Easy Jet Airline Company - Term Paper Example

Easy jet This is a study about Easy Jet Airline Company. The study will explore the strategies of the company that have made it more successful than its competitors. More specifically, this study will discuss the marketing strategy of Easy Jet Company and compare its pricing strategy with that of its competitors. Easy Jet is an airline company with its headquarters in London, Luton airport. In United Kingdom, Easy Jet is one of the largest airline companies, with a high number of passengers and operations both internationally and domestically. The company has more than 500 routes in European, West Asian and North African airports. Since its establishment in 1994, the company has undergone a lot of improvements including base openings and acquisitions. For a company to survive in the market, it should employ marketing strategies that are compatible with the market and profitability of the company (Koenigsber, Muller & Vilcassim 279). Easy Jet has applied a unique marketing strategy that has enabled it to survive in the competitive market (Koenigsber, Muller & Vilcassim 281). The mission of the company is to provide customers with exceptional value and point-to-point airline services. The company also aims at offering and effecting reliable and consistent fares and products that appeal to business markets and leisure on various European routes. By 2009, the company had employed more than 6107 employees. Easy Jet has been one of the most successful and competitive low-cost and short-haul airline with a clear pricing structure (Mayer 16). All prices for a given flight are quoted one way; this means that a single price prevails in any point of the flight. The prices of the airline are low early on, but increase as the date of departure nears. Easy Jet applies various and distinct strategies in its operations. First, the company does not offer a last minute deal. One cannot get a flight ticket at the last minute of the flight. Secondly, the company offers a single class of travelers unlike other airline companies where there are different travelling classes. Price is the only variant that controls the demand for flight tickets at Easy Jet Company (Mayer 17). The third strategy applies to the duration of sale of tickets. The company varies the time in which its tickets are offered on the market. The first two strategies can be contrasted to the traditional airline pricing strategy. Most of the competitors of Easy Jet Company offer the last minute deals through resellers or directly to customers (Koenigsber, Muller & Vilcassim 282). The prevailing pricing strategy at Easy Jet also aims to control the demand through seat allocation to certain classes of people. This is done by making price the only variable that controls demand for travelling tickets, and offering equal services to all customers. Ryanair is one of the airlines, which compete with Easy Jet. The two companies use the same pricing strategy that insists on providing air services that are cheaper than other competitors. The low prices set by the two companies are feasible through reducing all possible costs, and having no frills. They use indicative ways to reduce their costs such as little product differentiation, reducing the costs of research and development and reducing the advertising and selling costs (Jones 28). The two companies also use efficient scale facilities; any innovations can only be adopted when the other competitors have tried and implemented them successfully. This helps in reducing the risks that may arise after implementing these innovations. A competitive advantage of the two companies lies in the fact that they have a combination of high frequency services and low cost fares (Mayer 17). They also have an excellent network of routes where they increase the number of flights. Having reduced prices, Easy Jet and Ryanair do not offer drinks, food, or other services offered by other competitors. This way, the company lowers the expenses thus reducing the prices. Easy Jet has succeeded in reducing the costs when it comes to the selling of its tickets. There are no intermediaries such as the travel agents who may cause the price of tickets to increase. The company sells its tickets directly to customers or through its website. Intermediaries affect the prices of goods and services in the market. When they are eliminated, it is easy for a company to have direct control of the price of its products and services (Jones 48). The company also uses small and secondary airports that are not very busy and tend to be less costly. Most Easy Jet competitors use large or main airports during their flights. The cost of using such airports is extremely high, and this makes their prices escalate. Using small or secondary airports enables the turnarounds on the ground easy or fast as compared to the use of large airports (Koenigsber, Muller & Vilcassim 283). As a result, costs are highly reduced. Another strategy used by the Easy Jet in their pricing includes the elimination of almost all advertising costs. The image of the company is mainly promoted through the website where many of the customers visit. Advertisement costs affect the prices of the services directly. The company uses cheap advertising methods such as sending e-mails to their customers and advertising at the back of their seats. Unlike their competitors, the reduction in advertising costs has also contributed to the low prices. Most of the competitors of Easy Jet have invested heavily in advertising their services. The advertisement costs have consequences on the prices of the services since the intention of any company is to have profits. The low advertisement costs have enabled the company to reduce the operational expenses thus reducing the prices of the travelling service (Jones 54). Easy Jet Company has tried to minimize its costs through buying cheap aircrafts. They have also taken advantage of exceptional offers in seasonal circumstances such as the attacks on United States in September 11, 2001. Most of the competitors of Easy Jet were afraid to carry out their services after these terrorist attacks, but Easy Jet took the chances. In the aircraft, there is only a single class of seats; this minimizes the free space per traveler. This way, the number of seats in a single aircraft can easily be increased (Mayer 18). The competitors of Easy Jet have different classes of seats, which reduces the space per every traveler. Those travelling on high class occupy a lot of space in the aircraft. This minimizes the number of passengers in the aircraft. If the number of passengers is less, it means that they have to pay additionally in order to cover the extra cost. With Easy Jet, they increase the number of passengers through reducing the space per traveler, and then reduce the price. Such a strategy is advantageous instead of increasing the price of service and increasing the space per traveler (Mayer 19). The low cost pricing strategy adopted by Easy Jet has been useful in drawing more customers to the services. The company attracts customers with low fares during the booking period. Low fares in the company are available up to almost two weeks to the time of departure. Customers are able to make reasoned tradeoffs between timing and schedules as the fares are freely available (Mayer 19). A business traveler who is price sensitive may opt to use the best schedule at his or her convenience, and may be required to pay a high price. In the case of price sensitive travelers, they may make a parallel decision to that of a price sensitive business traveler. For an airline service that uses traditional revenue management system, it may overprice the travelers, especially where perfect information in the market is available. This differentiates Easy Jet and its competitors who effectively overcharge the customers. The low cost airline services have a certain degree of flexibility on the restrictions placed on the customers. This has enabled the customers to take advantage of cheap fares, although it is hard to justify the statement. In its pricing strategy, Easy Jet has encountered several problems in maintaining the strategy. The threat of terrorism has caused fear of flying among many travelers. This has led to a reduction in the number of passengers worldwide (Koenigsber, Muller & Vilcassim 287). The other challenge is the fluctuating oil prices; airline industry depends heavily on oil products. When the prices of oil increase, they are likely to affect the travelling prices and the pricing strategy of Easy Jet Company. Other factors include government legislation in many countries, epidemics or natural disasters like volcanic eruptions. In addition, contagious diseases and the high market competition in the airline industry affect the marketing strategy of Jet Airline. In conclusion, Easy Jet has developed a pricing strategy that its competitors should consider adopting. The company is one of the most successful and competitive low-cost and short-haul airlines with a straightforward pricing structure. The strategy insists on providing air services that are cheaper than other airline service providers. The company does not offer a last minute deal. Moreover, the company offers a single class of travelers unlike other airline companies where there are different travelling classes. Price is the only variant that controls the demand for flight tickets at Easy Jet Company. Works cited Jones, Lois. Easy jet: the Story of Britain's Biggest Low-Cost Airline. London: Aurum Press, 2007. Print. Koenigsberg, Oded, Muller, Eitan, & Vilcassim, Naufel. "EasyJet Pricing Strategy: Should Low-Fare Airlines Offer Last-Minute Deals?" Quantitative Marketing and Economics 6. 3 (2008): 279-297. Print. Mayer, Florian. A Case Study of Easy Jet and the Airline Industry. Berlin: GRIN Verlag, 2007. Print. Read More