03/29/2012

easyJet moves up-market

easyJet has announced trials of a seat booking possibility on some flights between the UK and selected destinations next month. What next?


Although the reason for this trial is stated not to be to make money, it is difficult not to see a link with the fact that, like other airlines, easyJet is actually making quite a substantial loss. The company states that because of the relatively clement winter weather, the expected loss for the six months ending on March 31 is likely to be only (!) between 110 and 120 million pounds sterling: an improvement on what had been forecast, and also on the same period a year ago. It also said that no improvement was likely for the second half of the (financial) year. This positive (!) news caused a rise of 8% in the share price.

I recently wrote a blog about what appeared to be a similar move by the airline Swiss. In their case it was more to profit from the high-end segment of the business travellers, whereas the easyJet objective seems to be simply to attract more business travellers.

The easyJet web site (which seems extremely slow to respond today, but that might be something to do with access via something called maxymiser.hs.llnwd.net) contains an explanation of this trial, though not the details of which seats can be booked with an extra charge. However, the newspaper articles say that easyJet will charge £12 to reserve the seats with the most leg-room, £8 for seats in rows two to eight and £3 for any other seat.Although I do not have the seating plans for their aircraft, I calculate that this could probably bring in at least $300 per flight if all are taken. Multiplied over the number of flights per year, probably of the order of 400,000, that would mean an extra 120 million pounds: much more than the 5 million pound cost of the new seat reservation computer system. However, this reservation might affect the existing revenbues from choosing early boarding.

So what might follow this? Perhaps these first few rows could eventually have more luxurious seats, appetising food, in-flight entertainment, internet access and panoramic windows. All that would be needed then would be to curtain off these front few rows and rename that section as ...

... business class!

 

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