EasyJet - 4

[Evanelpus]

Thanks, next summers flights now booked!

[FRatSTN]

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)?

[Pain in the R's]

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.

[Expressflight]

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.

[EI-BUD]

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.

[Barling Magna]

Yes. I think folk on here have it about right. My best guess is that EZY really did intend to increase their base at SEN to maybe six based aircraft over the period 2012-2014 but the situation changed when firstly STN was sold and secondly flyBE's LGW slots became available. Now I think EZY will remain at SEN for the 10 years of its agreement, basing three aircraft there. The situation may change again, of course; long-term planning in the airline industry means 18 months or so into the future in my experience.

SEN is fortunate that all the major investment to reach 2 million pax annually has been put in place. SEN has a perfectly viable catchment in its own right and can draw passengers from London also. EZY cancelled their SEN-Krakow route which was always almost full (don't bother talking about yield versus LF again - I know). It is possible that some other LCC may think that SEN provides an opportunity for profitable operations - let's hope so.

Incidentally, I think the percentage of passengers from London using SEN has been under-estimated. The SEN Annual Report for 2013/2014 shows about a quarter of passengers used the railway to access the airport. I suspect most of these will have travelled from or to London. Add those using the X30 service and their own vehicles and the % should surely be higher than the 20% suggested? Certainly the terminal seems full of London accents whenever I'm there - and, yes, I can tell the difference between a Southend accent and a London one, my dear; sixty years of listening pays off.

[FRatSTN]

EZY will not have just gone into SEN to try it out or because they will "make sufficient money to make it worthwhile".

Opening a new base takes a lot of work, time and expense. The airline needs to be certain in itself that it is going to be profitable, generate high share holder returns and has high potential for future growth over a long-term period. EZY obviously saw SEN as that airport, but only at the expense of others.

EZY made an investment into a 3 aircraft base at SEN in 2011, pulling 3 aircraft from STN as the "catchment overlaps" but being guided by Ms McCall that it wouldn't equate to capacity cuts at STN as part of their strategy of deeping the frequency of existing routes. EZY have now pulled 6 aircraft from STN since 2011.

At the time, STN was still very much in a rough position with the BAA with an uncertain future, but I'm sure EZY are intelligent and sophisticated enough to see that that wasn't going to last forever.

I don't wish to make this all about STN and SEN though albeit this is probably the most affected area. LPL and MAN?

FR is a good comparison here. At LPL, since 2011, EZY has dropped from 10 to 7 aircraft and FR from 8 to 5.

At MAN, EZY has gone from I think 6 to 8 aircraft and FR has gone from having no aircraft up to 7 (rumoured at 8) based units in the same period. With also many aicraft flying in from other bases, MAN is now FR's 2nd largest UK airport after STN.

The combined total of LPL and MAN for EZY was 16 aircraft in 2011 and is 15 for 2015. For FR it was 8 in 2011 and 12 for 2015. Interesting to note that despite EZY basing 1 more aircraft than FR at MAN, FR operates more flights. Either way, significant growth by FR has taken place here.

The same goes in Scotland for 2015. FR will cut back significantly in PIK due to the new GLA base, but the combined total of GLA and PIK in 2015 will be higher than the PIK operation in 2014. To add to that, FR will also be growing in EDI too. So the cities of Glasgow, Edinburgh and Scotland as a whole will see noticeable growth in 2015.

EMA has seen quite a lot of FR growth over quite a long period of time, but whilst BHX is pretty stagnant, it isn't seeing any major cuts. Similar thing now happening with the significant FR growth at STN, but LTN is still going as strong as always.

Both FR and EZY have had issues with fleet over the last few years, so despite the reallocation of aircraft to yield higher returns for shareholders, why is EZY failing to deliver real, "organic" growth, which FR seems to be pulling off quite nicely??

[North West]

Both FR and EZY have had issues with fleet over the last few years, so despite the reallocation of aircraft to yield higher returns for shareholders, why is EZY failing to deliver real, "organic" growth, which FR seems to be pulling off quite nicely??

Latest available results show a 5% increase in aircraft, a 2.2% increase in utilisation leading to a 6.8% increase in seats flown. From which, a 9% increase in seat revenue and a 9.4% increase in passengers.

A growth rate in passenger numbers that is nearly double the growth rate in aircraft is the very definition of organic growth, no ?

[Expressflight]

FRatSTN

I'm sure it was just a typo on your part but easyJet started at SEN in April 2012, not 2011.

You are quite correct in listing all the elements that had to be considered before the decision was made to establish a base at SEN and your frustration that STN was the loser as a result is very understandable. The case for doing so obviously convinced the Board and the addition of a 4th based aircraft in 2013 seemed to be a success. So far so good but then things changed at LGW when they purchased the Flybe slots and at the same time they were facing potential competition from the likes of Norwegian, so an increase in based aircraft there was the result and SEN lost one aircraft for 2014.

I don't see any of the above as necessarily meaning a further decline in the SEN operation going forward. All airlines adjust their strategy to reflect market conditions and the actions of competitors etc. and this is just another case of such an adjustment. The size of the future easyJet operation at SEN may increase, may stay the same or may reduce further, who knows? One certainty is that the potential for further growth in easyJet passenger numbers still exists at SEN and the terminal facilities now in place certainly make it an attractive option to passengers from a catchment area of at least 2 million people.

[easyflyer83]

Organic growth means growth of your business through means other than takeover and acquisition. Therefore Easyjet has grown, however modest you may deem it, in an organic manner. I just think that it is important to set out what 'organic' actually means from a business perspective.

Easyjet's strategy is clearly working. However much bases are growing or reducing the financial performance of the business is ultimately being championed by the city. It's profits targets are not only being consistently met but exceeded and despite a dip experienced by most carriers, it's share price is still exceptionally strong.

Easyjet is a European carrier and as such Europe is it's home market, like Ryanair it follows the best returns. Remember also that there was a time where Ryanair saw reductions in its 'home market'.

With a sustainable fleet plan, a robust performance and a reasonably good reputation Easyjet are proving that throwing assets the length and breadth of Europe at an exponential rate isn't necessarily the correct thing to do.

[FRatSTN]

Organic growth means growth of your business through means other than takeover and acquisition. Therefore Easyjet has grown, however modest you may deem it, in an organic manner.

I'm sorry, am I missing something here? In most areas in the UK as demonstrated, they have not increased their customer base. Last year they paid £20m to buy BE slots at LGW, the reason apparently by some of the posters here why EZY are barely growing elsewhere in the UK.

LGW is virtually full. The only way EZY has and can realistically continue to grow any more at LGW is by takeovers and acquisitions.

Yep, very organic growth.

[OltonPete]

BHX

FRatSTN

It still amazes me how the Midlands is virtually an Orange desert. I know it has been discussed to death in respect of BHX fees compared to say Southend and other airports but with Ryanair down-sizing (looking like three based permanently now) and Monarch seemingly shrinking (although that could change) leaving flybe as they only non-charter airline expanding.

I know it was never a BHX v Southend competition when the Southend base opened, as they are completely different markets and will have a different charges structure but as a BHX local it did make you think why the two parties (BHX/U2) could not find some common ground.

Obviously Luton is not too far from BHX and catchments do overlap but the sheer size of these should be able to support a base at each (ZB and FR do on a smaller scale).

This year easy are starting BHX-GVA one week earlier and added and extra Friday flight and maintained their BFS frequency at least until the end of March when it reduces slightly but that is as good as it gets.

Pete

[North West]

http://corporate.easyjet.com/~/media...18-09-2014.pdf

Slide 24. The UK is not where they see the biggest growth opportunity, clearly.

It's a mature market which has got too much capacity - you only need to look at what's been going on at Monarch to see that. So, the UK will grow less for Easyjet and within the UK you are likely to see route-churn and a shuffle of aircraft between bases.

To suggest that in totality this means they are not growing is nonsense. They are growing, as the rest of the presentation makes clear

[Skipness One Echo]

LGW is virtually full.

That's a common misconception, LGW has a fair amount of capacity outwith the morning, lunch and evening waves of based aircraft. There is a lot of opportunity for EZY to operate from overseas bases into LGW, though in fairness they operate to pretty much everywhere you'd expect from Gatters.

[Seljuk22]

New Amsterdam base

EZY released news regarding their new base at Schiphol starting next year:

Two A320 will be based starting summer schedule 2015 (end of March) and a third will arrive in May. 6 new destinations (HAM, VCE, NCE, TLS, DBV, OLB) will be launched and frequencies to other destinations will be increased.

http://mediacentre.easyjet.com/stories/8767

[Capetonian]

Does anyone know anything about an easyJet Advantage Plus card?

Apparently it's something they're giving out to frequent travellers, and it's a level above the easyPlus card (which I have) and gives a number of benefits such as free flight changes.

I've done about 60 sectors with them in the last year and someoene I know who uses the airline less than I do claims to have been 'given' this card (but actually hasn't shown it to me.........) He's not the type of person who normally makes things up.

I wrote to EZY customer services and they've denied all knowledge, however, it wouldn't be the first time I've had incorrect information in a response from them.

[Airbourne-Adamski]

To be honest I have not heard of the Advantage plus card. I was under the impression it was just easyjet plus.
I would expect if there was some form of adavantage plus there would be details on the website

[True Blue]

Capetonian


if it is what I think you are referring to, it is a trial being run at the minute with some cardholders for feedback. I have one. No doubt, if the trial proves a success, they will make it available to all, or it might need some changes, depending on feedback.


TB

[LAX_LHR]

Looking at the slot co-ordination for Germany, easyjet has filed all its current Berlin SXF slots into Berlin TXL instead for S15.

Mistake? Leverage for better fees at SXF? Intent to move?

[Jamie2k9]

One company runs SXF and TXL so unlikely to be fees related.