Easy Jet began its operation in November 1995 with two leased aircrafts and a staff composed of teenagers serving as reservation agents under the leadership of its founder; Stelios. Stelios grew the airline by factoring in on low labor costs, and low airport fees, by choosing the cheaper Luton Airport instead of the major international airports like Gatwick and Heathrow.
Easy Jet’s first flight from London to Glasgow was the major breakthrough the company needed; offering a low fare of twenty nine pounds, it propelled Easy Jet to market leadership position. This paper analyses the strategies Easy Jet employed to gain a competitive advantage in the airline market.
Competitive Advantage Strategies of Easy Jet
Easy Jet’s competitive advantage is the strategic advantage that one it had and still has over its competitors, that enables it to generate greater sales and retain more customers than its rivals. This airline factored mainly on costs, services and brand awareness, to gain a competitive advantage.
Competing on costs
Easy jet has a culture of minimizing costs as it offers low fares to its passengers. This culture began at its inception when Stelios initiated its operation with a low capital of five million pounds; with which he leased two aircrafts, a staff comprising of teenagers, and a low labor-low fees airport.
This culture still continues as the airline seeks to minimize costs wherever possible, for example; they save fourteen pounds per passenger by not offering meal services, they save ten pounds per passenger by flying into London’s Luton airport instead of the international Gatwick airport, and they also save cost by not offering business class seating.
Apart from minimizing costs, Easy Jet also seeks out other sources of revenue like the internet sales, which accounts for nearly fifteen percent of their annual revenues. They encourage internet sales through offering discounted fares to customers who purchase their tickets over the internet.
The internet sales also help them reduce cost that they might incur in hiring additional reserve agents. This also helps them avoid unnecessary cost like computer reservation system, which would probably add twenty five percent to their overall operating costs.
Competing On Service
In making their service outstanding, Stelio has become a down to earth person to the point of even working on the phone line and selling tickets himself. He also reads and gives a reply to many of the emails he receives from his customers, instruct his employees to dress casually, and encourage them to have an open-plan office just like himself. He ensures flexibility in booking, through internet ticket purchase or through calling the reserve agents through a given local number.
Creating brand awareness
Easy Jet spends nearly ten percent of its revenue on newspaper, radio and magazine advertising with an effort to create a name for them. This has resulted into market differentiation and increased sales. A poll in 1998 indicated that Easy Jet brand had eighty-eight percent recognition in London and eighty-two percent in Geneva.
Challenges
Easy Jet has faced stiff competition from Ryan air, Go, Virgin Express, Buzz, and has struggled with the option of whether to go public or remain private. It has also had a history of using sub contractors, and outsourcing of key functions which has created problems like; mishandling of customers by the contracted ground handlers.
But despite these challenges, the founder; Stelio, has well strategized on cost, competition, service, and brand advantages to maintain a firm grip in the market, and this is what has made Easy Jet achieve a competitive advantage in the market.