Easyjet Case Study
Pergamon
PII:
European Management Journal Vol. 17, No. 1, pp. 20–38, 1999 © 1999 Elsevier Science Ltd. All rights reserved Printed in Great Britain S0263-2373(98)00059-0 0263-2373/99 $19.00 0.00
Case Study easyJet’s $500 Million Gamble
DON SULL, London Business School, and Commentators, Constantinos Markides, Walter Kuemmerle, Luis Cabral.
This Case Study details the rapid growth of easyJet which started operations in November 1995 from London’s Luton airport. In two years, it was widely regarded as the model low-cost European airline and a strong competitor to flag carriers. The company has clearly identifiable operational and marketing characteristics, e.g. one type of aircraft, point-to-point short-haul travel, no in-flight meals, rapid turnaround time, very high aircraft utilization, direct sales, cost-conscious customer segments and extensive sub-contracting. easyJet’s managers identified three of its nearest low-cost competitors and the strategy of each of these airlines is detailed in the Case Study. But easyJet also experienced direct retaliation from large flag carriers like KLM and British Airways (Go). These challenges faced easyJet’s owner, Stelios Haji-ioannou, as he signed a $500m contract with Boeing in July 1997 to purchase 12 brand new 737s. The Case is followed by critical analysis from three Commentators in the field. © 1999 Elsevier Science Ltd. All rights reserved It was July 1997, and Stelios Haji-ioannou — owner and chairman of easyJet — glanced at his $500m contract with Boeing to purchase 12 brand new 737s. As he signed the contract, Stelios steadied his shaking hand. The words of Richard Branson, chairman of Virgin Atlantic airline, flashed through his mind: ‘the safest way to become a millionaire is to start as a billionaire and invest in the airline industry.’ With the Boeing contract, signed before easyJet reached its second anniversary, Stelios (as he was called by everyone) committed to triple the size of easyJet’s fully-owned
PII:
European Management Journal Vol. 17, No. 1, pp. 20–38, 1999 © 1999 Elsevier Science Ltd. All rights reserved Printed in Great Britain S0263-2373(98)00059-0 0263-2373/99 $19.00 0.00
Case Study easyJet’s $500 Million Gamble
DON SULL, London Business School, and Commentators, Constantinos Markides, Walter Kuemmerle, Luis Cabral.
This Case Study details the rapid growth of easyJet which started operations in November 1995 from London’s Luton airport. In two years, it was widely regarded as the model low-cost European airline and a strong competitor to flag carriers. The company has clearly identifiable operational and marketing characteristics, e.g. one type of aircraft, point-to-point short-haul travel, no in-flight meals, rapid turnaround time, very high aircraft utilization, direct sales, cost-conscious customer segments and extensive sub-contracting. easyJet’s managers identified three of its nearest low-cost competitors and the strategy of each of these airlines is detailed in the Case Study. But easyJet also experienced direct retaliation from large flag carriers like KLM and British Airways (Go). These challenges faced easyJet’s owner, Stelios Haji-ioannou, as he signed a $500m contract with Boeing in July 1997 to purchase 12 brand new 737s. The Case is followed by critical analysis from three Commentators in the field. © 1999 Elsevier Science Ltd. All rights reserved It was July 1997, and Stelios Haji-ioannou — owner and chairman of easyJet — glanced at his $500m contract with Boeing to purchase 12 brand new 737s. As he signed the contract, Stelios steadied his shaking hand. The words of Richard Branson, chairman of Virgin Atlantic airline, flashed through his mind: ‘the safest way to become a millionaire is to start as a billionaire and invest in the airline industry.’ With the Boeing contract, signed before easyJet reached its second anniversary, Stelios (as he was called by everyone) committed to triple the size of easyJet’s fully-owned