EasyJets business model and communication plan mimics that of the American based Southwest Airlines which has aided easyJets growth over the last ten years. asyJet was founded by Stelios Haji-loannou on October 18, 1995 and began operating on November 10, 1995 with two Boeing737-200 aircraft leased from the Independent Aviation Group Limited. In the beginning easyJet only flew from London Luton Airport to Glasgow and Edinburgh. In 1998, easyJet purchased a 40% stake in TEA Switzerland. By 1999, easyJet had over three million passengers and was traded on the London Stock Exchange in October 2000. In 2002, easyJet acquired Go Fly, a London based airline, and in December 2003 easyJet opened a new hub in Berlin, Germany at Schonefeld Airport.
In May 2004 easyJet increased its service from two routes to eleven routes. In 2004, FL Group began purchasing stock in easyJet and a rumor of a takeover ensued. However, by 2006 FL Group sold its shares in easyJet and the takeover never occurred. In November 2005, easyJet CEO Ray Webster stepped down and was replaced by Andy Harrison. Under the leadership of Andy Harrison, easyJet expanded its fleet to 122 aircrafts, 262 routes, and 74 airports in 21 countries. In 2007, easyJet reported carrying over 37 million passengers. asyJets success can be attributed in large part due to its website and internet presence.
Between 1995 and 1997 easyJet reservations could be made only via the telephone. Travel agents would not book easyJet reservations because they would not receive a commission. In 1997, easyJet developed a website in order to take reservations, and bookings skyrocketed by over 98% in 7 years. Easy Brand The communications culture of easyJet begins with the founder, Stelios Haji-loannou. easyJet and the easy brand are two separate entities. asyJet is owned by EasyJet Airline Company Limited whose largest shareholder is Haji-loannou.
Haji-loannou is also the sole owner of the easy. Haji-loannou licenses his easy brand to his airline as well as to other easyGroup corporations. easyGroup corporations pay a fee to Haji-loannou for the use of the name. However, easyJet does not have to pay to use the easy brand name. This arrangement and communication style is important because if a company tries to initiate any type of hostile takeover, the easy brand would be protected.
This arrangement displays the type of protection, culture, and loyalty Haji-loannou has in his company. Southwest Airlines easyJet has developed its culture of communication to mimic that of American based Southwest Airlines. Both easyJet and Southwest Airlines are low-fare airlines. Southwest Airlines is the largest airline in the United States and the second largest airline in the World by number of passengers carried (Wikipedia, 2007). Southwest began its operations in 1967 and flew to three cities. In the early 1970s, Southwest faced some financial turmoil.
Similar to the issues faced by easyJet, Southwest was searching for a way for consumers to book low fare flights directly with the airline. In 1995, Southwest launched its website allowing consumers to book flights directly without the use of a travel agent. Southwest maintains its personal communications with its consumers by only allowing its tickets to be sold on its website and not through any sort of travel agent or travel site. Southwest also allows customers to change reservations without additional costs, however it does not allow passengers same day standby travel on a different flight without paying for an upgrade.
While this may seem harsh to those passengers who need a standby ticket, it drastically reduces the number of passengers who lose their seats due to standby passengers. Another feature Southwest offers its passengers is to allow them to bring three pieces of luggage to check in instead of two like most airlines. Even though the aircrafts that Southwest operates are not as comfortable as other airlines, the additional amenities and low-fares have paid off. The United States Department of Transportation ranked Southwest Airlines as the number one passenger preferred airline for 2006.
Chairman and CEO of Southwest Airlines, Herb Kelleher believes its as simple as seeking out exceptional employees, treating them with respect, and giving them the latitude and encouragement necessary to do their jobs better than anyone knew possible (Stodder, 1997). Excellent communication with customers starts at the executive level and from within the corporate culture. If communication is effective within a corporation that culture of communication can be handed down to the customer.
Execution of a Communication Strategy By following Southwest Airlines example, easyJet has employed a solid communications strategy with its customers. The majority of businesses in the world today neglect The People Process (Bossidy and Charan 141). In their book, Execution, Larry Bossidy and Ram Charan discuss how to create a strategy of execution in order to create a successful business that focuses on the people and having the right people in the right places. A robust people process does three things. It evaluates individuals accurately and in depth.
It provides a framework for identifying and developing the leadership talent-at all levels and of all kinds-the organization will need to execute its strategies down the road. And it fills the leadership pipeline thats the basis for a strong succession plan (Bossidy and Charan 141). In order to develop a successful communications strategy, a good leader needs to consider the people/employees who will have to execute this strategy. easyJet takes reservations directly from its consumers via its website. When hiring employees, easyJet must ensure that these employees have the skills necessary to work within this type of communication culture.
Every easyJet employee needs to be aware of the communication culture and strategy maintained by the corporation in order to deliver that same style of communication to the customer. Rewards and Recognitions Due to easyJets communication culture and strategy it is one of the most frequently cited examples of a mainstream company which has exploited the shift from multi-layer distribution to direct business to consumer transactions. easyJet is a forward thinking corporation and as such launched its direct to consumer website prior to the mass adoption of the Internet.
This marketing strategy catapulted easyJet into a top market position in its industry. In June 2006, easyJets website was awarded the Best Airline Website Award by TravelMole Web Awards beating out rivals including British Airways. The judges stated that the website was user-friendly and pleasing to the eye. Innovation and Future Growth Even though the airline industry has experienced a decline, low-fare airlines have created a new growth market. easyJet has an extensive opportunity to continue growing within this growth market.
There are four main types of innovations for growth markets: Disruptive innovation, application innovation, product innovation, and platform innovation (Moore 74) In order for easyJet to maintain its market position, it must introduce one of these methods of innovation or it will fail to keep up with the rest of the industry. Disruptive Innovation correlates with the early market phase of the technology-adoption life cycle (Moore 74). The low-fare airline industry has been around for a long time, but new technologies and global affairs have paved the way for a new type of market within this industry.
There are two types of disruptive innovations: one that favors complex-systems models and one that favors volume operations (Moore 75). Like its American mentor, Southwest Airlines, easyJet should focus on economizing on every process and function of running a successful airline. Southwest Airlines redesigned its corporation and gained market capitalization that is equal to the sum of all of its competitors combined (Moore 80). easyJet needs to analyze its employee compensation, pricing, reservation procedures, equipment, and airport selection to ensure that it can keep up with future changes and growth within its market. asyJet has already started the process of innovation by hiring Site Confidence to monitor its website.
According to an article published by M2 Presswire in September 2006 The 24/7 monitoring service will ensure that easyJet customers can book tickets without the threat of downtime, outages or slow download speeds. This new system has produced results for easyJet. According to Airline Industry Information easyJet reported an 11. 2% increase in passenger numbers for November 2006 as compared to November 2005. Obstacles easyJet Has Had to Overcome asyJet faced an obstacle in 2006 by not abiding by EU-Law 261/2004 which states that passengers had the right to be reimbursed for the price of their tickets within one week due to airline cancellation. easyJet had difficulty refunding the tickets within the one week period. Effective communication by easyJet kept passengers at ease in the long run, and the passenger numbers continued to climb despite this obstacle. easyJet, although not the first low-fare airline or the first largest low-fare airline in Europe, paved the way for the boom in low-fare air travel at the turn of the century.
Due to this high stake in market share, easyJet has been accused of contributing to global warming through the high carbon emissions of their aircrafts. The European Low Fares Airline Association has teamed with easyJet and other low fare airlines to argue that these airlines operate more fuel-efficient aircraft than most full service airlines, and that the point to point services offered by these low-fare airlines also use less fuel. However, the low-fares offered by these airlines have caused an increase in air traffic which has resulted in a negative effect on the environment. asyJet and other low-fare airlines have a policy of only operating new aircraft that produce lower emissions and are more environmentally friendly (with the exception of easyJets initial two aircraft).
In order to overcome this obstacle, easyJet has been communicating with aircraft manufacturers to design more eco-friendly aircraft, and has even unveiled their own eco-friendly aircraft design. Future Eco-Friendly Aircrafts Across the globe nations are concerned with developing renewable energy sources that are more environmentally friendly. easyJet is no exception.
As easyJet forges ahead into the new millennium, it will face having to replace or redesign its current fleet to be eco-friendly. According to Flight Daily News, Harrison is continuing to push Airbus and Boeing to produce eco-friendly aircrafts. easyJet has unveiled its own design for an eco-friendly aircraft that utilizes existing technologies that could halve carbon dioxide emissions and produce 75% less NOx by 2015. Biofuel technology has been proposed as a current solution, but Harrison expressed his doubts about the use of biofuel technology at the World Low Cost Airlines Congress (Kaminski-Morrow, 2007).
The Alternative Fuels And Biofuels for Aircraft Development (Alfa-bird) project will investigate the economical performance and industrial consequences of switching from todays kerosene-based fuels to biofuels and other alternatives. Based on the results a strategy for these fuels will be defined along with an implementation plan. Due to issues with biomass supply for biofuels, synthetic fuels are probably a better solution, the consortiums proposal papers state.
Current jet engine fuel efficiency is viewed as near-optimal, while air traffic is increasing at a rate of 4% a year, leading to any future efficiency-related fuel savings being consumed by the growth, the consortium says (Coppinger, 2007). Harrison agrees that biofuels are not an optimal alternative at this point, but did state that he is not against biofuel technology (Kaminski-Morrow, 2007). Developing eco-friendly aircrafts will be an obstacle that easyJet will have to overcome, as well as trying to replace their current fleet.
EasyJet needs to work in conjunction with Alfa-bird in order to develop these new technologies and maintain their market position in the future. However, during this initial phase of development, easyJet and Harrison need to remember to utilize the communication style they utilize with their customers, be available and simple to understand and use. Dismissing any sort of proper communication while developing new technologies can change a corporations communication culture very quickly, even though it does not directly relate to communications with the customer.
Developing a Communications Strategy In order to develop a communications strategy that can be integrated into the strategic planning process for the corporation, easyJet must decide what type of strategy to use. There are ten different types of strategy development (Mintzberg, Ahlstrand, Lampel, 1998):
1) The Design School; 2) The Planning School; 3) The Positioning School; 4) The Entrepreneurial School; 5) The Cognitive School; 6) The Learning School; 7) The Power School; 8) The Cultural School; 9) The Environmental School; and 10) The Configuration School. asyJet needs build on its current communications strategy by applying principles from the Design School, the Planning School, and the Configuration School. The Design School utilizes a step by step model for strategic communications planning. To begin the communications planning process, easyJet must do an internal and external appraisal in the form of a SWOT Analysis. A SWOT Analysis lists the internal strengths and weaknesses, and the external opportunities and threats of a corporation. Based on the SWOT Analysis, easyJet can determine the corporations distinctive competencies and key success factors.
This information is used to formulate the communication strategy. The sole architect for the strategic plan, according to the Design School, is the Chief Executive Officer (CEO). Harrison must approve the final communication strategy, but should receive input from the strategic planning team. By developing the communication strategy as a team, easyJet will also use aspects of the Planning School. The Planning School adopts the majority of the premises from the Design School. The Planning School uses an internal and external audit stage, which consists of a SWOT Analysis.
The CEO gives the final approval for the communications strategy; however, he is not the sole architect. The Planning School provides for a team of strategists to develop the communications strategy. According to the Design School, in order to evaluate and choose the most effective and efficient communications strategy, the following framework should be used. This framework was developed by Dr. Richard Rumelt, DBA from the Harvard General Management group and professor at UCLA School of Management. The evaluation process, according to Rumelt, consists of a series of tests (explained in the form of questions).
Is the communications strategy consistent with the goals and policies of the corporation? Does the communications strategy adapt to the external environment? Does the communications strategy provide for a competitive advantage? Does the communications strategy overuse available resources or create unsolvable problems? The last step in the communications strategy planning process, within the Design School, is to implement the plan. Implementation of the communications strategy will include educating the managers involved as well as the employees of the plans details.
The plan should be simple and informal, just like the process of developing it. Managers and employees should be given a step by step guide on how to implement the strategy. The Planning School differs from the Design School in that it implements a formal step by step process for executing the plan. easyJet following the Planning School model should schedule each step of implementation by a specific date. In order to develop a communications strategy that can adapt to the global economy easyJet should also incorporate the six main premises of the Configuration School.
The key ingredient is for the corporation to sustain stability or at least adaptable strategic change most of the time, but periodically recognize the need for transformation and be able to manage that disruptive process without destroying the organization. easyJet must be cautious not to incorporate the Power School into its communications strategy so much so that it allows a political agenda to override the main goals and vision of the corporation. Harrison must not allow the communications strategy planning process to become a process of bargaining and compromise among conflicting political groups and individuals.
Utilizing this school of thought in planning a communications strategy can alienate customers and bring about undesired conflict. easyJet must remain cognoscente of the environmental concerns its customers may have regarding its aircraft. However, pushing an unwanted political agenda can drive customers away. Recommendations and Conclusions easyJet started off in the airline industry slow, but by adopting Southwest Airlines model of communication, easyJet was able to become the market leader in low cost air fare in Europe.
In order to keep up with technology, easyJet developed a website allowing customers to book reservations directly from the company without having to use a travel agent or pay a commission to a travel agent. To maintain that website easyJet hired European based Site Confidence to provide 24/7 support which resulted in an 11. 2% gain in passenger numbers a month later. Each of these strategies has allowed easyJet to forge ahead and stay one step in front of their competition. In order to remain a front runner in the market, easyJet must continue to utilize its communication style with customers, employees, suppliers, and political leaders.
When developing a communications strategy for the future, easyJet must complete and internal and external appraisal in order to tailor the plan to the current trends and the desires of its customers. easyJet should develop a strategic planning team to develop a communications strategy and implement an employee educational program. If easyJets employees are unaware of its communication strategy and culture, its customers will also be unaware of its communications strategy and culture. asyJet should continue to invest in research and development for new eco-friendly technologies as well as encourage its aircraft suppliers to follow suit. However, Harrison must remember to utilize the communication culture of the corporation at all times as a representative of easyJet and not let the Power School of planning dictate easyJets communications strategy. If easyJet can maintain and improve its current communications strategy then passengers will continue to want to come fly with us.