easyJet's Jerry Dunn talks about corporate travel, Amadeus and more...

We asked Jerry Dunn, easyJet Distribution Development Manager, to talk about his company's distribution strategy and development and the partnership with Amadeus.

Barely a few months ago, easyJet announced that it has partnered with Amadeus. This is a marked shift in your strategy, which until now has focused almost exclusively on direct distribution. What prompted your decision?

Well originally easyJet was very much founded as a leisure airline with people travelling to leisure destinations for low cost. But over time, as the airline has grown, we have become more and more attractive to business travellers. We have been very successful with the unmanaged business traveller, who can come to easyJet.com and, make an expense claim for their travel. We estimate that today around 20% of our passengers are travelling on business and it is a factor that we’re very keen to develop further. We feel that we are not getting as much business from the high-end managed corporate travel sector as we should be, so that is the reason for some of the initiatives that we are trying.

So you chose to partner with Amadeus to get a little closer to the corporations you’re now targeting?

Yes, it’s primarily to focus on what we felt  we were not fulfilling our potential with, despite the fact that our service, our routes, our network and our schedules were becoming more and more attractive to business travellers, the high-end corporate sector and the managed travel sector. Many travel management companies and corporations were not booking with easyJet, because we were not within their favourite systems. So, what we are doing with the GDSs is finding a way to be able to participate within those systems so that they can now get access and book us more easily than they could before.

Are you aiming for a particular target mix of leisure, unmanaged and managed business travellers?

No, we don’t have an official target, we are just keen to improve the mix. Clearly business travellers are high yield as they tend to travel closer to departure time when fares are a bit more expensive, so if we could fill up planes with more business travellers than price sensitive leisure travellers then we would earn more revenue per passenger than we currently do.

The plan is that it will generate incremental bookings, bookings that we are not currently serving, so ultimately business travel bookings. Our intention is to increase our average revenue per seat which if our mix of business to leisure is higher in favour of business then our average yield will be higher. . We have no problem filling our planes, our load factors are 83-84%, in the last twelve months it’s been 83.5%, in a rolling year. So, we have no trouble filling seats, but if we fill the seats more with business travellers then obviously we will earn more money overall.

easyJet’s motto has changed and is now “low cost with care and convenience” – could you explain why?

It’s because it’s not just simply offering low fares, although low fares are very important and not only important to us but to our customers. It’s also providing that service, the service and guarantee I think has been prevalent throughout easyJet’s lifetime. Our crew and all our staff are very interested in giving a good experience to our customers and then there is the convenience aspect which is related to our schedules and the flexibility in our fares. For example, we have a feature that not everybody knows about, so we need to communicate this more and more but we’re advertising it at the moment: if your meeting finishes early, you can change your ticket to an earlier flight, free of charge, subject to availability. That’s very convenient for all customers but primarily business customers if their meeting finishes early they can go to the airport and get on an earlier flight without having to pay any change fees at all. We also rate all the London airports that we fly to—Luton, Stansted and Gatwick—as one, so if you have a flight travelling back to Gatwick and there’s an earlier flight coming back to Luton then again you can change that free of charge to an earlier time. So we’re constantly looking at ways to make our service and our schedules and what we offer as flexible and convenient as possible.

Since you have decided to follow several distribution strategies, is it only a question of time before you begin distributing through online travel agencies and leisure agencies?

No we do not intend to do that, we expect leisure travellers to come to easyJet.com and make the bookings directly form our website. Some leisure travel agencies book on behalf of their customers on easyJet.com but our strategy is not to distribute through the GDS to leisure travel agencies. .

Our prime distribution model which we have been focusing on since the company was formed is all about direct distribution; it started with direct sales to the call centre and then with the internet it developed into the most successful internet distribution website. Our current sales through the internet are 98% with just 2% going through the contact centre so we feel that’s a very successful model.  In terms of distribution, we are now obviously engaging with the GDSs and looking to distribute through GDSs and other third party distribution systems in a targeted way to really focus on the high-end corporate managed travel sector, but our prime distribution channel, and our crown jewels if you like, is easyJet.com, so whatever we do must protect the business that comes to us direct, as that’s our preferred method.

You’re increasing your focus on the business traveller by distributing through the GDS, but what other strategies are you using to appeal to them?

Well apart from everything I mentioned earlier, we feel that our price is an important factor. We have done quite a bit of price comparison analysis on our competitor airlines on similar routes and the difference between 90 days before departure where we would still be cheaper than traditional carriers actually becomes more pronounced the closer to departure that you get. So although our prices do increase, traditional carriers increase their prices even more closer to departure and the differential in fares is actually much more pronounced closer to departure. And that’s a message that we are trying to communicate to business travellers, so that they understand that by travelling with easyJet they can save a significant amount of money.

We are also more environmentally friendly than most legacy carriers. We currently operate 127 A319’s and have a further 203 on order. The A319 is one of the most environmentally efficient aircraft available and it’s roughly 15% more efficient per seat than the older generation 737 300 aircraft which it replaced.  The new aircraft, coupled with our efficient business model with higher seat densities and higher load factors, means that easyJet emits 30% fewer carbon emissions per passenger kilometre than a traditional airline flying similar routes.  

What about your expansion strategy? That must be a key factor too.

Yes it is. Our ultimate goal is to expand throughout Europe and, you know, we’re already the fourth largest airline in Europe; we plan to grow at the rate of 15% year on year. When you compare the number of consumers living within 60 minutes drive time of an airport, easyJet is Europe’s number one transport network and there are 289 million consumers living within 60 minutes drive time of an easyJet airport, which is more than any other carrier in Europe; so Ryana ir, KLM, Air France, Lufthansa, British Airways have much smaller numbers within a drive time of those airports. We plan to continue to focus on what we do best: to develop our low cost short-haul network so that eventually everyone in Europe will be within 90 minutes of an easyJet airport.

Apart from that, we’re focusing on reducing costs whilst also looking to offer additional flexibility to our tickets and adding convenience services wherever we can.

About Jerry Dunn:
Jerry Dunn joined easyJet as Distribution Development Manager in November 2006 in a new role to explore and develop third party distribution opportunities. His main focus has been on negotiating and delivering the GDS deals with Galileo and Amadeus to drive incremental bookings from the managed corporate travel sector.

Jerry has worked in the travel industry for nearly 20 years, having held a variety of positions including at Opodo (Head of Distribution), Worldspan (Business Development Non-Air Suppliers), and Galileo (e-commerce Business Development EMEA) among others. Jerry graduated from Brighton University in 1987 with a BA (Hons) Business Studies degree and started his career in travel at Trailfinders two years later.

About easyJet
Low cost travel now accounts for over 37% of European short-haul travel and easyJet PLC, which carries 38 million passengers per year, is currently the fourth largest airline in Europe. easyJet PLC is engaged in the provision of airline services on short-haul and medium-haul point-to-point routes principally within Europe. For the fiscal year ended 30 September 2007, easyJet plc's revenue increased 11% to £1.8B and net income rose 62% to £152.3M. Revenues reflect an increase in passenger numbers, higher revenues from unit passengers and an increase in ancillary revenues. Net income also reflects decreased maintenance charges, lower aircraft & passenger insurance expenses, decreased aircraft dry lease cost & higher interest and other finance income.
(Source: Reuters)