ANALYSIS: How EasyJet has evolved its route network

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EasyJet’s development across Europe continues apace after it opened new bases in Hamburg and Naples and sealed long-term commercial deals with its two biggest London airports.

A look at the carrier’s development since 2010 shows the extent to which the UK – and London Gatwick in particular – together with the French and Italian markets are centre stage in the carrier’s growth

Data from Flightglobal's schedules specialist Innovata shows that EasyJet has increased its annual seats in the market from just under 54 million in 2010 to nearly 72 million this year. During that time, the airline has grown annual passenger numbers from 48.8 million to 60.8 million for its financial year ending September 2013. Innovata schedules show EasyJet capacity will increase again to nearly 75 million in 2015.

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During the same period, EasyJet has gone from serving destinations in 29 countries to 34 countries.The nations added to the network predominantly show further expansion around the edges as EasyJet has begun flights to Russia, Jordan, Iceland, Norway and Serbia. Only Luxembourg is located at the heart of western Europe.

Finland – where the carrier served Helsinki from London Gatwick, Paris and Manchester until 2011 – is the only country to have been dropped from its network over this period.

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Since taking the helm of the carrier in 2010, Carolyn McCall has been flagging a more robust approach to its network decisions. “We have to be because our shareholders expect us to have returns,” she explained during a recent interview with Flightglobal at the launch of its new Italian base Naples. “We have delivered high returns and I think we are confident we can continue to deliver good returns, but that does mean your discipline around network has to be very, very strong. And we have a very disciplined approach. Assets are expensive and they are finite. You can’t just keep getting loads and loads of aircraft, they’ve got to make money, so there will be no change in our terms of our network strategy.”

Fleet development

The airline has been adding aircraft steadily, growing its fleet over recent years from 183 in March 2010 to 220 as of last month. It is scheduled to add another five aircraft this year

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The carrier last year sealed its longer-term fleet plans with a follow on order for Airbus narrowbodies.This sees it exercising outstanding options on 33 Airbus A320s, as well as purchase rights on two more, and ordering 100 A320neo twinjets. Its A320s will arrive over 2015-17 and the A320neos from 2017-22. Around 85 of these aircraft will be replacement aircraft. While its fleet is set to reach 282 by 2022, it has flagged it ability its flex the size of its fleet anywhere from 171 to 298.

As part of the fleet renewal the airline will continue to rebalance its fleet with larger A320s. “Every aircraft that comes into EasyJet is an A320. So you get an extra 24 seats,” says McCall. “You are getting a lot of benefits in growth terms from the upgauge rather than just adding more aircraft all the time.”

Flightglobal’s Ascend Online database shows that the airline’s current fleet comprises 153 A319s and 67 A320s. “We do use the A319s in a different way and we’ll always need A319s, but the proportions of A319s today is more than the A320s, so we’ll switch that,” says McCall. “But we’ll always need some A319s in our fleet.”

Key routes

The carrier’s expansion at Gatwick has been one of the central stories of EasyJet’s route development, so it is perhaps no surprise to see a connection from the south London airport as the biggest route this year. It will offer more than 700,000 seats in the market this year on flights between Gatwick to Geneva and increase this to over 750,000 in 2015. This compares to under 180,000 on the route in 2010.

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Its three largest routes in 2010 – Gatwick-Malaga, Liverpool-Belfast and Milan Malpensa-Paris Charles de Gaulle – remain among its biggest by seats offered in 2015. These have been joined at the top table by routes such by Gatwick connections to Barcelona and Amsterdam.

Other notable additions are Paris Orly-Rome Fiumicino – a route it only began serving in 2012 but on which it already offers nearly 500,000 seats per annum. Barcelona-Geneva and London Gatwick-Jersey – which it will take over from Flybe – are almost among the biggest new additions to its network.

Some of the major movement in Italy has involved it switching big routes from Rome Ciampino to Orly and Berlin Schonefeld over to the Italian capital’s primary Fiumicino airport. Likewise, it halved capacity on the Fiumicino-Malpensa link after securing the much-prized rights to begin flights between the Rome airport and Milan’s downtown Linate facility.

UK market

At the end of March, EasyJet sealed new long-term commercial deals at the London airports of Gatwick and Luton, its biggest and third-biggest bases respectively. The commitments, while also aimed at locking in infrastructure improvements at the airports, underline the significance of both to the carrier.

EasyJet expects to double capacity at London Luton – where it currently carries around four million passengers on 39 routes – and has outlined its intention to raise capacity a fifth over the next 12 months alone.

Gatwick, though, remains by a distance its biggest operation. It already has 57 aircraft based at the airport serving 108 destinations.

The airline expects to lift capacity and passenger numbers at Gatwick around 10 per cent over the next 12 months alone. While McCall would not be drawn on precise growth plans or the commercial details of the new agreement, she notes that the airline’s growth at Gatwick has typically been ahead of its overall rate of capacity growth. The carrier is set to grow at around five per cent annually, “so Gatwick will usually be a bit ahead of that”, she says.

The airline, which has fuelled its growth at the south London airport through its acquisitions of British Mediterranean and GB Airways, further strengthened its presence after acquiring slots from Flybe after the UK carrier quit Gatwick. “Because we got the Flybe slots last year and we are using them this summer, I think organic growth at Gatwick is possible,” says McCall.

The strong presence at Gatwick means UK operations account for roughly a third of its total operations.

France, Italy and Spain

The airline has developed a strong presence in the Italian market where it is the third-biggest operator in the country. Its growth has been driven by its presence at first Milan Malpensa and the Rome Fiumicino. That has contributed to a big lift in its overall capacity in the country. This has helped grow originating seats in the Italian market from 6.7 million in 2010 to nearly 10 million this year.

The two bases have now been supplemented by its new Naples base, which opened at the end of March with two aircraft and six new routes taking its destinations from the southern Italian airport to 21.

“I think it’s a good development for Italy because it helps cover a different part of the country. It will connect Naples with all our other European destinations. I think it’s a gateway to a lot of other places,” says McCall. “It’s an iterative strategy. Once you are in Italy, where are the other opportunities.”

EasyJet network from Milan Malpensa, Naples and Rome Fiumicino bases (May 2014)

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Source: Innovata Flightmaps Analytics (key: yellow=domestic, blue-international, red=intercontinental)

Equally significant has been the growth of France to the carrier. “I think there is a lot of organic growth potential in both,” says McCall. “If you look at France, we were predominantly at Paris Charles de Gaulle and Orly in the beginning and then we moved very quickly to have Lyon, Toulouse and Nice. Now we have five bases in France and have been very aggressive in the regions and have been successful in the regions, and that’s been a very effective strategy.”

There has been some growth in Spain as well. But while it has taken up domestic route opportunities in France and Italy, its Spanish operations are exclusively international. “There’s so much capacity, its very fragmented. Everyone was piling in, even when Spanair went out of the market, it didn’t really improve the situation that much, so I think we were very sensible to steer away from Spanish domestics. But we still do a lot in Spain.”

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There has though been some consolidation in the countries with which it connects Spain. While the UK remains the biggest market for EasyJet’s Spanish routes by a distance, there are notably increased connections now from Switzerland and France.

At the margins

EasyJet has added some flights into markets on the fringes of its core European network, in places like North Africa, Israel, Iceland and Russia. The carrier launched flights from Gatwick and Manchester to Moscow a year ago.

“London Moscow was a scare capacity and it was interesting because of that and I think opening up markets is something EasyJet does very well,” says McCall. “Iceland was just an exciting destination, and one we could serve very well from Luton and its going really well. Egypt, winter sun, helps balance the seasonality, Morocco is the same.”

Countering impact of seasonality and the lower demand in winter months also forms part of the carrier’s route strategy. “You try to balance that with winter sun and also business travellers who are un-seasonal in nature – they tend not to travel in peak summer, but do travel all year. So that’s a good way to try to balance that. But I think the bigger you get, there is an increasing seasonal dimension. But our range of loss is lower year on year [for the winter period 2013-14], so we are reducing our losses.”

One of is most recent route launches, the addition of flights linking Gatwick to Tel Aviv, also illustrates the way EasyJet gradually brings new destinations into its wider network. “It is joining the dots: you open a new destination and then you fill in. Tel Aviv is a good example. We started from Luton and now we’ve added many of our other bases. That is really effective, when you have a network like ours, it’s a real advantage. You can do it in a way no-one else can.”

EasyJet route network from Tel Aviv (May 2014)

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Source: Flightmaps Analytics