THE EFFECTIVENESS OF CUSTOMER RELATIONSHIP MANAGEMENT IN THE BUDGET AIRLINE INDUSTRY (A CASE STUDY OF EASY JET)
This chapter presents the results of the research that was conducted. The first part discusses the Customer Relationship Management (CRM) of EasyJet, as relayed by three directors of EasyJet through email interviews. The second part presents the result of the survey, along with an analysis of the said results; and the third part presents a comparison between EasyJet and Southwest Airlines.
EasyJet’s CRM
Three directors of EasyJet were interviewed through email regarding EasyJet’s CRM. They were Liz Savage, Director of Business Development; Dominic Paul, Customer Services Director; and David Magliano, Strategic Marketing Director. Their address is at easyJet Airline Company Limited, easyLand, London Luton Airport, Bedfordshire LU2 9LS, UK, and the telephone number is +44 (0) 158252 52. They were also contacted using the email address, b2b@easyjet.com.
According to the interviewees, EasyJet’s strategy and business model are based on six key strengths that they believe support competitiveness, scalability and sustainable growth: These are simple fare structure; low unit costs; strong branding; commitment to customer service; multi-based network; and strong corporate culture.
EasyJet only offers a single fare at any one time for a specific flight. Its pricing strategy is to offer value-for-money fares, although not necessarily the lowest fares for any given route. This fare generally increases in line with demand towards the date of the flight, that is, fare is low during off-peak or unsocial hours and seasons and also when tickets are bought way ahead of time. EasyJet manages to keep its unit costs low by maintaining high aircraft utilization, eliminating all sales intermediaries between the customer and EasyJet except for some airport sales desks, focusing on internet sales, eliminating unnecessary service frills, operating a fleet of similar aircraft and establishing a long-term relationship with suppliers.
EasyJet has worked hard to establish a strong brand in its key European markets, the UK, the Netherlands and Switzerland, aiming to provide a service consistent with its image, that is, professional, friendly and informal. Its network strategy is to provide dense point-to-point services on routes within Europe. The company believes that this strategy provides significant benefits, including reduced dependence on a single hub base and the creation of local competitive advantages as a result of the size of EasyJet at its bases and the frequency of its flights.
Still, EasyJet has a strong and coherent corporate culture, internally known as the orange culture, which the company believes helps substantially to motivate employees to implement EasyJet’s strategies. The directors believe that the Company’s stated orange values, including being up for it, passionate and sharp, help to motivate employees to be productive and to implement these strategies. Employees are encouraged to contribute to the management of the business and are allowed to have access to a significant amount of information stored on the company’s electronic document system. In return, almost all employees have received an offer of either a gift of shares or an option over shares, dependent on a future flotation of the company.
The directors claim that safety and security are the top priorities of the company’s management. They accomplish this by implementing safety training procedures, investing in the latest aircraft equipment and adopting a confidential safety issue reporting system.
When it comes to their customer service, EasyJet seeks to provide its customers with a safe, low-cost, good value and reliable service. EasyJet operates an entirely ticket-less sales and check-in service, which the company believes, is less burdensome for customers. It also reduces the costs associated with ticket processing, including personnel costs, and simplifies administration and control. Moreover, there is no seat assignment policy. Instead, passengers are rewarded for checking in early because boarding is generally sequenced according to check-in order. Thus, those who check in early generally get a better chance of their choice of seat. Seats are not offered on a standby basis, as the company believes that standby arrangements complicate aircraft boarding and turnaround.
In-flight service costs are kept to a minimum. Food and drinks are served on board and are paid by the passenger, while the in-flight catering is provided by third party suppliers.
The Internet has indeed played a major role in the success of EasyJet, as most of its sales have been generated through the Web. EasyJet believes that its prominent use of the slogan, the web’s favorite airline, and the painting of the website address on each of EasyJet’s aircraft encourages customers to use this low-cost sales channel. EasyJet made its first Internet seat sale in April 1998, and has successfully built up the proportion of its sales via the Internet since then. In the year 2000, over 65% of initial bookings were made via the internet, this figure quickly rising to 78%, which the directors believe is one of the highest percentages for an airline. Now, over 90% of its ticket sales are made over the Internet, with only about 8% done through call centers.
The company is, of course not without criticisms. One of the most common complaints is the lack of people whom the customers can talk to in case they need assistance. Since transactions are mostly done through the Web, customers are unable to get more detailed information, which can only be given by a person whom the customers can actually talk to. Another is that some people may want to make reservations so that they can fix their schedules more easily. However, EasyJet’s seating arrangement is on a first-come, first-served basis. Still, some customers are not pleased with the company’s [policy on baggage, as there is a limit to the amount of baggage that a customer can bring. Some customers may also want more or better food served during the flight, but the flights are no frills, meaning that only snacks, such as peanuts and cheese biscuits, are served. Lastly, EasyJet’s use of Luton Airport, one of EasyJet’s airports, seems to be causing a lot of inconvenience to the customers.
When asked to evaluate their company’s CRM, the directors are one in saying that they believe that EasyJet is well positioned for success in a market that shows an increasing acceptance of low-fare airline travel. This is backed by the fact that after its first year of operations, EasyJet had sold approximately 485,000 seats and had established a network of 6 routes with 4 aircrafts. By the end of September 2000, EasyJet has flown 5.6 million passengers, which has an increase of 84% over the previous year and generated profits before tax of £22.1 million on revenue of £263.7 million. By then, EasyJet has also operated on 28 routes and had a core fleet of 18 aircrafts, and one aircraft operated under a wet lease.
The directors further cited some of the awards received by EasyJet for their CRM. Easyjet was voted as Best No Frills Airline in 1999 and, in 2000; Best Low Cost Airline, both in the Business Traveler magazine awards. In July 2000 it was voted the fifth best business airline in the world and seventh best leisure airline in the world. Still, in the Guardian/Observer travel survey based on the views of 17,000 respondents and In October 2000, it was voted Best Low-Cost Airline in the Telegraph Travel Awards.
The three directors agree that good customer service is defined by quick response time; helpful, knowledgeable and well-trained employees; ability to speak with a person to get help; ability to tailor services offered to fit customer needs; and ability to anticipate customer needs. In the same manner, they believe that failure to deliver good customer service is because of the lack of attention/interest by company to the needs of customers; poorly trained employees; ineffectiveness at answering customer concerns/problems; slow response time; lack of personalized interaction with customers; and failure to have ongoing communication with customers after purchase
Survey
A survey was conducted for this research, in which 30 respondents answered the questionnaire. The findings of the said survey are summarized in the following tables for clearer understanding.
Table 1. Customer Evaluation of EasyJet’s Services
CATEGORIES RATING
Poor
Fair
Good
Very Good
Excellent
Price/Value for Money
9
0
9
0
12
Bookings
0
3
15
12
0
Check-in
3
3
21
3
0
Handling of Baggage
3
6
21
0
0
Customer Service
at the Airport
15
3
6
6
0
Choice of Airport (Luton Airport)
6
0
24
0
0
Punctuality of Flights
12
3
9
6
0
Seats/Seating Arrangement
9
6
15
0
0
Food
9
9
12
0
0
Entertainment
27
3
0
0
0
In-flight Service
6
3
12
6
3
EasyJet is known for its low fares, which accounts for the majority of the respondents feeling fairly satisfied to very satisfied with regards to the price and the value they get for their money. However, some remain unsatisfied. These customers may feel that the prices are indeed low, but they are being caused a lot of inconvenience, and they may feel that they would rather pay more for more convenience.
Booking for flights is mostly done through the Internet, which is favored by most of the respondents, indicating that the Internet is a good medium, and one that the customers can easily access and use. However, some of the respondents do not find this so favorable, as they may have difficulty in canceling flights or in acquiring more information. When checking in, customers are given boarding numbers, and the lower the number, the bigger the chance for the customer to choose a seat, as seats are given on a first-come, first-served basis. This seems fine to most customers, although some rate this check-in system poorly as they may want to be assured of a seat beforehand and they may want to fix their schedule in a particular way. In line with this, there seems to be equal reaction to the seats or seating arrangements. Again, some customers feel that they should be given the chance to choose their seat beforehand, and some feel that the seats re too uncomfortable and are cramped. However, there are those who are fine with these, given the low price that they had to pay. There also seems to be some concern with regards to the baggage as there’s a limit to the amount of baggage that passengers can carry with them. Majority of the respondents don’t see this as such a big deal, though.
The choice of Luton Airport as EasyJet’s main airport is fine by most customers. However, there are those who think that it is not structured well and causes inconvenience especially when the customers have a lot of luggage with them. There also seems to be dissatisfaction when it comes to the customer service of EasyJet within the airport, that is, there may be too few people assigned to sales desks, or these people may be rude or unaccommodating. This implies that not everything can be automated, and that the customers may need someone they can actually talk to when they have questions or when things go wrong. This may also imply that in their fervor to develop the technological side of the business, the company authorities may tend to overlook their subordinate’s people skills and how they interact with the customers. On the other hand, there seems to be greater satisfaction with in –flight customer service, as the customers find the flight attendants courteous and sometimes funny and entertaining.
There is also equal reaction to the punctuality of flights. Flights are usually on time, although delays do occur especially on return flights, which greatly displease some passengers.
Lastly, being a no-frills flight, only snacks and no real food are served. Food may be bought from within the airplane, though these may be quite expensive; thus, the discontent of some passengers. However, some are fine with this, as the flights are mostly short ones, and they don’t need to eat heavy meals. They can also just bring their own food. There is also no entertainment provided, but most passengers understand this, considering the low fare.
Table 2. Recommendation of EasyJet
YES NO
Will you recommend this airline?
21
9
Overall, majority of the respondents would recommend EasyJet. They may recognize that EasyJet has its imperfections, but it does what they want it to do pretty well, that is, take them to their destination quickly and safely.
EasyJet vs. Southwest Airlines
The table below compares the CRM of EasyJet and Southwest Airlines ( Epinons, Inc, 2000; Lillich, 2002).
CATEGORIES EASYJET SOUTHWEST AIRLINES
Price
Low cost
Low cost
On-time Service
Yes
Yes
Seats
First-come, first-served
First-come, first-served
Food
No frills
No frills
In-flight Service
Good
Very good
Baggage
Limited
Limited
Business class
None
None
Airport Used
Secondary
Secondary
It can be seen from the table above that EasyJet’s CRM is very similar to that of Southwest Airlines. This is because EasyJet’s CRM is patterned from that of Southwest, the latter being the pioneer in the budget airline industry.
One difference, though, is that Southwest Airlines has a better customer service over EasyJet. This is an indication that Southwest Airlines is better able to balance its automated services with the services involving interaction between their customers and their employees.
Although Southwest has honed its operations and CRM better than EasyJet, EasyJet is definitely not far behind and is on its way to being at par with Southwest Airlines and other leading budget airlines.
Conclusion
EasyJet is one of Europe’s leading low-cost passenger airlines. They make massive use of the Internet as a means of transacting with their customers, therefore reducing the need for personnel and for paperwork. Their policies of first-come, first-served and the absence of business class promote efficiency, and their no-frills flights contribute further to the low-cost fares.
While these strategies keep Easyjet’s services cheap, they also compromise the customer’s comfort and convenience. Most customers, however, understand that these are due to the cheap fare they had to pay. They are more concerned instead on getting to their destination safely and on schedule, and as far as EasyJet is concerned, they meet these needs of the customers, as evidenced by the company’s huge success
BIBLIOGRAPHY
Epinions, Inc. (2000). Southwest Airlines. Epinions, Inc. Available in [http://www.epinions.com/trvl-Airlines-US_Canada-Southwest_Airlines/display_~reviews]. Accessed [23/05/03]
Lillich, J.M. (24/01/02). Communication, Perception Define Customer Service Satisfaction. Purdue University
SURVEY QUESTIONNAIRE
The undersigned is conducting a research on the Effectiveness Of Customer Relationship Management In The Budget Airline Industry, with EasyJet as the subject of the case study.
Your cooperation is of utmost importance to the completion of this research, and the researcher will greatly appreciate it if you answer the questions in this questionnaire.
Your answers shall be treated with the strictest confidence.
Thank You
Part 1. Personal Data
1. Gender
( ) Male ( ) Female
2. Age
( ) Below 18 years old
( ) 18 – 25 years old
( ) 26 – 35 years old
( ) 36 years old and above
3. Civil Status
( ) Single
( ) Married
( ) Divorced
( ) Widow
3. Educational Attainment
( ) Doctorate Degree ___________________
( ) Masteral Degree____________________
( ) College Degree____________________
( ) High School
( ) Elementary
4. Occupation (Please Specify) ______________________
Company (Please Specify) ______________________
Position in the Company _______________________
Part 2. Evaluation of EasyJet’s Services
Please rate the following with regards to the services of EasyJet, based on the following scale.
1- Poor
2- Fair
3- Good
4- Very Good
5- Excellent
Price / Value for Money 1 2 3 4 5
Bookings 1 2 3 4 5
Check in 1 2 3 4 5
Handling of Baggage 1 2 3 4 5
Customer Service at the Airport 1 2 3 4 5
Choice of Airport (Luton Airport) 1 2 3 4 5
Punctuality of Flights 1 2 3 4 5
Seating Arrangements 1 2 3 4 5
Food 1 2 3 4 5
Entertainment 1 2 3 4 5
Staff and Service in Flight 1 2 3 4 5
Will you recommend this airline? Yes No
EMAIL INTERVIEW
The undersigned is conducting a research on the Effectiveness of Customer Relationship Management In The Budget Airline Industry, with EasyJet as the subject of the case study.
Your cooperation is of utmost importance to the completion of this research, and the researcher will greatly appreciate it if you answer the questions in this questionnaire.
The results of this interview and this research are purely for academic purposes
Thank You
1. Describe Easyjet’s strategy, especially with regards to your CRM.
2. What is your top priority when it comes to the services you offer?
3. What are your goals when it comes to customer service?
4. What are the criteria that define good customer service?
5. What do you think are the reasons for failure to deliver good customer service?
4. How has the Internet played into your business?
5. Describe how you maintain the quality of work of your employees.
6. What criticisms do you get regarding your company’s CRM?
7. Overall, how would you evaluate or rate your company’s CRM?
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