easyJet The Web's Favourite Airline

Case details
About the authors

easyJet The Web's Favourite Airline was written by Brian Rogers and Nirmalya Kumar of IMD, Lausanne.

Cases were once described as "the tombstones of dead situations". One criticism of the case method is that it involves second guessing long ago managerial decisions, only to find that the true outcomes rarely corroborated the concerns of the class. 

Brian Rogers and Professor Nirmalya Kumar of IMD have developed one way round this. The decisions being contemplated in the case easyJet 2000, just completed, are still to be taken, and by the time they are, its successor, easyEverything, will be carrying the story forward towards the next horizons.

IMD has just released the case, easyJet 2000. That IMD releases a case would not normally warrant specific comment in The Case Centre's newsletter, but this is a case with a difference. European readers will mostly be familiar with the pioneering no frills low fares airline founded in 1995 by Stelios Haji-Ioanniou at the age of 33, and modelled on Southwest Airlines in the US. 

Perhaps the less interesting aspect of the case is that it can be used as a conventional entrepreneurial strategy case, responsive to the various analytical structures that teachers in this area like to demonstrate. For the record, these show that its pricing policy is strong and flexible, based upon the company's yield management system, its load factors and punctuality are as good as or better than other airlines, it is particularly rigorous on cost control, its marketing achieves colossal exposure and brand recognition of 80 per cent. in the UK, it is as well trusted as any other airline for safety and it is profitable with a strong balance sheet.

More interesting is the insight into the character and methods of Stelios himself. Responding to the interviewer's comment on Stelios' visibility on television, Brian Rogers commented, "He is his own best advert. We flew with him recently from Geneva to London, and one of his remarks was, 'When the passengers see me on the plane, they reckon it must be safe!'". He is, however, not without problems: to keep fixed costs down he employs sub-contractors, and can become incensed when he hears subcontract employees working for easyJet describing the airline as "them". Cost reduction also means that he is not paying the highest salaries in the business, and although it is an intrinsically exciting company to work for, he has concerns about improving employee commitment to, and identification with, the airline.

Entrepreneurial expression and consolidation

The core concern is where he is heading as of January 2000, when the case was completed. Brian Rogers and Nirmalya Kumar have obtained privileged insight in numerous meetings into the thoughts of Stelios and his Marketing Director, Philippe Vignon, thoughts that range from firm plans already starting to be implemented all the way to general ideas on which formal work has not yet started. Stelios has indicated that he is considering the option of not growing easyJet geographically, and he certainly does not contemplate going transatlantic. Should he consolidate the airline broadly along its existing routes in Europe?

If so how will he continue to express his entrepreneurial talent? (easyJet was not his first entrepreneurial venture, although it is the best recognised throughout Europe). Already he has evolved the concept of easyEverything, and the first steps in its development have been taken. In the last few months of 1999 he began to set up easyEverything, the Internet Shop, a UK wide chain of Internet cafes. He hopes to be able to run these on the same basis as the airline, maximising utilisation through national brand awareness. As this is written the first five are trading and beginning to turn a profit. Part of his logic is that many customers buy the airline tickets on the Internet, so why not sell them through his own locations also? This is not a capital intensive venture, but Stelios's thoughts go all the way to becoming a fully fledged e-retailer. How would he accomplish this, and what would be involved? As yet, the answers are unknown.

He has also stated that planning is under way to launch a car rental business. The connection with the airline is fairly obvious, and the Internet offers opportunities for a booking scheme. How it would be done remains an unknown, even to Stelios. Planning is at an early stage, though the project would probably be launched under the easyEverything umbrella.

Discussion should centre on three main themes

Brian sees discussion of the case centring around three main themes. First, given his existing challenges, will the airline continue to work? Will he be able to maintain his position in it as an entrepreneurial, hands-on leader? This question sharpens against the notion that he might seek to go public in late 2000 to raise capital and to be able, like Southwest, to be able to offer stock to his employees as a loyalty inducement.

The second question is, will the Internet cafe chain concept work? No one has tried a national chain so far. And third, should he go into car rental? Is he spreading himself too thin? Should he be consolidating the two existing ventures?

Events are unfolding as the case is taught

The case is special because the events are unfolding as you read this. Students can't find out what actually happened. By the time they can, the sequel will be available. Events are just a short step ahead of the reader. Meanwhile, Stelios is learning as he goes along, changing his approach in response to developing events, and at the time of use, many plans and decisions will still be unimplemented. The case is in step with events, not one step behind.

And Stelios is asking himself whether the step into easyEverything might ultimately logically lead to a move into easyBanking. 

Professor Nirmalya Kumar, who supervised the case research, adds the following comment: "The case is really easy to teach because every participant can identify with the product 'airline travel' and has his or her own horror stories to share. As a result, there is high involvement and energetic discussion. In particular, participants learn how easyJet has made several innovations in their business system that allow them to offer low prices, yet still make money. These innovations include certain cost savings (e.g., meals, travel agent commissions, maximisation of seat capacity per plane, use of less expensive airports, point to point short haul flights, use of a single type of aircraft, etc.) that other airlines incur. By constantly asking participants the question 'what costs do we incur that do not create any value for the customer?', participants are forced to rethink their own business models."

Case details

Click on the case titles to view further details and, where available, an educator preview copy.

Easyjet: The Web's Favourite Airline
This case was previously called easyJet 2000
Brian Rogers and Nirmalya Kumar
IMD
Ref IMD-3-0873
Also available:
Teaching note

Ref IMD-3-0873-T
Abridged version

Ref IMD-3-0872

Easy case series
Brian Rogers and Nirmalya Kumar
IMD
Ref IMD-3-0872-T
Teaching note

Easyeverything: The Internet Shop (Abridged)
Brian Rogers and Nirmalya Kumar
IMD
Ref IMD-3-0876
Abridged

About the authors

Professor Nirmalya Kumar is Professor of Marketing, Director of Centre for Marketing and Co-Director for Aditya V Birla India Centre at London Business School, UK. 
e nkumar@london.edu

Unfortunately we do not have the details of Brian's current post or contact details.

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