and a good IT infrastructure at its office in London. The company achievement of the infrastructure is the linking of the check-in desks at all the destinations that helped them to run a ticketless system and to the real-time purchasing of the online tickets. The company’s website that is integrated with the back office system is responsible for the low costs of the tickets.

Adherence to the strategies

To date, the company has shown an adherence to its original strategies and it cites that no change in their strategy is the key to their success. The company is highly successful in its market campaigning, by pushing the customer to utilize the online services. The web site is well designed, and efficient to the needs of the customer which has strongly contributed to the success. To support the busiest web site the company is praised for developing a highly scalable and redundant architecture that has multiple sites and connectivity. This ensures availability and continuity. This technology helps the company for its 100% availability that fulfils the transactions of the customers effectively, filling the air plane for every 20 seconds during the peak times. This technology may undoubtedly give promising growth to the company.

Implementation

Creating new core and extended value to the customers

The airlines company follows the policy of refreshing the technology. The policy of the company to upgrade the web platform that enables a exceptionally high availability. The company has upgraded the redundant products to support the web servers. This technology refresh helps the company to maintain 100% availability on the web site. These processes improve the efficiency of the customer transactions in such a way that makes the filling of the airplanes for every 20 seconds. The web site of the airlines is the Europe’s busiest web site, and to support the company has developed a highly redundant architecture with multiple sites and paths of connectivity that ensures availability and the continuity of the business.

Balancing the online and offline promotion methods

The company runs the internet only promotions in new papers. The scalability of the internet helped to meet the demand, as everyone was directed to the internet which reduced the costs of 250 telephone operators. To increase the bookings, instead of flight promotions, advanced booking schemes are introduced. Promotions through the newspapers recorded 2million pounds of revenue to the airlines. The owner of the company uses the web site as a PR tool, to keep the newspapers informed about the new promotions and offers through phone, and e-mail, to the journalists and refers them to the web site rather than faxing. The company uses its website as an aggressive tool in this competitive market place. An internet café with 400 seat capacity is Easy Everything and the customers of the company can spend their time on the Easy Jet site for free. The company also offers rent-a-car at very low rates. This is possible because of single car type and the company runs an internet only business. The effectiveness of the site occurred through a dedicated phone number.

Price tactics

The company implements the promotion strategy largely through the internet that reduces the costs. By offering discounts from time to time and balancing the price in such a way that the price attracts the customers.

Effect of the implementation of strategy upon the performance of the business

Any strategy developed by a company has its positive or negative effects on the organization. The Easy Jet company develops a strategy in such a way that it does not have a negative effect on the performance of the business as the company adheres to the strategies and the technology adopted by the company is highly innovative.

Conclusion

The global environment is so competitive that the efficient management teams began recognizing the need to explore the opportunities beyond their internal processes which will improve their sales by lowering the costs. EasyJet is a low cost airlines company based at London. The rapid growth of the company is attributed to its innovative e-business strategies that are customer friendly providing a wide choice and efficient service to the customers at low costs. The company’s adherence to its original strategies and innovativeness and adoption of new technologies is the key to the success of the company

References

Jones, Lois (2007). Easyjet: the Story of Britain’s Biggest Low-Cost Airline. London: Aurum Press. ISBN 1845132475.

Hill, T. & R. Westbrook (1997). “SWOT Analysis: It’s Time for a Product Recall”. Long Range Planning 30 (1): 46-52.

Menon, A. et al. (1999). “Antecedents and Consequences of Marketing Strategy Making”. Journal of Marketing 63: 18-40.

Myron J. Smith(2002), The airline encyclopedia, 1909-2000, Scarecrow Press.

Rigas Doganis,(2001) The Airline Business in the 21st Century, Routledge, New York,

Sager, Eckart (1998),EasyJet: Europe’s no-frills airline. CNN.

From the Internet

Garrahan, Matthew.(2004),”First Choice seals EasyJet hotel deal”, Financial Times, 200412-15.

The Airline Business in the 21st Century.” Rigas Doganis, Routledge, New York, 2001.

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