EasyJet Musical Chairs

The continuing boardroom farce at Easyjet seems to have roped in some new blood which hopefully will bring a degree of stability to Big Orange. (With due deference to Braniff).

For those who have not been following the saga - Stelios has been having a bit of a feud with the board and the management of his favorite child Easyjet. His concern has been that he disagrees with the move for expansion vs profitability that the company has been pursuing. He launched his latest broadside in July. Stelios is concerned that the relationship between his former protoge and Airbus has become a bit too incestuous. And is concerned that the company is paying too much for its aircraft and buying larger machines unnecessarily. The company now has A320s and A321s it acquired when it board GB Airways but has stepped this up by buying new A320s. Note the company could argue that its larger capacity needs were so severe that it needed to lease a different aircraft type (2 Boeing 757s) during the summer 2010 season to accommodation this. The company is now exclusively Airbus as the last 737-700s were returned this year.

For those of us on the sidelines - the battle seems a little silly since the airline is doing nicely thank you. But a battle there is. As the leading shareholder Stelios is entitled to make his point and he has done so. For the record - his family own 38% of the stock.

Latest to leave is deputy chairman Sir David Michels. The revolving door has seen a parade of folks rotating through the board room in Luton. Among the recent hires as board members are Andy Martin and Adele Anderson. They join recent Deputy Chairman recruit Charles Gurassa. The upheavel is so new that the website has not yet updated the composition.

You can discern the tea leaves here of a change in board direction for the company. On board we now have a bunch of real traditional travel stalwarts.

Let's have a little peak.

Out goes also Sven Boinet (ex - Lastminute.com),
Charles Gurassa has as noted above an excellent travel pedigree
Newcomer Andy Martin is ex Forte, Granada and First Choice (now TUI).
The board seems to have a blue chip set of players. Both women, including its new CEO, on the board shared top 50 most powerful women in the UK status as far back as 2002. Adele has experience in aircraft financing - this seems to be at part of the battle that Stelios is fighting.

For those of us with a little memory this was the company that was founded on the premise that travellers should "cut out the travel agent", we can get an impression that the board will likely take a more traditional approach to distribution. One can infer that the company will become more like a regular carrier and discontinue a key plank of Stelios's product positioning.

Stelios's arguments about the board being a bit cosy - does seem to have some merit. Newcomer Adele and the non-exec chairman were both colleagues at KPMG in the 1990s and 2000s. Rigas Doganis has a long history of working with airlines as an academic and board member of Olympic and SAA. Keith Hammil is currently on the board of Travelodge and was part of the original team of Go.

Clearly this story will run for a long while.

Cheers

Shhhh ....Does Sir Stelios Know?

Sir Stelios now ex-board member of the airline he founded, has blown another gasket on the long running battle of the to expand or not to expand. In the London Based Sunday Times yesterday easyJet founder Sir Stelios Haji-Ioannou is objecting to the airline’s use of outside aircraft. Earlier this month, easyJet chartered a Titan Airways Boeing to cover one of its own aircraft that had a technical fault. Sir Stelios has written to easyJet claiming its use of aircraft not carrying the easyJet name and livery breaches its brand agreement.

But Shhhhhhhhhhhh there are actually two of them - both 757s leased in from other airlines.

So Sir Stelios if you would like to look at them - in glorious colour - here is where you can see both of them:

Titan Airways comes without winglets.
Air Finland also has one painted in Easyjet colours.

This is not really a case of a technical fault - it was that they just ran out of capacity and it was clearly planned since it was covered in the professor's blog on June 11th.

Cheers

EasyJet Leases 757s

Under the category of curious - U2 is leasing from several operators, aircraft that are not normally in their fleet. To be specific 2 757s and a 767. The latter wont be painted but here is a pic of the newly minted 757 in full U2 colors it will be wet leased from Air Finland. The second plane is coming from Astreus. The unpainted 767 will be from Titan. All 3 aircraft are being operated on long haul routes replacing the A321s that U2 is returning to lessors after their acquisition from the purchase of GB Air. Apparently they will be parted out by Airbus. Which seems to be strange unless you are trying to keep up the prices of your new A321s. They have to pay for the A380s somehow.

Cheers




(c) Photo Keith Wignall

A Woman! What Is The World Coming To?

Congrats to the board at Easyjet for hiring a highly competent manager in Carolyn McCall. I think this is the perfect foil for a certain pair of Irishmen who must be classed as the Orange's competitors.

However with no Aviation background this will be a challenge. There are few clues as to how she will rule at the house that (now Sir) Stelios built. She is known as a forceful manager and perhaps that is what is needed after the steady if somewhat undramatic style of her predecessor Andy Harrison.

There are many challenges she faces. An increasing chance of confrontation in the market between Ryanair and U2. Head to head battles with BA. As the airline has been quite successful in moving to a hybrid model - they have captured additional revenue and boosted yields from their customers. However they also face the challenges of no access to LHR and some other airports. I do foresee that during her reign U2 will make a major foray into an entrenched airport and challenge one (or more) of the weaker legacy EU carriers. I think that there will still be the guarded dance between FR and U2 with them both continuing to avoid head to head battle.

Also look for setting an eye on longer haul, brand franchising and less boardroom brawls that have been somewhat of a distraction.

And for anyone who thinks the Professor is a misogynist, the headline is a less than subtle joke that we have not had a EU CEO in airlines for some time - Barbara Cassini was the last one if I recall - and I am sure someone might correct me otherwise. I am really happy to see the old boy network get some female flavour. Let's have more people like Ms McCall irrespective of gender... it should (always) be about the competence which is good for all.

EasyJet adds Mobile Customers Service

On any typical morning at Luton the airport bustles with people rushing for flights. However the contrast with say 10 years ago or more is startling. It is the dress of the passengers.

What used to be an almost exclusively for Leisure market with loads of families and couples off to sun destinations now sees a very different crowd. The business person is now more than likely to be that group who occupies the security lines. (Not the check in lines as everyone has previously checked in if they are biz people).

Easyjet deserves a lot of the credit for this. Taking the low cost model to business markets is driving the differentiation between them and Ryanair. It is also driving greater revenue per passenger - but also greater costs. Easyjet is now deploying technology to improve the quality of the checkin process. In a story carried by ABTN, an Easyjet Spokesman commented: "We are evaluating the technology as to how it can speed up the check in process."

"It allows our staff to have more contact with passengers, providing a faster and more informative service.

"We will never get rid of check-in desks like some other airlines have done in the past," he said.

CapGemini in a recent piece on its concept of Mobile Service Partners combining to deliver services to the consumer via any mobile devices estimates that by the year 2030 almost all travel customers will use some sort of mobile Information and Communication (I&C) device to handle their travel arrangements, independent of the larger computing devices such as PCs and laptops. The formal line between the customer and the supplier provider will blur making some of these services less necessary.

Who knows maybe Ryanair will be right in the end. But for now - in the customer service stakes - Easyjet seems to have the ascendancy. So more and more of those Easyjetters will be biz folks.

BA vs FR and U2

The January Traffic numbers are in and the numbers are impressive.

Ryanair is now officially more than twice the passenger size of BA. Easyjet is nearly than 50% larger in terms of number of passengers carried. Both of the LCCs are generating better yields than the former national carrier.

So here are the comparisons in January:

Ryanair 4.44m passengers , up 9% year-on-year, Load factor 70%
easyJet, 3.14m passengers up 10.7% Load factor 79.3%,
British Airways, 2.14m passengers dropped 8. Load factor 74.2%.

No need to speculate on the financial impact of these numbers.

However this does indicate that the hybrid model is gaining traction. It will be interesting to see how well FR's numbers look this quarter in comparison to U2.

Cheers

Easyjet Shows Boost in Yields But .........From Where?

Easyjet has made a lot of play lately that it is making more money from its GDS revenue. However the recent numbers dont show this.

Indeed an examination of their numbers show that total revenue actually only just rose. Given the troublesome year - this is still quite an achievement.

Total revenue per seat (£) 47.50 45.57 4.2%
Passenger revenue per seat (£) 37.60 36.90 1.9%
Ancillary revenue per seat (£)
Including checked bag charge 9.90 8.68 14.0%
Total revenue per passenger (£) 55.38 54.66 1.3%

So the real driver comes again from the ancillary revenue bucket. With baggage fees definitely helping along.

Ryanair's numbers (in dollar value) are not quite as good but still very healthy.

So there is still a lot of room for growth.

One observation is that clearly the model of being able to get ancillary revenue at the point of sale is going to be a driver for all airlines

Cheers

Is there Someone Missing From The Party?

The Hoopla over the Jetstar/Air Asia pact may be missing a player. That player would be Easyjet.

So here's a thought - how long before Stelios thinks to join up. It might be the right occasion for the Easyjet plane to get built.

Cheers

Easyjet V4,0 = V1.5?

Andy Harrison the Third leader for U2 is to leave in June 2010. Since taking over from Ray Websterin 2005 he has presided over the transition of the airline from pure startup to mature hybrid airline.

However the long running battle between Founder Stelios and first the board and more recently the senior management over expansion plans has probably contributed to what many will consider Andy's early exit.

So the critical question is who the new chap will be and what will this signify to the airline's future direction. Will the next leader go back to the future?

It would seem that the more conservative approach adopted by Harrison will be replaced by an aggressive market footprint expansion. With Ryanair having grown significantly since 2005, Easyjet has pursued profitability over pure growth. There is however an opportunity to grow the airline with over 100 planes on order over the next few years. Y2 has shown its ability to compete as a hybrid carrier and optimize yields better than its Irish larger "LCC Cousin".

I would probably think we are going to see a more aggressive stance to new markets with U2 and even the opportunity to export the business model to other markets.

Stay tuned

Cheers

EasyJet Boosts Yields on Ancillaries, Corporate Travel Increasing

Orange smiles all round it would seem.

Easyjet has been making some headway in the fight on driving yield on their flights. The average flight is yielding more and the Orange Crew seem to be beating the Blue/Yellow crew in this respect.

From the conference call 10 days ago - EZ was able to report the following:

Ancillaries are up 22%, excluding baggage charges.
Baggage charges are up a whopping 62.3%
Business travel accounts for just over 20% of revenue

It is probably the latter that needs to catch the eye of the other LCCs particularly Ryanair.

The take up of Biz Travel can be attributed (and has been) to the availability in the GDS. And this is an important lesson for any LCC. While the GDSs may be an anathema there is logic to providing a well established and simple tool which the TMCs and their corporate clients have access to.

I have made the point before that TMCs tend to be process driven and often at the expense of increased yield. EZ seems to be confirming this. On the heels of improved yields by Southwest as a result of their reappearance in the GDS,

Lest anyone thinks the Professor has gone soft - I firmly believe that the LCCs need to get in front of the standard sources of booking for the Corporate business. But the value of the GDS needs to be weighed carefully. Unless of course you take the extreme view like LH and start charging for access to content.

Yield can be improved by increasing the footprint in front of the TMCs and the Corporate Travel Depts. (CTD)s. Ignore this group at your peril.

Cheers

I Come (This Time) To Praise Southwest

In the past I have berated WN for not allowing direct interaction between WN and its customers via email - even though they have email addresses and could easily allow this.

However I do see that in fact they have a number of tools which would alleviate much of the need for a number of these interactions. So while I still feel they should allow it - indeed I am going to carry on my campaign to get them to allow it - The Professor would like to compliment Southwest on being aggressive in deploying a better than average customer alert system.

In a recent piece for CIO entitled Southwest Upgrades Customer Service I learned they WN even has someone who has been dubbed the CAO for Chief Apology Officer. WHAT a cool job! This is a good article to read and there are some great lessons for all airlines.

I recommend it! Further it is good to see airlines taking the moral high ground here even if it is only WN doing it. I contrast this with Easyjet and Ryanair who have deployed similar technology but have the gall to CHARGE for it!!!

Going back to my crusade, I would strongly suggest to WN that they go ahead and allow a non-verbal direct interaction tool. Examples are chat or an automated tool such as NextIT's smart agent which has been deployed as the mystical Jen on Alaska's website. I asked her for a date (since we live near each other) and she was not amused - but that's another matter.

Cheers

Ancillary Revenue Mania - By EasyJet

OK so this is about the worst case of Ancillary Revenue highway robbery I have seen so far.

Sign up for the Easyjet text service (to tell you about the conditions of your flight and the likely delays etc etc). You can sign up for 2 different versions.

Frankly this is not a good thing in my opinion. Creative but man it sucks!!!!

easyJet To API Users: "I Was Only Kidding"

So it seems my correction earlier has changed the rules in the game (ok now I am kidding).

Easyjet has decided that even though a number of good development companies have built and sold "official" API links from the easyJet host to form independent parts of distribution, from September they are going to shut off the sale of fares.

The about turn seems to affect about 19 API users including Elite and Advantage Agent groups and Thomas Cook who receive their interface from Partners Software of Bremen and Multicom (UK).

The API will still be available but for "predominantly business" based bookings. For Leisure, guess what - its back to the official easyJet website. Presumably this will encourage screen scraping again...

I understand the reasons what airlines want to do things a certain way. However I am empathetic to the need for a simple resolution to this issue. I would welcome any comments on the subject and will likely put a poll up in the next day or two.

Cheers

easyJet to Scrapers: "C U in Court"

Easyjet UK based, has finally decided to take action against screen scrapers. At least with Easyjet you have an option - which is to pay the license fee and then you can get access. Like Ryanair it explicitly forbids this activity on its website. For more explicit explanation go here:

http://www.easyjet.com/en/book/acceptableuse.html

As I understand the Easyjet programme - a developer can have access to the Easyjet host if they pay a license fee and generate a specific number of transactions. If you generate a significant number of bookings this cost can drop to zero.

Specifically Easyjet has decided to take Interes a German based IBE vendor to court and has filed suit in a Hamburg court.

Interes has a string of customers some of whom are high profile. Specifically again TUI - Europe's largest tour operator company (in part owned by a Russian Oligarch) is a major customer. Indeed TUI is also an investor into Interes (going back to approx 2002).

Are we clear?

In response to InteRes’s activities, easyJet said it had invited the company to connect to the airline’s Application Programming Interface (API), which gives real-time access to easyJet flight inventory.

But InteRes had rejected the invitation.

easyJet’s distribution development manager, Jerry Dunn (no relation I hasten to add) stated: “We offer screen scrapers (and others) a commercially viable and fully licensed alternative form of distribution, which a majority of former scrapers have already signed up to." He also added “We will not accept that some scrapers continue to go about their business to the detriment of our customers."

Then he pointed out the harm element of the complaint. "Screen scraping causes many technical problems, mis-selling of our flights and consequently to numerous customer service problems.”

Multicom - are you listening?

Cheers

Virgin Bails on Gatwick

Virgin group is going to bail out of its attempt to be one of the buyers for London Gatwick. Not even Branson’s magic can raise the sort of funds necessary… however as BAA’s parent Ferrovial struggles to restructure its debt – VS may be playing a waiting game… Virgin Atlantic reportedly (30-Dec-08) cancelled its bid for London Gatwick International Airport after failing to secure sufficient financial backing. Two consortia, led by Hochtief AirPort and Citigroup, are left in the bidding process and early offers are expected to be posted in Jan-09.

Meanwhile more carriers are bailing on LGW - perhaps easyjet might be a good buyer or Stelios himself.

Cheers

Easyjet Profit Plunges as Boardroom Battles

Sir Stelios and the Easyjet board are now officially at war. The battle of the use of the "Easy" brand name and control of the company of the airline's founder and largest shareholder group is getting uglier and uglier.

Frankly I am at a loss to understand why the Happy Greek would want to mess with this unless he feels there is a problem. Easyjet's performance doesnt seem to support that. However like everyone else they have been feeling the downturn.

Easyjet's move away from the purist LCC model to HVC has challenges.

Let's hope they make nice and make up before this turns really nasty. Somehow I think this is a soap opera that has a way to run yet

Cheers

Euro LCCs: A Quantam of..?

The big 3 European Low Cost Carriers have reported their October traffic numbers. They make for interesting reading.

Here are the numbers.

Ryanair carried 5.35m passengers last month, 18% more than in October 2007, taking its rolling 12-month total to 56.8m. October load factor was flat at 85% and on a rolling 12-month basis averaged 81.5%. They have already announced significant cut backs for the Winter months that could see capacity fall by as much as 25%.

For easyJet, October passenger numbers grew by a similar 18.4% to 3.96m, taking its rolling 12-month total to 44.27m (+17.6%). October loads were 1.4 percentage points ahead at 83.9%, and on a rolling 12-month basis 0.5pp ahead at 84.2%. Thus continuing their LF trends higher than their Irish rival.

Alas on the mainland things don't look so good. Passenger numbers at Air Berlin declined by 4.4% year-on-year to 2.7m last month, due to a ‘targeted capacity reduction’ of about 80,000 seats. Load factor dropped 1.6% to 80.1%. Still pretty healthy Air Berlin seems to have stabilized at about half the traffic of Ryanair.

For other airlines in the LCC category things are not looking too good. XL Airways (UK) and Zoom both left the field followed by Sterling last month. But bright spots from the UK include traffic growth at Jet2, and Monarch Scheduled. There is continued uncertainty in Germany over the fate of the musical chairs game being played out with TUI/Thomas Cook/Euro Wings+German Wings and Lufthansa. Air Berlin's ability to play has been weakened by their need to absorb all the hodge podge of traffic they acquired with LTU, DBA etc. The latter of which is no longer an entity.

Cheers

Eurosharks - and when the smoke cleared there were 4

For Austrian Airlines - not surprising to some - but perhaps a shock to others - the game of musical ownership shares/chairs now looks like this:

There are 4 declared short listed bidders for Austrian Airlines' publicly held shares. They are (drum roll please):
BA, AF/KL and LH plus a dark horse bid from S7.

This sets up the battle for the big boys to buy something. So the battle lines are drawn and everyone is going to battle for each and every one of the little/poorly guys. And dont count out the rich chaps. Austrian has no value to someone like Ryanair or Easyjet but dont expect them to sit on the sidelines when Sabena (excuse me I mean Brussels Airlines) comes on the block more formally.

Interestingly I was doing some filing over the weekend and came across an old copy of Air Transport World April 2008 entitled "SAS Alone" which was the cover story. Judging by the recent frenzy the task to reform SAS just got a WHOLE LOT harder.

All airlines are now keeping their heads down. I hear that many airlines are canceling participation in conferences. Now why do you think that? it can't just be that they dont want people to travel does it?

Do we hear any fat ladies warming up? I think I hear quite a few. Certainly the dogs around me are howling in anticipation of the final chorus

Easyjet to cut jobs, close Dortmund?

This has not been a great day for British Aviation, Travel and Tourism.

Easyjet on the same day as BA's big job cut announcement - has said it will ax a small portion of its admin staff. About 8-10% (of admin - 4-5% approx of total) will go meaning about 60 people who are in non-customer facing jobs mostly admin at the Luton HQ.

Dortmund is almost certain to go now - it was speculated earlier but given the current situation its a gonna.

The UK seems to be badly hit by its precipitous currency fall. General dissatisfaction and nervousness with Gordon Brown's administration and policies has crept into the currency market battering the pound with an over 10% drop this year against the dollar and the euro.

A lot of people stopped travelling this year as a result.

Not much to cheer about here

Blog Entry #600 - Easyjet reduces GDS "Fee"

Easyjet is going the other way from Ryanair with its intermediary policy on bookings.

Effective almost immediately the Luton based carrier will reduce the surcharge it has been applying to GDS based bookings by nearly half: from a current fee of GBP 5
(€7.50) per seat (depending on the number of seats booked), will now be set at a fixed fee of £3.30 (€4) per seat.

With the lowering of the pound against the dollar - this is a significant development.

despite trying to jab one in the eye of Ryanair at the same time - Easyjet's policies are the same - just the response is not so draconian as FRs.

So on this occasion of the 600th blog entry for The Professor's Wisdom - I think this is entirely appropriate. Why?

It solidifies two trends we have been commenting on for a very long time:

Trend 1 - The airline distribution model in particular GDS is broken and needs reforming.

Trend 2 - The low cost carrier market is splitting into Pure type LCCs and HVCs - High Value Carriers who are Type 1 coming from LCC going up into looking and performing like a Legacy Carrier, and Type 2 which is a legacy carrier operating like a LCC.

So be it...


Cheers