Stelios is really an interesting man. He's based the creation of his group of companies around the concept of yield management: perishable goods (internet connexion time, car rental time, aircraft passenger seats, etc.) are sold with different prices according to demand. Very smart.
He also has another characteristic: he's able to sell his services for dirt-cheap prices, without sacrificing the real stuff people are paying for. So without writing up an HBR case study, here are my impressions of the EasyJet flight I tool the other day, for the first time:
* reservation: everything is done online on their website. Cool! No intermediary, straight from the company to the end-customer. Seems they are applying DELL's magic formula for selling services. Interestingly, the web site is rather well done: you can check availability online for any flight, and get the current price (gets more expensive when you get closed to the date).
* airport terminals: realizing that customers are not really willing to travel for about 1h to some obscure airport in the middle of corn fields, EasyJet has taken up slots at real airports: envertheless you get to walk for a very loooooooong time at the airport before you get to the boarding gate. I guess these are the cheapest. Hey, customers are willing to walk in airports: => rule #1: understand the value you are selling to customers...
By the way, as long as you are reasonable, you won't be charged for extra weight...
* once at the checking gate, no need to tag your bags. EasyJet uses barcode stickers they put on the bag. They are confortable that your suitcase can't be lost as they are the only ones using their sides of the terminal.
* ground and air crew: funnily enough, orange seems to be the company colour everywhere. Easy to recognise the brand everywhere for very little effort on their side. THe crew is dressed up in casual orange and grey uniforms: no need for the formal stuff: it has to be functional. Hey, maybe even cheaper ?
* planes: my understanding is that EasyJet currently has 70 planes, with an option for 70 more (maybe I got these numbers wrong, and they are more). All the planes are the same: Airbus A119 for mid-haul flights, perfectly suited to the task. WHy all the same:
- discount prices when they buy planes bulk
- all pilots are trained ONCE on all planes
- all planes are BRAND new, so that the mean time between failure is very low
- all spare parts are the same
- all technical personal is trained on the same equipment
=> you know what, a crowd of brand new and identical planes brings the overall cost down...
* crew: rather amazing crew. The chief steward told me he had EXACTLY 20 minutes on the ground from the minute he asks passengers to disembark (from the opening of the door) to the moment when he closes the door (all passengers having boarded the plane). What ? 20 minutes ? yes, that's 6 min for passengers to leave the plane, 8 min to tidy up the plane, 6 min to allow passengers to board.
Whenever he misses the 20 min target by just 2 min, the Chief Steward is called to go up to HQ and explain himself. With 5 "invitations", the guy is fired. FIRED! some discipline in cost control right ?
How does it work:
- food & beverages are SOLD on board. Sure, who wants that crappy sandwich? who values it ? If you want something pay for it. OK. That also means that there is very little litter on board, and a stewardess (they are 3 in total on board + 2 pilots) passes just before landing with a big bag to clean up. During their 8 min on the ground, they just tidy up the buckle and magazines.
Indeed, magazines are handed over only to those passengers who wish to read them, and collected again before landing.
The crew also deos the duty-free selling, serves paying food, puts toilet paper back where it is due, etc. A non stop journey. The day I flew, the crew was meant to fly 5 times between Paris and Cannes.
And algthough you are flying a discount company, they are obsessed with security and won't let you transgress any rule.
The Crew is happy to work the EasyJet way: a steward makes about £1200-1500/month, the Chief Pursuer makes between £1500-2000 /month. They are all paid in the UK, hence probably less taxes too. That's about twice as much as what they would be making on Air France for instance (their estimate).
I was reading Stelios' magazine on the plane: he was advertising EsayCruises, starting £25. You know what, if you are going to sell anything at such low prices, you'd better have a perfectly refined process and costs back home.
Startups: have a look at some of the intrinsics of EasyGroups' companies. You'd be surprised and you'll learn many tricks that will help the fittest survive.
PS: I'm aware of all the litterature about the industry's poster child and first example: Southwest Airlines. I just thought it would nice to share with you some thoughts on a company where execution matters more than just the idea.