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EasyJet - 4

Old 17th Sep 2014, 17:28
  #3781 (permalink)  
 
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Without wanting to appear tribal, I wouldn't treat the number of aircraft FR has on order necessarily as an advantage. Given the overcapacity in the European market (and I don't think we have seen the peak of that yet) having an endless stream of new aircraft could well be a big headache for Ryanair.


The proof will always be in the financial performance of the carriers. Easyjet are currently doing particularly well and have had a stellar performance in recent years. Ryanair may well be adopting the highly successful Easyjet strategy but they are doing so 3 years later and simultaneously have to improve their image. That won't be easy. (No pun intended)
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Old 17th Sep 2014, 18:55
  #3782 (permalink)  
 
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Do remember what overcapacity is though. Simply it's where the supply exceeds the demand. But who knows what the demand will be 10 years down the line? It's extraordinarily difficult to predict demand, but let's face it, it's generally going to increase.


That's essentially why they make aircraft orders with both firm orders and options, as it gives them the flexibility of how many aircraft they actually need when there is a clearer vision in terms of the demand.


Ryanair are not going to bang an extra 400 or 500 extra aircraft into the mix. Airlines and particularly FR and EZY as examples do not just make aircraft orders for expansion although that tends to be the primary reason.


They are also used to replace the older aircraft in order to maintain a young fleet age and in the case of the A320Neo and 737MAX, are more fuel and cost efficient than current generation aircraft. FR have even managed to get 8 extra seats on it's new 737MAX series. These aircraft orders essentially allow them to further reduce their cost base.


This allows them to reduce fares which in turn helps to increase demand, a practice known as "price elasticity of demand" for those who weren't already aware, and the aviation industry does tend to be a very price elastic and price sensitive business.


Also take into account that a good proportion of these aircraft will be used to compete and gain market share from other airlines who reduce their schedules or even go bust.


If FR didn't have this huge aircraft order, they wouldn't be able to renew their fleet and reduce their cost base and they'd be losing market share and essentially be in decline.


FR may have a bigger order by number but remember their fleet size of 300 aircraft is already 50% bigger than EZY's 200, give or take a few.
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Old 17th Sep 2014, 19:09
  #3783 (permalink)  
 
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You come across as being pretty patronising to be quite honest mate. Taking a load of spiel from a GCSE business studies text book and applying it to the conversation we're having doesn't necessarily mean your argument is correct.

Making aircraft orders in a way where you can cap your fleet, expand and plan your fleet in a manner that allows you to decrease your fleet size insulates your airline from the many external factors that can cause a downturn in our industry. Some airlines are doing this whilst also achieving modest expansion.
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Old 17th Sep 2014, 21:12
  #3784 (permalink)  
 
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Yeah and FR have been talking about transatlantic for at least ten year. What is said, and what is reality are often at odds.
They keep getting asked the question and keep answering it.


They park planes up all over as it is in winter, where are going to park the extra 200 and where are they going to fly more importantly?
They not the only ones who do but who said they were parking 200 ?

They replacing current fleet but giving themselves scope for growth.

In 2014 summer they cancelled routes simply because they did not have enough aircraft plus leased in others.

Course in low season there will be aircraft parked............... they not the only one doing this.
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Old 17th Sep 2014, 21:56
  #3785 (permalink)  
 
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In fact, easyJet themselves will only operate around 25 aircraft from LGW on certain days (Tuesdays and Wednesdays) throughout this Winter, compared to up to 68 throughout the Summer.
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Old 17th Sep 2014, 23:09
  #3786 (permalink)  
 
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Monarch slots
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Old 17th Sep 2014, 23:17
  #3787 (permalink)  
 
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Suprising regarding Gatwick, which invites the question what bases on the Easyjet network are least susceptible to seasonality, proportionally between the summer and winter schedules?
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Old 18th Sep 2014, 17:07
  #3788 (permalink)  
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When the overcapacity tsunami hits it may well be easyJets options to DECREASE fleet size that assures its position of a stable profit making dividend paying airline.

Once you are past 200 aircraft the economy of scale tails off. History is littered with bankrupt airlines that over expanded and then couldn't survive whatever crisis hit the industry shortly afterwards. And lets be in no doubt that there is always an unexpected crisis around the corner in this industry.

The Norwegians and the Irish can take the role of the Germans and the Russians in WW2 whilst easyJet stays British...
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Old 18th Sep 2014, 20:05
  #3789 (permalink)  
 
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Once you are past 200 aircraft the economy of scale tails off. History is littered with bankrupt airlines that over expanded and then couldn't survive whatever crisis hit the industry shortly afterwards. And lets be in no doubt that there is always an unexpected crisis around the corner in this industry..
So can you show some of the studies on this................. maybe use Southwest with a fleet of 614 737's.



The Norwegians and the Irish can take the role of the Germans and the Russians in WW2 whilst easyJet stays British..
Ah good old Jingoism................ Really helped Uk industry in the past didn't it.
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Old 18th Sep 2014, 23:16
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RE: Southwest. There isn't the same overcapacity problem in the states. In fact they have experienced consolidation in recent years. Overcapacity in Europe will
prove to be potentially fatal for some European carriers. Clearly, having too many aircraft that you cannot fill isn't going to help you survive.
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Old 19th Sep 2014, 12:05
  #3791 (permalink)  
 
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RE: Southwest. There isn't the same overcapacity problem in the states. In fact they have experienced consolidation in recent years.
But that wasn't the point being questioned.

The point made was that after 200 aircraft economy of scale tails off....

I have not seen any study that backs this up. Therefore I am assumming poster either has details of such studies or has made up a number that suits because it is close to Easyjets fleet numbers.
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Old 19th Sep 2014, 16:58
  #3792 (permalink)  
 
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The Norwegians and the Irish can take the role of the Germans and the Russians in WW2 whilst easyJet stays British...
...erm like Austin Rover?
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Old 19th Sep 2014, 20:33
  #3793 (permalink)  
 
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j41cac, do you think they will be up for sale soon?
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Old 20th Sep 2014, 11:45
  #3794 (permalink)  
 
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I fear easyJet could be easily wrong footed by Ryanair, who seem now to be on the right track. Ryanair have been talking up 500+ aircraft in 10 years (with easyJet in the 300's), new business/family options, allocated seating and network changes to be more 'business friendly' are all encroaching on the EZY advantage.
No, the two will co-exist as there are subtle differences in their "target markets". There not engaged in a race to the bottom.

U2 introduced allocated seating a while back, it chases business pax, and it serves major airports (it will eventually will be at LHR).

U2's business model is quite different from FR's, even the new "user-friendly" FR.
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Old 8th Oct 2014, 07:20
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Summer 2015 peak dates (Jun/July/Aug) are now on sale.
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Old 9th Oct 2014, 13:18
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Thanks, next summers flights now booked!
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Old 11th Oct 2014, 00:55
  #3797 (permalink)  
 
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It's that time of year again when we get to see how EZY has managed to screw it up for most of us for another year running.

As posted on the NCL thread, this has been the general picture for EZY over the last 3 or 4 years:

- BFS and BRS are big but not really expanding at any fast rate, if at all
- Growth at EDI has been off-set by reductions in GLA
- Growth at MAN has been off-set by reductions in LPL
- New SEN base was more than off-set by reductions at STN...
- ...Now growth at LTN for S15 is offset by reductions in SEN and yet further cuts at STN
- And NCL has been no different, also seeing cuts across the network

(Also not forgetting they closed EMA base in 2010.)

Literally all of EZY's "growth" (and by that I mean real growth) in the UK market for several years has been solely at LGW. Everything else they have advertised as growth has been nothing more than a reallocation of their aircraft to different airports and routes.

This below isn't absolutely perfect by any means, but should still give you a good idea:

On a Monday in August 2011, LTN had 52 departures and STN had 51. That's a total of 103 departures.

4 years later in August 2015, we are currently looking at 58 departures from LTN, 9 at SEN and only 30 from STN. That totals only 97 but considering probable new routes between now and then, we're looking at pretty much the same. Still poor considering it's 4 years on with a new base, yet no growth what so ever.

Again, on Mondays in August 2011 LPL had 34 departures, in August 2015 there's only 25. MAN for August 2015 will have 23. I'm not sure what MAN was in August 2011, but if it's any more than 13, (which I would've thought it was) then again the combined total is no better off, with again no growth compared to 2011.

I also remember quite well in 2011 when EZY announced the SEN base, that it would help towards their aim for, in the words of Ms Carolyn McCall, "Organic growth". How does any of what is basically outlined above even remotely demonstrate "organic growth"??

Does this company even have a vision and desire to grow anywhere across it's home market any more (other than the obvious place)?
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Old 11th Oct 2014, 05:25
  #3798 (permalink)  
 
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Well that begs a further question. Easy seem to have Gatwick sewn up to the south of London and appear to be expanding Luton to the north of London maybe in readiness for an expanded Luton despite Luton being the UK's most unpopular airport.

So what's the long term future of their Southend and Stansted bases? Does easyjet really need to operate out of 4 London Airports particularly when Southend has no public transport access for early morning departures or late arrivals, a CAT 1 ILS, which means the airport can close at short notice due fog and a terminal that closes overnight?

I never did really understand their motive for creating a Southend base with a catchment area much smaller than Stansted, which at least has land in all directions rather than the sea.
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Old 11th Oct 2014, 06:42
  #3799 (permalink)  
 
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Pain

A simplistic answer would be that they simply make sufficient money at SEN to make it worthwhile, regardless of the disadvantages that you point out. The advantage that SEN has in terms of its popularity with travellers and large local catchment also helps.

It was interesting that the introduction of the third daily SEN-AMS was extremely successful so it doesn't appear that SEN's growth potential has yet been reached. I wouldn't rule out further easyJet expansion in the future.
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Old 11th Oct 2014, 08:20
  #3800 (permalink)  
 
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It seems very clear to me what is happening. EasyJet is managing shareholder return as best it can. Aircraft are moved to where they provide the best return on investment.

It makes absolutely perfect sense as to why Gatwick gets priority. It's the base that is most sought after and plugging any gaps or filling any available slots is a way to keep norwegian at bay, prevent more entrants coming in or existing ones expanding. especially those with lower costs, eg Ryanair, Norwegian or Vueling. Gatwick is their biggest base it has to be protected. Sound business sense.

It is also easy to say SEN was a bad choice for them, hindsight is always 20:20 vision. But I congrsgulate easyJet for having the balls to try SEN. It is nonsense to suggest the catchment is small... It has 600k people locally, can serve London which is an enormous destination. easyJet offers bucket and spade and most popular city destinations that the UK market wants, hence it would appear the offer is what the outbound passenger wants as that is what is working. I believe that at least 80% of SEN traffic originates at SEN. The inbound market is largely untapped and this is where Stobart will spend time and money building up SEN routes at some cost. It has a vested interest to grow the airport - easyJet does not.
I think it is a good outcome that easyJet has a string core route structure ex Sen - therefore they should around. SEN is also a way of taking them out of the firing line away from FR, where fetching ticket prices is more difficult. In this way SEN is more niche and in a sense protected from FR.

A more general issue is much greater capacity in the market this year and prob same next year. To manage yield in this environment easyJet are not growing revenue significantly to its all about getting more return or as good as before from less. This explains moving of ac numbers, MAN/LPL, LTN/ STN - all about fine tune the revenue model to effect shareholder return.
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