Can EasyJet overtake Ryanair?
Photo : anna.aero
Recents EasyJet business development can lead to the question i’m going to discuss here: is it realistic to even think that Ryanair could be beaten by EasyJet?
The largest UK low cost airline has announced that it has purchased 15 new Airbus A320 aircraft. The total list price for the 15 new A320 is about €824 million. The carrier has also secured an option to purchase another 33 aircraft of the same type. This imposing order will grow EasyJet’s fleet to 220 aircraft by September 2013. Although the airline didn’t disclose the value of the deal, EasyJet has declared to have won a “substantial” discount on Airbus.
According to me, the Orange company has a bright future. First I think its strategy is less risky than Ryanair or Wizzair. While Ryanair looks for volume of passengers, easyJet looks for margins.
Indeed, Ryanair has adopted a “volume strategy” in order to get the highest load factor possible, but also to reach the number of passengers that its airport contracts require. Ryanair receives grants, including public ones, from airports and local authorities, based on the number of passengers carried. Thanks to these grants, Ryanair is able to offer cheap fares. (See my enote).
Secondly, while Ryanair only focuses on leisure travel, EasyJet is now trying to attract business travellers. It’s a crucial business development strategy that, according to me, can make EasyJet the largest European low cost airline.
Thirdly, November and December Ryanair traffic passengers figures are particularly low (its lowest performance since 2002) while EasyJet still maintains high performance. Another fact that shows EasyJet’s revelant choices.
Stelios: EasyJet’s burden?
Sir Stelios, EasyJet’s founder and largest shareholder used to brake hard EasyJet’s growth plan. But since the budget airline reached an agreement with its founder, EasyJet’s management has now plenipotentiary over operational strategy orientation. However it seems that Stelios keeps its freedom of speech about EasyJet strategy. Indeed, Setlios declared “I remain very concerned with the strategy of the previous management which expanded the fleet to develop summer holiday routes leaving it with approximately 40 aircraft parked over the winter. Parked aircraft lose money.”
It’s too soon to answer, but all in all, we can already say that EasyJet is taking the good way to overtake one day Ryanair.
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Check out what others are saying...[...] Not so long ago, I was writing about in-depth changes in easyJet’s business model. It seems as if the company has been validating my predictions recently, albeit it did add a few new elements here and there. If you rememeber well, I predicted that easyJet would, one day, be able to overtake Ryanair. The way things are going nowadays, it could very well be possible soon. However, it might not happen the way we expect it. [...]