This report will analyze easyJet's business model in this highly competitive aviation industry. easyJet is a low-cost, no-frills airline founded by Stelios Haji-Ioannou in 1995. Stelios' mission in founding this company is to "offer low-cost airline service to the masses." The concept of budget airline is derived from the idea that demands for short-haul air transport is price elastic. That means, if prices for flights are being reduced, the consumers' demand will increase significantly. The mission statement of easyJet's founder, Stelios is "To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers." (easyJet)REVENUE SOURCES ANALYSISRevenue Streams1.easyJet employs multiple-stream revenue model. The primary source of revenue is in the sale of air-tickets.
Besides, it launched easyKiosk which sells food, souvenirs or even cosmetics to substantially reduce operating costs while generating substantial ancillary revenues. The revenue for 1997 is ÃÂ£ 46 millions, increased 67% to ÃÂ£ 77 millions in 1998. Appendix A shows the revenue chart for easyJet from 1997 - 2007.
2.In addition, easyJet utilizes "loss-leader" model, which gives away free flight-tickets for promotional purposes. This is an effective competitive marketing strategy aimed to stimulate consumers' purchases. As the operating costs for each flight are mostly fixed regardless of number of passengers, this marketing strategy will maximize aircraft utilization.
Revenue Model1.easyJet utilizes volume-based revenue model where customers pay a price and receive a product (air service) in exchange. However, easyJet uses "Yield Management" whereby prices will automatically increase once the load factor (percentage of seats sold) increases.
2.easyJet relies on two manner of...