Easyjet chief executive Andrew Harrison, who took over the reins at easyJet from previous incumbent Ray Webster in December, is focusing on business travellers as he sets himself the challenge of boosting the low-cost carrier’s profitability
Speaking in the back of a taxi on the road from Milan Malpensa airport – where the carrier has just established its first Italian base – Harrison told Airline Business: “The challenges for me are to continue to manage our growth successfully and we’ve said we want to increase the profitability of the company. We make £2 ($3.50) profit per passenger, which equates to about a 7% return on our assets, and we’ve got a public target to increase our return on assets up towards 15%,” he explains.
He believes that this can be achieved by a series of small initiatives rather than a drastic change in direction. “I don’t think we need to do anything too dramatic. It will be a series of sensible things on revenues and sensible things on costs which I think will increase our return,” says the former chief executive of the RAC motoring organisation.
He says the carrier will carry on doing what it does well, including car hire and hotel bookings while looking for other sources of ancillary revenues. However, he rules out the introduction of portable entertainment devices such as the digeplayer unsuccessfully trialled by arch rival Ryanair, and sees no future at easyJet for onboard gambling.
One possible revenue stream is the introduction of a £5 premium for a passenger to secure priority boarding – although Harrison insists this does not herald allocated seating. “We’re trialling whether a proportion of people want to pay to be in the first priority group. And we will see – maybe they will, maybe they won’t.”
EasyJet is testing the concept on several routes out of London Luton Airport, as well as online check-in, which was first introduced in February, and the Early Bird transfer of passengers who arrive in time to catch an earlier departure. These offerings, he judges, are likely to appeal to the business traveller, and it is here that Harrison sees a way to help achieve his profitability plans. “Business travellers tend to pay more because they book later,” he says, “so we don’t need to shift the mix very much to have an impact on profitability.
“Historically the focus has been on the leisure passenger and we maybe need to target our marketing a bit more. I’m not talking about a radical shift, just moving the dial slightly.”
The carrier will operate 150 aircraft by 2008 and Harrison insists there is enough capacity for them all to be used. He has announced a number of new routes recently, including London to Marrakech in Morocco, the Turkish city of Istanbul and Rijeka in Croatia. Morocco marks its first destination outside of European continent.
He describes the move as the carrier’s most significant expansion since entering the central and eastern European markets two years ago. He says: “Croatia, Turkey and Morocco are forging an ever-closer relationship with the UK and Europe. As a consequence, the demand for low-fares to these countries is growing quickly, and easyJet will be in a unique position to benefit from this development.”
Harrison says the carrier is now aiming deeper into continental Europe. “We’ve got bases in Milan, Berlin, Dortmund and Paris, and with aircraft based in Germany, they can obviously fly much further east than you can from the UK. So our footprint will naturally expand as we move our centre of gravity away from being just a UK airline.
“We’ve got a good product. I just think we need to go and shout about it a bit more,” he smiles.
The carrier is currently in talks with several European airports, including Madrid Barajas, to establish a southern European base in 2007, from which it will launch 11 new routes.
EasyJet posted a pre-tax profit of £67.9 million ($118.6 million) for the twelve months to September last year and is targeting mid- to high single-digit profit growth for this year.