Service concept analysis of easyJet.

University Degree Business and Administrative studies

PGBS0050 Service Operation Management

Service concept analysis of easyJet

Service concept of easyJet is identified as following:

Use of the Internet to reduce distribution costs
No frills services on aboard
Short haul/ Point to point services
Modern and standardised fleet
Maximise the utilisation of the substantial assets

In the service industry, such as airline industry, the critical mission of the service management is “defining what the organisation is selling and the customer buying or using”. The service concept could provide a way in which customers, employees, shareholders perceive the service of the organisation, in other words, the service concept is the business proposition (Robert Johnston, 2001). It gives us a management philosophy that encourages organisations to understand and then satisfy customer’s need and fulfil the objective of the organisation.

In case of easyJet, the service concept plays a critical element to help this no-frills air carrier to success in the tough air transport market. The important role of the service concept could be analysed in the following points:

Service focused

Using the two traditional dimensions of focus – number of markets served and range of service provided – service concepts can be categorised into four broad types. Differing from the flag carriers in Europe, easyJet’s service concept is service focused.

First, the narrow range of service provided. Comparing with other airlines’ large number of routes within European state and international flights, the flights operated by easyJet are mainly concentrated in the UK air transport market, and those routes are short-haul services. Second, a large number of markets serviced. In 2003, the passenger that flied with easyJet was 2,030,000.

The first advantage of focused service is the carrier could concentrate on the key area of the flight operation. The service provided by easyJet is short-haul service, which mostly last only 1 or 2 hours. Because of the short travelling time, it is possible for easyJet to cut unnecessary frills on aboard, such as free drink or food. As Stelios, the founder of easyJet, said that: “in the same way you don’t expect a meal when you got on a morning train, why you expect a meal on one-hour flight?” Besides the short haul flight, easyJet concentrates on the leisure travellers, who are sensitive about the price, but not care about the full-services on aboard. Due to that they are belong to same customer group, they could be satisfied with simple no-frills services at the same time. Under such kind of situation, easyJet provide no-frills services not only greatly reduces the running costs but also saves more human and financial resources to other key area, such as the safety and puncture of the flight, to ensure the better performance in the future.

The second advantage is the low fares for the passengers and high profit for easyJet. According to the annual report of easyJet, each year the carrier could save great amount of money in the daily operation. That’s the real reason that passenger could get much cheaper air tickets from easyJet.

A means of communication

When looking into the service concept in the minds of easyJet and passenger, it could be found that there is very small space between the expectation of the passenger and the actual service (Appendix 1). Even in certain points, the actual service and the expectation of the passengers are totally same. The effective communication between airline and passengers is also illustrated by the rank of European’s low-cost airlines by service and value, which is risen from survey of low-cost airlines service and value was conducted in May 2000 by four British journalists.

An organisation’s service concept may be an explicit statement made by the organisation or it may be inferred from marketing information, either direct marketing by the organisation or indirect marketing through experience and word-of-mouth (Robert Johnston, 2001). For the service organisation, a clearly identified service concept could help the organisation to gain the alignment, which not only makes sure that the service provided by the organisation and the expectation of the customer are the same, but also ensure different parts of the organisation will “have same perspectives about the nature of service”.

It shows that the service concept of easyJet is clearly understood by the passengers, and accepted by them; there is small space between passenger expectation and easyJet’s business objective. As a communication method, the no-frills service concept helps passenger to understand the service experience, outcome, operation, and then the value of easyjet’s no-frills service.

A tool for business strategy

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A tool for business strategy

By thinking carefully about the market, the different customer segments and the needs of the customers in those segments, together with a dispassionate understanding of the core competencies of the operation, managers may be able to develop totally new and innovative concept that give great appeal to customers and give the organisation a significant competitive edge (Robert Johnston, 2001).

One remarkable case is easyJet’s on-line booking system. easyJet was the first in the world to insist that every passenger had to book direct by phone/Internet and pay with a credit card. For the service concept is “using of the Internet to reduce distribution costs”. Consequently booking on-line became a critical strategy for easyJet. The company took its first Internet reservation in April 1998 and by march 2001 online sales had grown to account fro 86.5% for total sales. The benefit of on-line booking is obviously for the passenger and the carrier. Passenger could get any information they need for the travel and the airline could enjoy a high volume of booking without any increased costs.

The role of technology in the delivery of easyJet’s service

Without the development of technology in terms of aviation and business management, it is hard for us to forecast the fast development of the modern airline industry in the future. easyJet also benefit greatly from the technology development. The most critical technology developments for easyJet are the safe, fast jets and Internet & computer.

Aviation technology

In the last fifty years technological innovation in air transport has far outstripped that in any other transport mode. The emergence of larger and more powerful engines in association with improvements in airframe design and in control systems has resulted improvements in aircraft speed and size. Higher speed and lager aircraft have in turn produced significant jumps in aircraft hourly productivity.

easyJet flies one of the world’s youngest fleets of Boeing 737-300, the average age of the aircraft being ubder 5 years old. As the best-selling commercial jetliner of all time, Boeing 737 has made more than 90 million flights and carried more than 7 billion passengers. The benefit of this aviation technology, for easyJet, is the low running costs, high profits and steam growth of the passenger number; for the passenger, is the fast and safe travelling.

Another great advantage easyJet gained from the aviation technology is the single model fleet. One major contributor to the success is that they fly only one airplane model in their fleets. Thus, pilots and mechanics need to be trained on only one kind of airplane. Having a single airplane model in a fleet also lowers inventory, record keeping and maintenance costs, and it minimizes the number of technical manuals, tools and spare parts. Also, fleet management is greatly simplified.

Therefore, it could be described like this without Boeing 737 and the single model fleet, easyJet could not achieve the business success so easily in terms of finance.

The Internet technology

The great benefits of e-service are easy to understand in today. However, the development of the Internet technology is more significant for the success of the on-line booking system of easyJet. Since easyJet started selling seats via the Internet in 1998, the carrier has enjoyed dramatic growth in its online sales.

Due to the strategy of direct booking tickets with the airline, the on-line booking could provide great convenience for the customer. The Internet introduces the possibility to access travelling information at any time and any place, and the customer could be given perceived control by arranging the details of the travelling by themselves, but not wait the information from travel agents. The web site of easyJet allow the airline to make vast amounts of information available for the passenger, the information involve from price, flight number, data and time, credit card security service, and etc.

For the customer Internet means great choice and information from home and office. For the easyJet it means lower costs of the operation.

At the very beginning easyjet receive the booking by the phone, each year there was a great amount costs on the phone and the staff, meanwhile, this cost grew in line with the number of passengers because the increased call and staff. However, the Internet totally changed the situation of the booking system. easyJet just investment a limited amount of money to set up the web site,

Today, easyJet sees the wb site as crucial to its success. Nine of ten easyJet seats are sold via the Internet, way above the industry average. “The Internet has peobably had a bigger effect on people’s abiltity to fly than the jet engine. The jet engine was an improvement on the propeller, but what really made it a mass market for everybody was the ability to economically speaking let that seat go for £1. You can only do that with the Internet.” (Simon Calder, 2003) easyJet could enjoy a low booking costs should thanks to the cost of “distribution” falls almost to zero.

Service encounters of easyJet

Basically, the service that passenger could experience are booking/ticketing, check-in, boarding, take-off, cabin service, catering, flight attendant service and arrival; however, there are many other activities that ensuring the smooth operation of the airline could not be saw by the passengers. According to Robert Johnston, there are mainly three kinds of service encounters: remote encounters, phone encounters and face-to-face encounters. Although remote encounter—on-line booking—is a major service encounter, for easyJet, the most critical encounter is the face-to-face encounter between the passengers and customer-facing employees.

The passengers could neither see the busy pilots nor experience the hard work of maintenance on the round, what they can experience is very small art of total service delivery system, but none the less would judge the whole organisation on the basis of the small service encounter (Robert Johnston, 2001). Therefore the quality of face-to-face encounter is closely related to the survival of easyJet.

Unfortunately, this critical service is not under control of easyJet totally. Besides the service concept, polite & professional staff which could be managed by the airline, there are a number f other factors will influence the service encounters, for instance, the customer’s uncertainty, social interaction.

Psychological risk

In case of eayJet, the first intensity of service encounter is the psychological risk entailed by the lack of confidence of this new concept of air service. We mentioned above that low-cost airline is a brand new business model introduced just couple years before. Like other new products or services are introduced before, it is nature the customer is lack of confidence about it. They are wondering without tickets how they can get on aboard; whether they could receive a reasonable service at the low fare, and etc.

The influence to the passengers is that some of them still prefer travel by the traditional methods, such as rail, flag airlines. Under such kind of situation, paying great attention to market the benefits of no-frills service for passenger is the only way to reduce the negative influence.

Physical risk

Although the safety record of commercial airlines has been improved greatly in the past fifty years, there are still some serious air crash happened each year. Some of them are caused by the bad weather or technical failures, other are the results of human error. But the influence tot eh airline and the passenger are the same, there is certain risk of travel by air. Such kind of physical risk, even at present, is still the intensity of the service encounter.

On the other side, due to unfamiliar the operation of no-frills airlines, passenger usually developed this ides in their minds: low fare is the result of cheap and second hand jets; just like the second hand car, the reality of those jets are unacceptable; therefore, the reality of no-frills airline is unacceptable. But the fact is that value-for-money fares provided by easyJet are based on the low unit’s costs. This strategy does not mean that taking the lowest-cost supply alternative (Thomas C. Lawton, 2002). Rather, the carrier seek sustainable efficiency improvements and unit cost savings, principally through distinct but interrelated cost reduction tactics.

Financial risk

In this case, it may be difficult for the passengers to assess the extent of risk. The tickets of easyjet are indeed cheap, but are there any potential costs that the passenger doesn’t know? For example, some low-cost airlines choose the secondary airport as their terminal, and then the fact usually is that the fare to the airport is much expansive than the air tickets! In addition with passengers need to but food or other services on aboard, the financial risk of passenger is greater.

Customer variables

There is a wide range of customer variable which will complicate the service encounter. For instance, customer mind-set, their mood and personality clashes. These variables would not only influence passenger themselves, but also the smooth operation of the airline, even other passengers.

A good communication between the carrier and the passengers is an efficient way to overcome the risks mentioned above. easyJet increase the customer involvement in order to help the customer to fully understand the service concept of easyJet. Through web site, newspaper, and other kind of methods easyjet makes passenger aware the real benefits for them and the safety of air travelling with low-cost airlines.

Relationship approach of easyJet

The relationship approach means that the service organisation concentrates on developing more points of contract with their customers. The emphasis has changed from acquiring new customers to retaining existing ones. For many organisations this has resulted in attempts to strengthen relationships with their customers in the belief hat this approach will lead to loyalty and fewer defections.

Airlines, as service provides, actively promote product relationships and loyalty on existing products and services through loyalty schemes such as frequent-flyer programmes. easyJet, as the leading of low-cost airlines, does not apply frequent-flyer programmer to built relationships. Although in 1990s, easyJet invented its own frequent-flyer scheme: anyone paying the highest fare was entitled to collect a bottle of Scotch upon check-in, comparing with other airlines’ loyalty passenger’s privileges, “a bottle of Scotch” could not be described as a real relationship approach.

The loyalty passengers may be provided with access to executive lounges, free seat reservations, cheque-cashing facilities, and etc. most of there are in essence discount scheme encouraging the customer to earn points by spending more money with a particular provider rather than the competition. Such provider are “buying loyalty” rather than “building relationships” (Robert Johnston, 2002). For the carrier it means higher operating costs and lower revenue, which is unacceptable for easyJet.

Besides the high costs to manage and implement the frequent-flyer programme, easyJet believe that the low fare is the real benefit for the passenger, they will be satisfied even there is no “Scotch”. “The low-cost consciousness got the better of us, it was actually a half bottle of whisky which didn’t go down too well with some of the passengers queuing up at the sales desk to collect their bribe.” (Simon Calder, 2003) The competitive low fare itself, together with professionalism and informality service, are the best method to build relationship. No evidences show that fewer passengers choose easyJet’s flight; contrarily, the passenger number has increased greatly since the passenger aware the benefits of low-costs and fast air service.

In the term of service concept, the frequent-flyer programme conflicts the idea of single tickets model and no-frills service. easyJet only offer a single fare at any one time for a specific flight. It could offer value-for-money, although not necessarily the lowest fares for any given route. This fare generally increases I line with demand towards the data of the flight. The frequent-flyer programme not only cause the unnecessary revenue lost but also increase the complexity of the price model and the costs to manage it. For a one-hour flight, free seat reservation, cheque-cashing facilities, company newsletters, opportunity to anticipate in special events, all them, in view of easyJet, are totally service frills that produce nothing about value-added service.

Applying the frequent-flyer programme is against the service concept of low-cost airline; neither the airlines nor the passengers would get any benefits from it. Therefore, reducing the costs by eliminating all unnecessary, then providing more competitive fare to the passengers is the real way to build the relationship with customers. Because “a bottle of Scotch” is not the final destination for the passengers who pay the highest fare and fly one hour in the morning.

“World- class” low-cost airline

Organisations have superior performance that is the result of best-practices service management, for instance, superior process management, customer management, staff management and structure management. In turn these behaviours result from a clear vision, a clear articulated service concept and strategy, and an appropriate culture driven by good leadership.

We can find many world-class characteristics in easyJet, and that’s why easyJet could be one of leadings of world low-costs airlines. Because easyJet can manage its drives successfully—such as process, capability, employees, customers and structure—the carrier could achieve good results, including market share and customer, staff satisfaction and profit.

The key to great service “is genuine service leadership at all levels in an organisation”(Robert Johnston, 2001). Great leadership is always the secret for the success business. Clear and purposeful leadership right from the top of easyJet introduces direction for the employees to achieve the business target. Furthermore, the purpose and the organisation concept are continuously emphasised and enacted. Good leadership is also characterised by a belief in easyJet that investment in people, system, training and the delivery of outstanding services.

Excellent service companies define their buiness in strikingly clear terms. The service concept of easyjet is well defined, communicated and well understood by employees and customers, which we have mentioned above. Easyjet’s brand image is well known in the market place and the organisation is known to be a market leader. In European markets, being the UK, the Netherlands and Switzerland, esyJet has established a strong brand (Thomas C. Lawton, 2002).

Well-developed strategy. World-class organisation has clear planes in place that set out how they will achieve their goals and their vision. The strategy of easyjet is not pit-in-the-sky but something concrete that employees feel is both achievable and desirable. The strategy communicates how this will be achieved and defined their part in the activities.

Great service is delivered by employees who don’t need to be defensive in their dealing with customers. easyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. All office-based employees are encouraged to dress casually. Ties are banned—excepted for pilots! Remote working and “hot-desking” have been characteristics of easyjet since the beginning. A positive attitude is generated by easyJet culture consistent with the declared competitive strategy, and that values the contributions of all members.

Supportive and committed staff. Excellent service is delivered either directly or indirectly by employees. easyJet uses approaches such as empowerment or self-directed work team appropriately rather than implement these ideas because hey’ve seen them work elsewhere. Staff is committed to the organisation an to the service concept because they are involved in the process of service development, they are encouraged to own the service delivery process, to look for ways of improving it, and they are motivated by the right mix of recognition and reward.