Easyjet has just reported a 51% rise in pre-tax profits for the year. And the main reason they give for this is that they made it possible for passengers to pre-book a seat, according to a BBC report. This has resulted in the boarding process becoming less stressful and increased customer satisfaction. But is this really the case?
In many business environments in which competition is based on a low cost strategy, it is not unusual for firms to start differentiating on the basis of service. In the airline sector, Ryanair has stuck firmly to the strategic ‘principles’ of operating as a low cost carrier (see previous blogs), whereas Easyjet has moved more towards operating as a conventional carrier. So whilst Michael O’Leary is trying to change his airline’s approach to become more customer friendly, Easyjet is thriving. This illustrates something that we bang on about in class – it’s not price that is important, it’s VALUE that often drives success.
Source: BBC News