Last week, easyJet became part of the FTSE 100 index, making it officially one of the top British companies. There are people saying that the airline has now reached a natural plateau and growth will be much more restricted in future. I think this is wrong for two reasons.
Firstly, there are still countries in Europe where easyJet has plenty of room to expand. It is a European airline now, not just a British one. Of course, growth needs to be controlled, but there is plenty of room – even in markets where they already have a large share such as Britain.
Secondly, and much more important, the airline looks to have tremendous scope to improve simply by doing what it already does, but just a little bit better. I do not mean they should cut costs (they tried that under the last management regime with disastrous results). They simply need to use their strong position more effectively.
An interview for a US business magazine with one of their senior sales executives gave a couple of examples of what they can do.
Can you guess the seventh largest country market for easyJet sales? The answer is not so surprising if you think about it – the USA. Yet it is only recently that easyJet have created a dedicated site for US sales – using the American date format and replacing words like “holiday” with “vacation”. So simple – yet it is amazing the airline has got to the size it has without doing this before.
Then the executive mentioned their weekly sales email sent to all their customers. In the past, a fairly standard email was sent to all passengers giving news of new routes and special offers. The email was translated into other languages but was otherwise standard. Now, personalised emails are being created based on the regular airports used by the customer.
Again, another obvious way to get better sales at hardly any extra expense.
What the executive did not mention though is just as important. The current system used by easyJet to maintain its mailing list is hopelessly inefficient. I heard (maybe incorrectly) it was outsourced to an Indian company which has not done a good job. Whatever the case, an awful lot of passengers do not get regular emails and even those who try to sign up often fail to get their names added.
When easyJet started, it grew rapidly and became very successful but its back office and management was often shambolic. The period of cost-cutting under the last management made this worse. Implementing an efficient mailing list is just one example of many and the gains to be made could be substantial. Now that it is under sensible management, I am sure there is plenty of room for the airline to improve its profits just by growing at a reasonable pace and doing what it already does – but just a little bit better.