easyJet focuses on developing strong positions in Europe’s leading airports – flying between airports people want to travel to with optimised frequency. Its principal competitors at these leading airports are the legacy airlines and charter carriers.

easyJet’s structural cost advantage relative to these airlines allows it to offer customers more affordable fares. This cost advantage is created through a combination of factors including:

  • aircraft configuration enabling a higher number of seats per aircraft;
  • higher load factor and aircraft utilisation driven by its point-to-point model; and
  • younger fleet and advantaged fleet deal reducing ownership and maintenance costs.

easyJet is confident that its strategy of building on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - will position it to deliver sustainable and disciplined growth and returns for shareholders.

easyJet is delivering its strategy through its six strategic pillars.

EasyJet strategy model

Build strong number one and two network positions

easyJet’s strategy is focused on key airports, serving valuable catchment areas that represent Europe’s top markets by GDP, driving both leisure and business travel. easyJet has developed a more economically resilient network than its competitors, helping to support consumer demand throughout the cycle.

These are strong, existing markets, built up over a period of time by legacy carriers.

Driven by strong underlying demand, an attractive customer proposition and a structural advantage, we will continue to invest up to 9% annual capacity increases in growing its network to drive the highest returns in the long-term. In 2016 we have refined our network strategy to ensure a greater focus on:

  • Achieving number one positions both at primary airports and on our routes
  • Investing in scale
  • Investing with purpose

To build on this, easyJet has a clear network strategy to:

  • protect its number one positions in the UK and Switzerland;
  • secure a significantly stronger position in France;
  • invest in lean bases to drive more efficient capacity growth;
  • across the network; and
  • target specific market opportunities, such as city-based strategies in Germany, Italy and the Netherlands.

A lean cost advantage

easyJet has a strong cost-focused culture, with structural advantages in key areas that enable it to combine a leading airport network with affordable fares. easyJet’s lean culture consistently delivers substantial cost savings against underlying cost inflation and we are committed to delivering our target of flat cost per seat excluding fuel at constant currency in the 2019 financial year versus the 2015 financial year at normal levels of disruption.

In 2016, cost per seat improved by 2.0% primarily reflecting benefits from fuel, partially offset by the £112 million impact of foreign exchange. At constant currency, cost per seat excluding fuel improved by 1.1%. Existing easyJet lean initiatives delivered savings of £95 million, an increase of 106% year-on-year. These savings were primarily the result of improvements in airports, maintenance and ground handling costs.

Customer and operational excellence

easyJet’s strong operational and cost performance is built around ensuring aircraft depart and arrive on time. This minimises disruption costs and improves customer satisfaction and repeat purchases, which in turn increases revenue.

Disruption due to air traffic and other strikes in Europe, as well as severe weather and runway closures at Gatwick airport, has severely impacted easyJet’s performance during the year.

During the year, easyJet cancelled 3,268 flights (2015: 2,637) and on-time performance was 77% across the network, a decrease of three percentage points from 2015. Given the level of disruption this is a resilient performance and excluding the UK, which was disproportionately affected, on-time performance was 80%.

To secure better on-time performance easyJet has set up a taskforce to focus on the following main areas:

  • Reduce the number of events due to technical issues, using predictive maintenance and enhanced parts management and distribution.
  • Improve disruption management through better processes and communication with our customers as well as using technology to reduce cost and improve effectiveness.
  • Influence structural improvements through discussions with airports, national Governments and the EU.
OTP % arrivals within 15 minutes Q1 Q2 Q3 Q4 Full year
2015 Network 86% 86% 79% 74% 80%
2015 Network excluding UK 86% 87% 81% 77% 82%
2016 Network 82% 82% 74% 71% 77%
2016 Network excluding UK 83% 84% 78% 76% 80%

Our Gatwick North Terminal programme is already driving operational and customer benefits. The consolidation process will complete in January 2017 and total operational cost savings are anticipated of around £5 million. The auto-bag drop area, the biggest in the world, has now processed three million bags since it opened last October and we have added greater functionality to collect payment for additional or excess charges for luggage. 97% of our customers now wait less than five minutes to go through the bag drop experience which has improved customer satisfaction. We are now rolling out our “customer-host assist” that is expected to drive lower cost and greater customer satisfaction primarily through mobile-based functionality to self-serve.

Data and digital

A core part of easyJet’s strategy is the implementation of its wider digital strategy. This includes leveraging data and easyJet’s digital platforms to support its network, customer focus and operational excellence by enhancing its customer relationship management capabilities. These tools help build customer loyalty and drive revenue growth. easyJet’s increasingly sophisticated use of data will enable it to make travel easy and affordable in the long-term.

Loyalty and data

In the last year 74% of our seats were booked by returning customers. We have seen a strong increase in customer loyalty in our core markets, with returning customers in the UK increasing by 9%, France by 11%, Switzerland by 11% and Amsterdam by 20%. easyJet’s marketable customers have now reached over 26 million, up 5%, providing further potential for growth.

Following its launch earlier this year, Flight Club has now been successfully rolled out to our most valuable flyers, as identified through our customer database. We have seen a 14% uplift in retention and 32% uplift in CSAT amongst our Flight Club members. At the same time, easyJet Plus membership has grown by 40% following successful campaigns across our digital channels and Customer Relationship Management (CRM) programme. Flight Club aims to recognise and retain our high-value and loyal customers with a scheme that makes travel with easyJet even easier. Very different to legacy frequent flyer programs, which are highly expensive and complex, Flight Club makes the simple things even easier for our customers

Innovation and digital leadership

Our digital platform is a key point of differentiation from our competitors. We believe that we have significant advantages in the capability of our web platform and our mobile offering. Our award winning App has now been downloaded 18.3 million times, an increase of 30% on last year. 20% of bookings are now on mobile, with ApplePay a significant step forward this year. Passengers are also increasingly using mobile boarding passes, which has increased 63% year-on-year. Enhancements like these add to the customer experience and drive customer loyalty, as well as driving our cost advantage.

Since the year end easyJet has also signed a five-year contract with Founders Factory, the corporate backed accelerator and incubator. The partnership will create value for easyJet and our passengers by putting disruptive thinking at the centre of our digital strategy, helping us to explore opportunities for advanced TravelTech services that will help us to keep making travel easy and affordable.

We will continue investing substantially in our digital capability, building on our success in enhancing the digital customer interface.

Grow revenue

easyJet has driven its leading customer and digital proposition through constant innovation and by listening to its passengers, focusing on market demand and offering value.

Business passengers

Performance for the year has been encouraging with continued growth in business passenger numbers, and further investment in how we reach and interact with our corporate customers. We have continued to target business passengers, growing the number of passengers by 6% to 12.5 million, with September 2016 a record month for easyJet. We also signed 137 corporate agreements over the year, representing a 25% increase against last year, serving to demonstrate the significant growth potential for business passengers. There has also been a growth in business-specific fares throughout the year with a 14% increase in Flexi fares, which carry a greater yield premium.

Our combination of using primary airports in large economic markets, alongside high frequencies and attractive flight timings, makes easyJet a logical choice for business passengers. We are focused on providing a bespoke business offering through distribution platforms, Travel Management Companies and direct to small and medium-sized enterprises.

Growth in Global Distribution Systems (GDS) volume continued to drive revenue and channel movement from web bookings to GDS within the travel management company partners. The recent negotiations across our GDS partners extended our agreements with Amadeus, Sabre and Travelport for an additional term. Developments across our Self-Booking Tool partners have seen a 16% increase in bookings due to the lower fees applicable and customised set-up for our corporate accounts.

easyJet has recently won Business Traveller Magazine's “Best Low Cost Carrier” for the 14th successive year. easyJet continues to see opportunities to sell its business product across Europe and we continue to strengthen our corporate sales capability through a new market, customer and industry structure.

New revenue streams

Non-seat revenue has performed strongly, increasing by 17%, offsetting pressure on ticket yields from the external environment.

easyJet has a programme to develop new revenue streams as well as enhancing existing revenue streams, leveraging its attributes of a primary airport-focused network, cost focus and track record of innovation. We are exploring new distribution channels, partner agreements and structures such as connectivity with other suitable airlines. Recent examples have been:

  • Earlier Flight - a mobile app-only proposition, targeting customers who may wish to switch flights at short notice on the day of travel. This flexibility is offered to customers for just £15 and capitalises on the scale of our mobile app use when customers are on the move.
  • In-flight - our investment continues to pay off with revenue growth of over 30% in the last 12 months. This year saw the introduction of pre-purchased in-flight vouchers, scaled through our targeted CRM programme.

The best people

easyJet is passionate about its people and we believe they set us apart. We believe that our customer-facing employees are the very best in the industry and contribute significantly to the positive experience that our passengers enjoy, leading to increased loyalty and repeat business.

It is our people who continue to deliver the business’ strategy and will drive our future success. We continue to focus on recruiting the right people, helping them to understand easyJet’s values and their role in the business and then giving them the tools to develop a high-performance culture.

easyJet’s new Academy at Gatwick demonstrates our commitment to the development of our staff, providing a world-class training facility comprising of classrooms, cabin simulator, evacuation slide and fire training rig. The centre is an investment in our people, fulfilling easyJet's expected training needs to 2020.

We recruited during the year to help support our growth, adding over 360 pilots and 1,400 cabin crew, as well as 280 people within the management, administration, engineering and maintenance departments. In line with our target, 35% of positions were filled by internal candidates. Retention rates remain good with employee turnover at 9.0%, while engagement scores remain high at 76%.

Increasing diversity

easyJet’s launch of the Amy Johnson Flying Initiative, in partnership with the British Women Pilots Association, is part of our long-term strategy to increase the number of our female pilots. easyJet set an initial target to double the proportion of its new entrant pilots who are female, from under 6% in 2015 to 12% over a two-year period. easyJet was able to meet its target within one year. Other activities to increase the number of female pilots include working with easyJet’s pilot training providers to attract more women to apply for its cadet programme and working in partnership with organisations which promote female take-up of STEM (Science, Technology, Engineering and Maths) subjects and women in business.