Haji-Ioannou, the jet-setting son of a Greek shipping tycoon, was rated by the Sunday Times in 2003 (Sunday Times, 2003) as Britain’s 140th richest person. He is however so cheap, that when he launched easyJet, he decided not to offer free soft drinks or peanuts. He’s so cheap that when he launched his car rental business, called easyCar, he decided to charge when customers brought cars back dirty. He’s so cheap that when you go to see a film in one of his cinema, called easyCinema, you get a statement at the end of the film saying, “Please take your rubbish with you – your mum doesn’t work here.
” Stelios, the 35 year old entrepreneur is well known throughout Europe, as an energetic almost billionaire who has lit up the world with his neon-orange easy brand. This neon-orange easy brand is to represent value for the masses. Stelios has founded a range of easy Group of companies. A full list of the founded companies can be seen in appendix 1. Stelios’s appreciation of business strategy powered by low costs allowed him to examine the benefits of a similar model to that of the Southwest Airline within Europe.
Stelios felt he had found the “right-concept” for a European low cost airline (Sull D, 1999). He therefore launched easyJet into the European market. easyJet is based at easyLand, a bright orange building adjacent to the main taxiway at Luton Airport. “To provide our customers with safe, good value, point to point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes.
To achieve this we will develop our people and establish lasting relationships with our suppliers” (easyjet. com-index, 1997). easyJet promotes itself by offering great value fares, 128 routes to 39 key business and leisure airports in Europe, one way fares, flexibility on all its fares, fast easy convenient booking facilities and hassles-free flying due to ticketless travel (Ghose & Reid, 2004). easyJet owes its existence to the development of what is called the “open skies” in Europe, this is when any airline can fly into another countries without licences.
(easyjet. com-information pack-development, 1997). Before 1987 the European airways were mainly regulated by the government. The national flag carriers were the dominant airlines. They required significant government subsidies due to high cost structures and operational inefficiencies. At this time new competition was non-existent. This was due to entry barriers created by the governments within the EU. As a result, the national flag-carriers rarely had the need to be concerned with competitive strategy.
The deregulation of the airline industry was considered necessary by the European Commissioner to facilitate commercial reconstruction. A three-phase ten-year plan was introduced in 1987, which allowed new competitors to enter the market with a chance of success. The 1992 Deregulation Act stated that any EU carrier was permitted to provide a passenger service without restriction on any domestic route within any EU member-state (Sull D, 1999). Due to this, approximately 80 new airlines entered the market (Sull D, 1999).
In 1995, 56 airlines were launched of which 17 went bankrupt within the first year of their operation. Some of the successful launches include Ryanair and easyJet. There are two distinct strategies within the aviation industry. These are “low cost, no frills” and “value added”. There is no official definition for low cost/no-frills airlines. They focus on core activities and run regular services at the lowest possible cost. Thus offering lower fares which undercut those offered by larger competitors.
They tend to focus on short haul routes and reduce costs by operating a unified fleet of aircraft for example Boeing 737, which effectively reduces maintenance costs (Farran P A, 2000). Both Ryanair and easyJet adopted this strategy. On the other hand, there are those who adopt the “value added” strategy which attempts to provide a full quality service, providing additional services/frills for those consumers who are willing to pay extra i. e. national flag-carriers such as Air France, British Airways.