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- Hangar 89, London Luton Airport,
- Main hub
- London Gatwick Airport
- United Kingdom
- Business model
- Low Cost Carrier
- Domestic | International
- Association Membership
- Codeshare Partners
- Transaero Airlines
Based at London Luton Airport, with its busiest base at London Gatwick Airport, easyJet was founded by Sir Stelios Haji-Ioannou and is listed on the London Stock Exchange. The carrier has experienced rapid growth since its establishment in 1995, having expanded due to a combination of acquisitions and base openings triggered by consumer demand for low-cost air travel. Using a fleet of Airbus and Boeing narrow-body aircraft, easyJet operates an extensive network throughout Europe as well as to northern Africa and Israel supported by over 15 hubs spread throughout Europe.
Location of easyJet main hub (London Gatwick Airport)
easyJet share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider easyJet fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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easyJet's FY2014 pre-tax profit increased by more than 50% to its highest ever level and its operating margin returned to double digits after more than a decade at less than 10%. Its pursuit of a more passenger-focused and business-serving LCC model has driven it to improve and innovate in terms of product, with features such as allocated seating and a user-friendly website now being copied by the likes of Ryanair.
This customer focus, together with what the company has called “a benign capacity environment”, as competitors were forced to reduce seat numbers, has led to impressive unit revenue growth, while management has not lost sight of cost control. Its confidence in the future was signalled by a dividend totalling GBP308 million.
Looking into FY2014, however, the outlook for unit revenues is less certain as capacity growth steps up a little, and profits are unlikely to grow as rapidly as they did in FY2013. Nevertheless, easyJet's business model remains robust and should deliver sustained healthy returns.
A corporate leader of any organisation requires an unusual, sometimes extraordinary range of skills. Inevitably not every CEO has these; nor does having the skills necessarily always triumph over external forces. Timing is not everything but it is important. With time, those external forces change the skill sets needed, for example when an industry is undergoing major upheaval.
Arguably, given the complexity of the airline business, a leader in this industry has greater demands placed on him (rarely her; there are very few women CEOs). And today the world must seem a particularly hostile place for legacy airline managements and their workforces, under siege from all directions. Meanwhile the Gulf carriers and many new short-haul low-cost models are changing the demands made on competitors, as protectionism slips away and hiding places become scarce.
This CAPA report examines some of the features involved in making a great airline CEO – or not.
Following dramatic declines in airport passenger numbers in 2012 and 2013, Spanish airports operator AENA has decided to introduce an airport charge discounting scheme to offer incentives to airlines to grow their traffic in Spain once more. With plans being formulated to privatise Spanish airports, the success of this initiative will be closely watched by both industry participants and potential investors.
In this report, we examine traffic trends at AENA and consider whether they have been affected by higher airport charges. Our analysis suggests that there is a clear link and so action to reverse falling traffic numbers through lower charges seems a logical step.
The questions then are whether the discounts offered will have the desired effect and how sustainable will be any resultant growth in passenger numbers.
Ryanair is the biggest carrier in Spain by passenger numbers and its CEO Michael O’Leary has called AENA’s discount scheme “almost unachievable”.
The UK CAA’s mind-numbingly long and complex review of airport charges at Heathrow, Gatwick and Stansted is almost complete. In the five-yearly process, the regulator consults with airports and airlines. It publishes proposals and amends proposals, trying to reconcile the irreconcilable.
Between 2007 and 2012, aeronautical income per passenger at Heathrow almost doubled; at Gatwick it rose by more than two thirds; and at Stansted it grew by 43%. They all beat the 14% increase in the UK’s Retail Price Index over this period. Airlines now want prices to fall, while airports seek further increases to pay for planned capital expenditure and to reward investors.
The usual result of the review is that neither side is pleased. After the publication on 3-Oct-2013 of the CAA’s ‘final’ proposals for price caps from 2014 to 2019, the usual result looks likely again at Heathrow. At Gatwick, the CAA might just find common ground between the two sides. At Stansted, it seems the regulator has been by-passed entirely. Final decisions are due in Jan-2014.
On 4-Oct-2013, Lufthansa gave a presentation to analysts and investors in London on developments in its Passenger Airlines business, with a focus on giving more details of the progress of the ‘new Germanwings’. The session was led by Carsten Spohr, CEO of Lufthansa German Airlines, and supported by the CEO and CFO of LCC subsidiary Germanwings.
The speakers gave an update on the transfer of non-hub European point-to-point traffic from Lufthansa to Germanwings and its expected impact on the group’s short/medium-haul losses.
Lufthansa’s plans for Germanwings are more far-reaching than those of Air France with its LCC subsidiary Transavia France. However, IAG already has a fully fledged stand-alone pan-European LCC in the form of Vueling. Moreover, both Transavia and Vueling (and other European LCCs) have lower unit costs than Germanwings. Can it generate enough of a price premium to offset this cost disadvantage?
easyJet's announcement on 25-Sep-2013 that it would open a new base in Hamburg illustrates the success of the European Union’s decision to liberalise its aviation market in the 1990s. The UK’s largest airline owes its success largely to these reforms, which allow any EU airline to fly from anywhere to anywhere within the bloc. Hamburg will be its 23rd base. No-frills rival Ryanair also took advantage of European liberalisation and now has 57 bases (including two outside Europe).
Nevertheless, there are still some barriers to this liberalisation. A recent court judgement ruled that Ryanair should have paid French social charges in respect of its employees based at Marseille, whom it employed on Irish labour contracts.
What is meant by an airline base? Why have Europe’s LCCs established so many foreign bases and why is the practice of basing aircraft and crew away from an airline’s home market rare outside Europe?
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