catchup
13th Oct 2004, 13:18
SPIEGEL ONLINE met easyJet CEO Ray Webster in Dortmund, where he introduced new promotional fares. Following are excerpts from the conversation.
DDP
Airline executive Webster: "All our plans assume that the situation stays the same or gets worse"
SPIEGEL ONLINE: Mr. Webster, how often do check the easyJet share price?
Ray Webster: Normally a couple of times a day. I can do it on my Palm Pilot or I can ring someone up.
SPIEGEL ONLINE: During the course of this year, the price has plummeted from 389 pence to an all-time-low of 116; it has since recovered only slightly. Do you understand why you've been punished this severely?
Webster: I don't consider it punishment. We're obviously all disappointed. But we're big enough now to get beyond this. I've been in this industry for 40 years, and there've been cycles like this before.
SPIEGEL ONLINE: Shares of Ryanair are also down, but they've outperformed yours. Does that bother you?
ZUM THEMA IN SPIEGEL ONLINE
Interview mit easyJet-Chef Webster: "Dass wir aus dem Gröbsten raus sind, glaube ich keine Minute" (13.10.2004)
Webster: I'm not going to comment on other airlines. But we've got to get better at communicating with shareholders. There's concern in their minds about the future - even though easyJet is generating good results and has announced figures ahead of last year's, as one of the very few airlines to deliver that.
SPIEGEL ONLINE: Competition is especially fierce in Germany, but also in the UK. Will it become more brutal still or is the worst behind you?
Webster: I wouldn't think for a minute that the worst is behind us. All our plans assume that the situation stays the same or gets worse. That doesn't mean our results will deteriorate. But we'll have to be relentless in taking costs out.
SPIEGEL ONLINE: Your own CFO said he expects another difficult 12 to 18 months.
Webster: That would be optimistic. We've had one airline fail this last week with V-Bird. There'll be quite a lot of others. But new airlines are continuing to come into the market - which is remarkable, with all of this turmoil.
SPIEGEL ONLINE: In order to save costs, you've recently experimented with fully automated check-in kiosks - there's no manned check-in counter anymore at all. Will you deploy these machines on a larger scale?
Webster: We're looking at a wide range of innovation. The kiosk is just one of them. We'd be the first airline in the world where everyone self-checks-in. This technology has done amazingly well in East Midlands, where we're testing it. We're keen to roll it out at other airports, but we've not decided how and when.
SPIEGEL ONLINE: Are passengers ready for life without any check-in ladies at all?
Webster: I went up and spoke to customers who've used the kiosk. I expected them to be reluctant. But they said, no, no, I enjoyed it. There're no queues. You can self-check-in very quickly. You're in control. Because this technology is new, we'd plan to have quite a number of people to help you at first. In the long term, it may be the same as getting money out of an ATM.
SPIEGEL ONLINE: Can you envision introducing in-flight entertainment on a pay-per-use basis? Ryanair is trying that right now.
Webster: We've been looking at that for quite some time. JetBlue in the US has got screens built into the aircraft using satellite technology. Ryanair is providing a portable unit. If it works, we could put in a system like that in two months' time, should we choose to do so.
SPIEGEL ONLINE: In spite of all the cost-cutting and the turbulence in the market: Will you be adding new airports to your German network in 2005?
Webster: One thing is certain: We will be opening new bases across Europe in 2005. We have until March to commit ourselves - the summer program will be the next opportunity to add airports. We still have to go through discussions with them. Germany is a possibility; Italy is a possibility, too. We're very happy with Germany ...
SPIEGEL ONLINE: ... but most of your routes from Dortmund, for instance, are unprofitable.
Webster: It always takes quite some time for any new market to become profit-making.
SPIEGEL ONLINE: How long?
Webster: It varies depending on the base and the size of operation we establish. If we operate a single new route out of an airport like Dortmund, it's going to become profitable in 18 months. That's not how we do it. We instead put three aircraft in and start with nine routes. We're trying to build a network. Routes become profitable when you slow growth.
SPIEGEL ONLINE: So the prices Germans pay are, on average, lower than in the rest of the easyJet network?
Webster: A little - but in line with what we expect from new operations. Our average fare is around 45 pounds. In Dortmund, it's about 10 pounds lower than that. We do promotional offers in Berlin almost every three or four weeks. You have to make this investment up-front. To get the brand established will require millions and millions of euros to be spent over two or three years.
SPIEGEL ONLINE: If your strategy is long-term, why do you plan to abandon Munich?
Webster: I didn't say we're abandoning them. What I've said before is that Munich is a problem airport for us because of their high fees. The only airport we've pulled out of so far is Zurich. I'm sure there will be others.
SPIEGEL ONLINE: Since your expansion to Germany, you've started to take regular German lessons. What's the last thing you've learnt?
Webster: That I'm a slow learner. My wife speaks German reasonably well. We have German satellite TV at home and a flat in Berlin. I'm doing French as well. When you're doing both at the same time, you're mixing up the words a little bit.
SPIEGEL ONLINE: So what's more difficult - learning a language or entering a market as a low-fare carrier?
Webster: Oh, learning the language is much, much more difficult. I'll never be able to converse fluently. But that's irrelevant. It helps me to stay humble. easyJet's future is as a European airline. We can't assume that what works in the UK will work abroad as well.
Interview: Matthias Streitz
DDP
Airline executive Webster: "All our plans assume that the situation stays the same or gets worse"
SPIEGEL ONLINE: Mr. Webster, how often do check the easyJet share price?
Ray Webster: Normally a couple of times a day. I can do it on my Palm Pilot or I can ring someone up.
SPIEGEL ONLINE: During the course of this year, the price has plummeted from 389 pence to an all-time-low of 116; it has since recovered only slightly. Do you understand why you've been punished this severely?
Webster: I don't consider it punishment. We're obviously all disappointed. But we're big enough now to get beyond this. I've been in this industry for 40 years, and there've been cycles like this before.
SPIEGEL ONLINE: Shares of Ryanair are also down, but they've outperformed yours. Does that bother you?
ZUM THEMA IN SPIEGEL ONLINE
Interview mit easyJet-Chef Webster: "Dass wir aus dem Gröbsten raus sind, glaube ich keine Minute" (13.10.2004)
Webster: I'm not going to comment on other airlines. But we've got to get better at communicating with shareholders. There's concern in their minds about the future - even though easyJet is generating good results and has announced figures ahead of last year's, as one of the very few airlines to deliver that.
SPIEGEL ONLINE: Competition is especially fierce in Germany, but also in the UK. Will it become more brutal still or is the worst behind you?
Webster: I wouldn't think for a minute that the worst is behind us. All our plans assume that the situation stays the same or gets worse. That doesn't mean our results will deteriorate. But we'll have to be relentless in taking costs out.
SPIEGEL ONLINE: Your own CFO said he expects another difficult 12 to 18 months.
Webster: That would be optimistic. We've had one airline fail this last week with V-Bird. There'll be quite a lot of others. But new airlines are continuing to come into the market - which is remarkable, with all of this turmoil.
SPIEGEL ONLINE: In order to save costs, you've recently experimented with fully automated check-in kiosks - there's no manned check-in counter anymore at all. Will you deploy these machines on a larger scale?
Webster: We're looking at a wide range of innovation. The kiosk is just one of them. We'd be the first airline in the world where everyone self-checks-in. This technology has done amazingly well in East Midlands, where we're testing it. We're keen to roll it out at other airports, but we've not decided how and when.
SPIEGEL ONLINE: Are passengers ready for life without any check-in ladies at all?
Webster: I went up and spoke to customers who've used the kiosk. I expected them to be reluctant. But they said, no, no, I enjoyed it. There're no queues. You can self-check-in very quickly. You're in control. Because this technology is new, we'd plan to have quite a number of people to help you at first. In the long term, it may be the same as getting money out of an ATM.
SPIEGEL ONLINE: Can you envision introducing in-flight entertainment on a pay-per-use basis? Ryanair is trying that right now.
Webster: We've been looking at that for quite some time. JetBlue in the US has got screens built into the aircraft using satellite technology. Ryanair is providing a portable unit. If it works, we could put in a system like that in two months' time, should we choose to do so.
SPIEGEL ONLINE: In spite of all the cost-cutting and the turbulence in the market: Will you be adding new airports to your German network in 2005?
Webster: One thing is certain: We will be opening new bases across Europe in 2005. We have until March to commit ourselves - the summer program will be the next opportunity to add airports. We still have to go through discussions with them. Germany is a possibility; Italy is a possibility, too. We're very happy with Germany ...
SPIEGEL ONLINE: ... but most of your routes from Dortmund, for instance, are unprofitable.
Webster: It always takes quite some time for any new market to become profit-making.
SPIEGEL ONLINE: How long?
Webster: It varies depending on the base and the size of operation we establish. If we operate a single new route out of an airport like Dortmund, it's going to become profitable in 18 months. That's not how we do it. We instead put three aircraft in and start with nine routes. We're trying to build a network. Routes become profitable when you slow growth.
SPIEGEL ONLINE: So the prices Germans pay are, on average, lower than in the rest of the easyJet network?
Webster: A little - but in line with what we expect from new operations. Our average fare is around 45 pounds. In Dortmund, it's about 10 pounds lower than that. We do promotional offers in Berlin almost every three or four weeks. You have to make this investment up-front. To get the brand established will require millions and millions of euros to be spent over two or three years.
SPIEGEL ONLINE: If your strategy is long-term, why do you plan to abandon Munich?
Webster: I didn't say we're abandoning them. What I've said before is that Munich is a problem airport for us because of their high fees. The only airport we've pulled out of so far is Zurich. I'm sure there will be others.
SPIEGEL ONLINE: Since your expansion to Germany, you've started to take regular German lessons. What's the last thing you've learnt?
Webster: That I'm a slow learner. My wife speaks German reasonably well. We have German satellite TV at home and a flat in Berlin. I'm doing French as well. When you're doing both at the same time, you're mixing up the words a little bit.
SPIEGEL ONLINE: So what's more difficult - learning a language or entering a market as a low-fare carrier?
Webster: Oh, learning the language is much, much more difficult. I'll never be able to converse fluently. But that's irrelevant. It helps me to stay humble. easyJet's future is as a European airline. We can't assume that what works in the UK will work abroad as well.
Interview: Matthias Streitz