If one were to ask about a fastest growing airline the name easyJet would be mentioned. The airline is part of the easyGroup owned by a Greek entrepreneur Stelios Haji-Ioannon. The airline use of the Internet has marked it as an innovative, dynamic company. A product the airline offers is air flight.
The purchasing of airline ticket is neither low- or high-involvement purchase, it is in the mid-range. It is not a low-involvement purchase since consumers under this condition will go for 'buy the cheapest' and are likely to purchase on impulse (Engel, Blackwell, and Miniard 1990). However, airline ticket purchases are usually not impulse purchases; they are usually planned.On the other hand, it is not under high-involvement purchase because according to Engel et al. (1990), products that have similar alternatives tend to be in low- or mid-range problem solving continuum.
The alternatives of an airline flight are quite similar because any airlines can take a passenger from one place to another. It is important to keep in mind that under the context of this paper airline ticket purchases are considered to be in mid-range problem solving continuum and neither low- or high- involvement purchases but in the the middle. However, it is also important to remember that different consumers might have different level of involvement to different products (Engel et al. 1990).
This paper will start by briefly discuss the client history then move on to analyse situation in client market. After that Engel, Blackwell, and Miniard (1990) individual consumer decision-making model will be discussed in detail along with some implications to the airline. The paper will also discuss about consumers' E-commerce adoption intention as part of the model. Next, the paper will put forward the critiques made on the model used. Finally, recommendations to the client of what should be done to increase sales and profits will be presented.
Situational AnalysisClient HistoryeasyJet is the second biggest Europe's low-cost airline, next to RyanAir, with leisure and business travellers as their main targets. Its first flight was launch in November 1995 with low-cost/no frills policy adapted from the US Southwest Airline. There are no free meals on-board, but available for purchase. Seats are not reserved or assigned. The airline uses direct sales approach in selling tickets in order to simplify the business process to maximise efficiency.
All tickets are booked direct through the Internet or by telephone.However, easyJet has always encouraged passengers to book their seats through the Internet by making all sales promotions exclusive online. For example, the airline give �5 discount on all Internet booking. As a result, approximately 95% of seats are sold online. The percentage is a higher percentage that any other airline thus reinforcing its achievement as the 'Web's Favourite Airline.
' The airline employs 'ticketless travel' in which every passenger is given a confirmation number to use when checking-in.The airline claims that it gives passengers less hassle and, for the airline, save cost of printing paper ticket. Passengers do not have to collect ticket prior to travel therefore giving passengers more convenience. Further on promotions subject, the airline relies heavily on in-house PR and instead of using television advertising easyJet uses press, outdoor, and radio advertising to promote the airline.
Awareness of the airline has been raised by the ITV docu-soap about the life of staff and customers at easyJet in Luton.The airline is so successful partly because of its simple structure and its yield management system. The system allows information to flow easily through out the system and prices are closely linked to demand and the length of time in advance that the ticket is booked. Now the airline offers 189 routes between 56 business and leisure airports.Environmental AnalysisThe MarketeasyJet is operating as a low-cost or budget carrier in short haul aviation market. The market has been expanding rapidly with the average growth rate of around 30% in the recent years (Mintel 2003a).
In addition, it is shown that low-cost airlines account for 4% of European air travel, but this figure is expected to rise to 12-15% by 2010 (Mintel 2003a). However, according to easyJet, it claims that according to OAG in June 2002 states low-cost airline has market share of 8.65% in intra-European routes and 3.76% of which is easyJet (easyJet 2004).
Moreover, according to the news released by easyJet, number of independent travellers has increased by 9% to 24 million in the last year, the number which account for 55% of the holiday bookings market (easyJet 2004). Consistent with the figure, easyJet claims that the airling account for 36.5% of the total UK independents travel market (easyJet 2004). It further states that the report revealed that British travellers are not just looking for beach holidays, but they are increasing looking to experience different cultures. Nevertheless, since easyJet claims that 50% of its passengers are business travellers (Mintel 2003b) it is worth to look at the UK market for business travel.Mintel (2003b) states that in 2002, more than six millions UK residents travel by air for business purpose and eight percent of the figure is dominated by low-cost routes.
Besides business travellers, another easyJet market target is leisure travellers. Consistent with Mintel (2003b) there was more than 13 millions UK residents leisure travellers. However, these figures incorporate destinations outside of Europe or routes easyJet are not offering. Nevertheless, it can be seen that the market is big and it is still possible for easyJet to further penetrate the market to increase sales and profits.The CompetitionThe competition in short haul aviation market is more intense than ever due to a fierce price-war. There are now more than 50 carries operating in the market (BBC 2004c).
However, easyJet biggest competitors are RyanAir and traditional carriers such as British Airways (BA) or Luthansa offering low-fare in short-haul flights. The smaller carriers are likely to die out because they will not be able to fight in this price-war due to rising fuel prices. Even for leading carrier such as BA has to increase fuel surcharge from �2.50 to �4 per sector on short-haul flights (British Airways 2004). The smaller carriers are too small to handle the cost in such a competitive environment.To illustrate this, according to Wilson (2004), more than 20 budget airlines in Europe have already gone out of business.
Examples are Skynet which has suspended flights and Planet Air which has gone into liquidation this year (BBC 2004a). As a result, only big carriers will be left in this price-war. This paper therefore will regards RyanAir and British Airways as easyJet main competitors and both airlines will be referred to throughout the paper.Online Distribution ChanneleasyJet is renowned for its aggressive promotion of Internet booking. Internet is the most cost-effective distribution channel which cost less than 75p to handle a consumer compare with �30 handling cost of telephone booking (Rigby 2004). One of easyJet achievement is to successfully implemented and promoted Internet booking to the 95% which is the highest percentage among its competitors.
It is therefore an opportunity given to easyJet to exploit the Internet to increase sales and profits.The Internet is highly penetrated through the UK households with 36% increase between 1998-2003 (Mintel 2004). It also aids the airline by making e-ticketing possible. The opportunity is further manifested with the growing number of broadband users in the UK.
Currently, there are 5.3 millions broadband users in the UK which is 7.5 connections per 100 people (BBC 2004b). Broadband Internet will enrich online purchasing experience by reducing search time and processing time which are favourable to pure-play such as easyJet.Competitive Dis/AdvantageeasyJet VS RyanAirAs opposed to RyanAir 'no-service' and cheapest airport taxes, easyJet has considerable advantages over RyanAir.
easyJet, though a budget airline, uses both smaller and major airports. The smaller and quieter airports cost less than major airports and allow for faster turn around time. Moreoever, by using smaller airports the budget airlines, such as easyJet and RyanAir, open a new market which is neglected by traditional carriers. Place such as Bournemouth was not an attraction to British Airways but RyanAir has seized the opportunity to diverse from intense competition in busy airports.However, in contrast with RyanAir, easyJet uses some major airports such as Paris Charles de Gaulle, which is the major international airport in Paris, whilst RyanAir uses Beauvais Airport which takes approximately 1 hour to get to the centre of Paris thus adding more cost to the passengers.
Besides, RyanAir on-board food is known to be expensive and luggage are not encouraged. On the other hand, easyJet allows as much luggage as long as the passenger can fit it to the overhead bins.Despite RyanAir offering more competitive price than easyJet, number of passengers of easyJet quickly surpasses RyanAir passengers in 2003 with more than 20 millions passengers (see graph). Therefore it can be concluded that easyJet's simple no-frills policy has competitive advantage over RyanAir.
However, RyanAir is now trying to digress from its price-led strategy by introducing in-flight films for all passengers (Flanagan 2004).easyJet VS British AirwaysBritish Airways (BA) is on a different spectrum from easyJet. BA provides seat reservation, free meal on board, and standard luggage allowance. In addition, the airline mainly uses major airports. The airline enters low-fare market and becomes easyJet main competitor to take account of competition from low-cost/no-frills airlines (Mintel 2003a).
Traditional airlines, such as BA, have advantage such as strong brand, large base consumers, loyalty programme, and strategic alliances (BA is a member OneWorld alliance of airline). However, budget airlines such as easyJet or RyanAir benefit from their simple operations. A passenger can book in advance via the Internet or telephone, then get a reference number and after that he or she just needs to check-in and fly without any restrictions such as 'Saturday night stopovers.'In the next section, the consumer individual decision-making model will be discussed while any relevancies to easyJet will be pointed out.
