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Newsletter 17
Summer 2007
Updated on 28Jul2007
Contents
Editorial
Aces, Erks, Backroom Boys
Annual General Meeting
Dunsfold Wings and Wheels
EDO to Project Office
Eric Rubython
F-35 Lightning News
From Ribs to Retirement
Hawk News
Hawker Nimrod Query
Hawker People News
Hunters Still Active
Kingston Aviation Heritage
Members
Programme
Racing Gliders
Unlocking Potential
Upper Heyford Recollection
V/STOL Wheel of Misfortune
Why Pay More

Published by the Hawker Association
for the Members.
Contents Hawker Association

 
    This was the title of Sir Colin Chandler's talk, delivered to the Association with characteristic verve and wit on 14 February.
    His subject was, of course 'easyJet'. Our Chairman, Ambrose Barber, introduced Sir Colin saying that after starting as a De Havilland commercial apprentice in 1956 he moved to Hawker Siddeley at Kingston rising to be MD of BAe's Kingston-Brough Division and then Group Marketing Director. From 1985-89 he was Head of Defence Sales (receiving a Knighthood for services to export), then Chairman of the Vickers Group and now Chairman of 'easyJet'.
    Sir Colin, in his relaxed, informative and entertaining style, outlined the history of the airline and explained its low cost philosophy. Stellios Haji-loannou started the business in 1996 using a 5 million loan from his father to buy two used Boeing 727s.
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    His objective was to take advantage of the opportunity to innovate made possible by Margaret Thatcher's deregulation and market liberalisation policies. Prior to this the market had been dominated by large, overstaffed, airline partnerships with fares set by the IATA (International Air Transport Association), resulting in high costs and fares.
    'EasyJet' emphasised safety, timekeeping, high utilisation, rapid turn-round and pleasing the customer. They introduced low cost, 'no frills' operating techniques (e.g. food not included, no free newspapers), dispensed with tickets and agents substituting on-line and call-centre booking. The lean business model minimised management staff who were housed in non-prestige offices without 'personal assistants', company cars, medical schemes or other benefits. Everyone eats in the same canteen.
    Heathrow was not used because of its high costs and delays, Luton, Stanstead and Gatwick being preferred, especially Gatwick.
    The classic hub and spoke network was replaced by a point-to-point route system flying to major airports, unlike its main competitor. 'EasyJet' has seventeen bases of which ten are in the UK. The company culture is lively and customer oriented. The operation is constantly under review and steps are taken quickly to correct adverse trends. Ineffectual directors are soon replaced. Growth is rapid - from zero to 35 million passengers in eleven years - so staff are recruited for what the job will be in two year's time.
    After 'nine-eleven' the major carriers experienced large falls in passenger numbers and reacted by putting fares up resulting in many airline failures; in contrast the low cost operators reduced their fares resulting in record revenues and profits. Today the business is a PLC with a solid investor base.
    The opportunity for growth in Europe, particularly France, is such that even greater future annual growth is forecast for the next five to ten years. For this reason 'easyJet' bought BA's unsuccessful 'low cost' offshoot 'Go' and has purchased a hundred and twenty Airbus A319s with an agreed price option on another one hundred and twenty 319s, 320s or 321s. Tenders were invited from Boeing and Airbus; Boeing was complacent but Airbus, fielding their top people to pitch their product, was keen and made the best offer. A modern fleet of efficient new aircraft gives reduced operating costs.
    Ancillary revenue is raised from hotel bookings, car rentals, parking, transfers and 'ski partners'. Early bookers get the lowest fares; business passengers tend to book late so pay more! Speedy boarding is achieved by releasing passengers in blocks - first to check-in are first aboard. However, research showed that boarding first was highly valued so, for a premium, passengers can book into the first block no matter what time they check-in. 'EasyJet' fares are under attack from competitors but ancillaries are doing well.
    Safety is paramount. The Board is the safety committee, meeting as such every three months. The Safety and Security Director, a retired training captain and ex CAA official, is responsible and has a direct line to the Chairman. Green issues are seen as very important. The young fleet has low emissions, carbon trading and offsets are to be introduced together with another typically innovative initiative.
    Today 'easyJet' is the number one low fare airline, is growing steadily to satisfy a continuing demand, leads the industry with its business model and is keeping up the pressure to reduce costs and increase efficiency.
    However, it is necessary to be active in opposing Government's misguided 'green' taxation policy which taxes all airlines the same whether they have modern low emission aircraft or geriatric gas guzzling turbojets. The tax puts up the costs to passengers, reduces load factors and increases emissions per passenger mile! The airlines must be vigilant that they do not become the Chancellor's 'cash cow'.
    After a long question period, during which important issues were raised, Les Palmer thanked Sir Colin for his splendid talk.