Easy_Jet

Easy Jet Analysis INTRODUCTION Expensive and luxurious short haul flights are becoming a thing of the past. Nowadays low cost airlines provide efficient and frequent services from the UK to nearby European destinations. Customers are beginning to realise that cheaper can also mean better. One of the airlines providing these services is Easy Jet. After its merger with Go Fly in August 2002, it has become one of Europe's biggest and leading low cost airlines. Easy Jet is committed 'to provide customers with safe, good value point to point air services. To effect, and to offer a consistent and reliable product, as well as fares appealing to leisure and business markets on a wide range of European routes." In the process of achieving these goals, they also emphasise on developing and supporting their employees. The airline was founded by Stelios Haji-Ioannou, and the family remains the major shareholder. He controls other separate easygroup companies such as easy Internet Café, Easycar.com, easy money and easy value .They are different companies from Easy Jet and are operated differently. However, some cross marketing does exist. Since its first flight in November 1995, Easy Jet has shown substantial organic growth. It has been faced with the toughest of market situations but it has shown its commitment and kept its promise of delivering good value service at rock bottom prices. How they managed to achieve this, will be discussed further in this report. This report is divided into three sections. Section 1 deals with Easy Jet in general, the nature of its business, the number of employees and basic financial statistics. A 7S analysis has also been performed. Section 2 deals with the changes in strategy, structure and culture of Easy Jet. The leadership required to achieve this change is also discussed. Section 3 comprises of issues relating to the relative success and failure and the factors affecting this followed by concluding remarks. EASY JET OPERATIONS The secret of Easy Jet's success lies in the mere concept on which the organisation is based. [2] A Ticket less Company The reason Easy Jet has kept its promise of providing low-cost, efficient travel is through its strict control over costs. Since its beginning, Easy Jet relied on its call centre based at Luton for bookings. It introduced the idea of ticket less travel that only requires a passport and a confirmation number on international flights and a suitable form of identity on domestic flights. It was in 1998 that Easy Jet started its bookings on the internet and that mode of booking has gained immense popularity. It is predicted that the popularity of internet booking will take over booking through the call centre. No Free Lunch Easy Jet believes in reducing costs in order to maximise profits. According to a customer survey, travellers on short haul flights did not prefer to have meals. There is a kiosk on board the plane, from where snacks may be purchased if necessary, thereby eliminating use of plastic trays, and extra cabin crew. Efficient Use of Airports Easy Jet flies to main destinations throughout Europe but gains efficiencies though quicker turnaround times and progressive landing charges agreements with the airport. E.g., Easy Jet has its bases at Luton, Liverpool, Geneva and Schipol airports. The choice of airports is reflected by the company's low cost policy of operations. Paperless Operations The company has cut down administrative and managerial working costs by operating these functions entirely on IT systems, which run on secure servers and may be accessed from all over the world. Subcontracting Easy Jet is said to subcontract its crew, including pilots and cabin crew. RECENT MERGER WITH GO FLY Easy Jet's recent merger with British Airway's Go Fly (August 2002), Europe's number one low cost airline has been created. All the necessary changes regarding the merger have been carried out, including staff allocation and cultural amalgamation. However it is believed that a few redundancies will be made as a result of this change. It is predicted that customers will benefit from this merger, as more cost effective flights will be introduced on new routes. NUMBER OF STAFF Easy Jet, combined with Go Fly, employees 2870 people, currently has 47 Boeing 737-300 aircraft and 19, Boeing Next Generation 737-700's. The Go fleet includes 24 Boeing 737-300 aircraft. FINANCIAL STATISTICS According to the financial year ended 30th September 2002: Profit before tax up 78% to £71.6m (in 2001 = £40.1m) Revenues up 55% to £552m (2001= £357m) Passenger numbers up by 60% to £11.4m (2001= £7.1m) Average net fare down 4% to £46 (2001= £48) Profit before tax, goodwill and exceptionals up by 86% to £81.8m (in 2001 = £44.1m) THE 7 S ANALYSIS The seven S frame work emphasises on the following 7 elements. They have been elaborated in terms of Easy Jet. Structure When speaking of culture, we emphasise coordination in terms of how to make the whole thing work. According to Alfred Chandler (1962) [4], who first pointed out that structure follows strategy or more precisely, a strategy of diversity forces a decentralised structure. So strategy is the way by which a company improves its position in regards with its customers. Easy Jet follows an informal, very flat managerial structure, thus eliminating the wasteful layers of management. The emphasis lies on teams working from remote locations, hot desking, which is the whole idea of Easy Jet as an organisation. Systems By systems we take into account all the systems, formal and informal, for example, those responsible for the day to day running of the business. In this case the systems would be the internet and the booking system. The main concept of Easy Jet was to embrace the opportunity of the internet to reduce distribution costs. It is one of the pioneers of introducing online booking for its customers. Next is the booking system. The system allows for customers to be very flexible in terms of their travelling requirements. The way the fares are structured is based on supply and demand. The booking system even reviews the bookings everyday for future flights thus determining their popularity. If the number of seats sold is higher that usual, then the price is increased. Style According to Mintzberg and Quinn [5] it is important to distinguish between the basic personality of top management and the way teams come across to the organization. As far as the management style is concerned, it has more of a fit as a Craftsman Category of managerial style. According to Patricia Pitcher [6] Craftsmen see the organisation as an enduring institution and they tend to stay in one organisation. They are indefinitely careful about preserving its identity in the midst of change. The credo of the craftsman is, 'if you look after the people, the profit follows'. Another aspect of style is symbolic behaviour. Easy Jet following a successful strategy has employed people who have considerable experience in the airline industry. There are nine people in the Management team, 5 out of which have previously been involved in strategic planning and in negotiating strategic alliances. Thus this can be considered as an aspect of growth for Easy Jet, as it might explore further mergers and acquisitions in the near future. Staff It is important to consider the staff as a pool of resources, to be nurtured and developed with time. The core staff at Easy Jet is call centre based. From the very beginning, Easy Jet nurtured concepts such as remote team working and hot desking. This type of work environment means that the employees should possess a high level of self motivational skills, apart from being constantly motivated by the management staff. According to Mintzberg and Quinn (5), the question arises how do management shape the basic values of their management cadre' They observed that the superbly performing organisations paid extraordinary attention to the socialisation process in their companies. This particularly refers to the process of the introduction of new recruits into the mainstream organisation and the manager's training those recruits and developing them into tomorrow's managers. Skills According to Mintzberg, the skills of a company help us to capture its crucial attributes. That is to say what they are good at. In case of a rapidly changing environment, companies need just more than a shift in strategy focus. They need to maintain competitive advantage by adding on an extra attribute. Easy Jet has grown since its existence in 1995. They have maintained their promise of offering low prices to their customers. But on the other hand, Easy Jet faced competition from the low-cost airline by British Airways, Go Fly, but finally eliminated that threat by entering into a merger with that airline, forming Europe's biggest low-cost airline. Super ordinate goals The word super ordinate literally means "of higher order". By super ordinate goals, we mean the main goals around which the organisation is based. Easy Jet emphasises on providing a consistent product and good value for money. The goals in this case are simple, yet there is strong competition