Nothing has changed the face of aviation in the last 25 years as much as the advent of low-cost carriers. Pioneered in the US, with PSA and Southwest, it wasn’t until the advent of the internet that the premise could really take-off. Combined with deregulation of the EU area it has been Europe that has led the transformation, and of course it is Ryanair and Easyjet that have dominated the continent.
In hindsight the opportunity for low-cost airlines appears obvious, but in the mid-90s this wasn’t the case. Incumbent national and charter airlines were dominant, the European region was only slowly opening up to deregulation, travel agencies still controlled ticketing and the risks of starting new airlines well known. Indeed early LCCs like Debonair met with failure. This was not to be the case with easyJet, but it’s growth is no less impressive because we know the outcome.
Stelios Haji-Ioannou started his airline with a £5 million loan from his father. He had only become interested in air travel accidentally, when flying between Athens and London he had been spoken to about taking a shareholding in the airline he was flying (a Greek Virgin franchisee). He sensibly didn’t invest but became intrigued by the idea of a pan-European low-cost airline.
Stelios was attracted to the business model of Southwest Airlines, and like Ryanair, adopted it with some changes for the European market. The new airline would adopt quirky marketing, a single aircraft fleet, point to point short haul travel, no in-flight meals, rapid turnaround times and very high aircraft utilisation. It did not adopt other features of Southwest like free onboard snacks and drinks, or flight connections. easyJet also wanted to eliminate ticketing costs and unlike Southwest would not work with travel agents. It instead pushed for 100% direct sales. Of course this strategy would become a lot easier once the internet took off.
By the summer of 1995, with his research complete, Stelios presented his business plan to his father and was able to get things started. A pair of ex-Britannia 737-204s were acquired on lease and a small 70 strong staff built up, operating out of the under-served charter airport of Luton (or London-Luton as it would become known). With no AOC of his own easyJet initially used that of GB Airways. The airline’s first flight was launched in November 1995 between Luton and Glasgow for a one-way fare of £29. This was advertised as being able to ‘Fly to Scotland for the price of a pair of Jeans!’.
The £29 fare on the initial route was not only a lot cheaper than competing British Airways but also cheaper than the train fare. Expansion quickly saw the addition of both Luton to Aberdeen and Edinburgh services. Since London to Scotland services accounted for 30% of the UK passengers in 1995 this made a lot of sense.
easyJet hired seasoned airline executives to run the carrier and built up its ‘orange culture’ with enthusiastic young professionals. The Ioannou family pumped in £50 million over the next two years to keep the airline flying and also to replace the 1977 build 737-200s with six mainly leased 737-300s, built between 1986 and 1990. In what seems an anachronistic mechanism nowadays the aircraft were all painted with the airline’s phone number down their sides. This was a vital component of the airline’s strategy.
As it didn’t use travel agencies easyJet needed all the advertising help it could get so it used its own aircraft as billboards. It also spent up to 8% of revenue on print and radio ads, sponsored special promotions and sought out public relations opportunities that would get it free publicity. It focused on its low prices and good on-time performance. As Stelios said ‘ we make limited promises, but make sure we consistently deliver on them’.
The carrier’s base was the easyLand headquarters, a bright orange hangar next to the runway at Luton. This contained the all-important call-centre, where reservation agents were paid solely on commission and calls from non-UK customers were handled by foreign speaking English staff. All customers paid by credit-card and were given a simple booking reference number, not a ticket.
Check-in was kept similarly simple. Passengers were told to arrive only an hour before the flight, undertook a simple check-in and were given plastic boarding cards with a number from 1 to 148. easyJet fitted out its 737-300s in their highest possible capacity, i.e. 148 seats, so with no preassigned boarding the passengers simply boarded by card number. The majority of services were provided by subcontractors.
The network was built up with the addition of routes from Luton to Inverness but also into Europe to Amsterdam, Barcelona, Nice, Palma and Geneva. Even though Luton itself had proven an excellent fit, being close to London and cheaper to fly from than Gatwick or Heathrow, its small size limited easyJet’s ambitions and so in October 1997 a second hub was opened at Liverpool Speke from which flights to Amsterdam and Nice were begun.
Of course what easyJet would need to cope with its expanding schedule were aircraft and in September 1997 it took a giant leap by ordering its first new aircraft – a dozen Boeing 737-300s. The contract was valued at $500 million, but even though the airline was less than two year’s old and this would triple its fleet to 18 aircraft it already looked like a sensible decision.
The last years of the 20th Century would see easyJet cement its position in the UK market and begin to expand into a pan-European LCC with its first European base plus the investment and takeover of TEA Basel to create easyJet Switzerland. Competition from British Airway's own low cost start-up Go also failed to dent easyJet's rise.
Despite all this success by the time easyJet went public in 2000 it was still only flying 22 737-300/700s. There was still plenty of work to be done to turn it into the low cost goliath of today, however Stelios had by then more than proved that the industry had changed beyond all recognition from when he started his project in 1995.
Lawton T. Cleared for Take-Off: Structure and Strategy in the Low Fare Airline Business
History of easyJet. Seat maestro.com
1997. easyJet expands fleet and starts Liverpool operation. Flight International
Sull D. Case Study easyJet’s $500 Million Gamble. European Management Journal Vol. 17, No. 1, pp. 20–38, 1999
I'm Richard Stretton: a fan of classic airliners and airlines who enjoys exploring their history through my collection of die-cast airliners. If you enjoy the site please donate whatever you can to help keep it running: