From the 1990’s to the first years of the millennium, the basic characteristic of the airline industry was the increasing demand for travelling due to globalization. This situation started to reverse from the year 2000, when an economic slowdown was apparent. The terrorist attack of 11th September 2001, along with the SARS virus in 2003 increased the fear of air passengers and facilitated a big crisis in the airline industry. Rapid changes in computer technology also triggered changes in the air transport sector, since they facilitated new business processes, like network management, e-services, e-commerce e.t.c. Furthermore, the third package of EU deregulation which was applicable by the year 1997 led to a big increase of the Low Cost Carriers (LCC), which offered an alternative to clients who were price conscious.
EasyJet and Ryanair follow a cost leadership competitive strategy, which emphasizes in producing the service of air transport more cheaply than the competitors. Their low prices strategy is feasible by reducing every possible cost and by offering no frills. Indicative ways to eliminate their cost are the little differentiation of their product, the minimizing of the expenses for Research and Development, the elimination of selling and advertising costs etc. They also emphasize on efficient scale facilities, while innovations are adapted only after their competitors have implemented and tried them, so as to diminish the risks involved.
The competitive advantage of both companies lies in the fact that they offer a combination of low cost fares along with high frequency service and a wide network of routes.
The basic elements (7 Ps) of the Marketing Mix of both companies are the following:
Product-Service: EasyJet and Ryanair offer the core service of transport to short haul destinations at a low price. They do not offer food, drinks or extra services like other traditional companies do.
Place: They sell their tickets via the website of their company and other websites, cutting off the intermediates, like travel agents. They also use secondary and small airports which cost less and are not very busy, thus the turnarounds on ground are done faster.
Promotion: Both companies have eliminated advertising costs. They use only their web-site to promote their image and people tend to learn about them from web sites which compare services. They also have some little advertisement on the back of the seats in the cabin and they send to customers some e-mails informing them about their special offers.
Physical evidence: The only physical evidence in the case of Ryanair and Easyjet are their airplanes. These companies have also tried to diminish their cost when it comes to buying their aircrafts, taking advantage of special offers due to seasonal circumstances e.g. the 11th September event e.t.c. They have only one class of seating and they have minimized the free space per customer so as to increase the numbers of seats.
People: Pilots work for many hours, so does the staff of the cabin which is eliminated as possible. They follow flexible work conditions, their wages are very low and their contracts do not follow the trade union agreements, thus these companies often suffer from strikes. There is also no dedicated customer service, because both companies usually use outsourcing for this purpose.
Process: The passengers book their tickets via the Internet.They do not have a checking in procedure. The passengers just have to show their passport and the number that was made known to them from the website. Seats are not allocated, so every passenger can seat anywhere. The passengers make their way to the aircraft either walking or on a bus (there are not special air bridges). The turnaround times on the ground are short because the aircrafts are used to the greatest extent, offering point to point service.
Price: All the above mentioned elements of the two companies Marketing Mix make it clear that they are strategically oriented at the most important strategic goal of the business, which is to provide the transport service at the lowest price.