easyjet and Ryanair Flying High with Low Prices Created by Lisa Neumann, Matthias Pernkopf, Viktoria Scheidl Table of content

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1 easyjet and Ryanair Flying High with Low Prices Created by Lisa Neumann, Matthias Pernkopf, Viktoria Scheidl Table of content 1.) History of Ryanair & easyjet 2.) Questions

2 History easyjet Airline Company Limited 1995: Founded by easygroup 2006: 262 routes and 74 airports in 21 countries Passengers: 1999: 3,100, : 33,000,000 easycar, easyinternetcafe, easycinema, History Irish airline headquartered in Dublin founded in routes to 25 countries 3rd largest airline in Europe Passengers: 1986: 82, : 40,000,000

3 Question 1 How do easyjet and Ryanair achieve success using low-price strategies? easyjet and Ryanair achieve success by their way of pricing (yield management) simplicity (using one aircraft type) productivity (fast turnaround times) direct distribution (Internet booking) flying from secondary airports onboard costs are reduced concentrating on their target group Cutting costs & targeting

4 Question 2 What are the advantages and risks associated with low-price strageties? Marketing-orientated pricing Promotion Price High Low High Rapid Skimming?? Low Slow Skimming Slow Penetration Figure 11.5 New product launch strategies

5 Marketing-orientated pricing Promotion High Low Rapid Slow High Skimming Skimming Price Low Rapid Penetration Slow Penetration = Low-price strategy Figure 11.5 New product launch strategies Low-price strategy =combines a low price with low promotional expenditure Advantage: reduced costs (less administration costs, reduced pilot training, ) large sales volume time saving (fast turnaround times) not expensive no luxury

6 Risk: Unemployment (booking through websites) Competitors follow Bad Image of offerings Question 3 To what extent do the conditions for charging low prices discussed in this chapter hold for easyjet and Ryanair?

7 Barrier to entry Easy Jet Increasing use of mainstream airports Passengers from conventional rivals Few destinations but higher frequency Businesstravellers pay higher prices Predation Use of mainstream airports Passengers from conventional rivals

8 Only feasable alternative No differental advantage Many suppliers Internet Experience curve effect Effect due to low prices

9 Question 4 How successful do you believe easycinema is likely to be? What is easycinema? it s another segment of the easygroup providing a low cost product in the entertainment sector. easycinema consists of two sections: the most comprehensive cinema listings service in the UK pay-as-you-go online DVD rental (since 2005) Consumers have the choice at of buying a seat to go to the movies or renting a movie to watch at home.

10 Figures easycinema has become one of the busiest listings websites in the UK with half a million visitors per month. The website of the dominant chain of cinemas in the UK only gets twice as many visitors as Opinion In general good idea but skeptical if it is/was successful because: long term forward planning no spontaneity long winded looking in the Internet invented DVD rental 2005

11 Thank you for your attention!!! Sources David Jobber: Principles & Practice of Marketing David Jobber: Case Study easyjet and Ryanair (p. 408) www. ryanair.com