RE: Times article on EZJ holiday business2 Jul 2024 14:54
EasyJet holidays had an inauspicious start, launching in 2019 only a few months before the pandemic and travel ground to a halt. Five years on, however, the package holiday wing of the eponymous airline has truly taken off, generating pre-tax profits of £122 million in 2023 on turnover of £1 billion. It is on course to make another £170 million in the present financial year.
Indeed, this year it claimed to be Britain’s “fastest-growing, lowest-cost and highest-margin” holiday business. Analysts think this means a brighter outlook for easyJet itself, with the prospect of better revenue growth, profit margins and return on capital for the Luton-based airline. Can it keep the momentum going?
The tour operator was the brainchild of Johan Lundgren, easyJet’s chief executive, who realised he had a ready-made customer base for holidays at the airline, plus an extensive flight network that offered more flexibility than a traditional tour operator. He felt that easyJet’s holiday operation at the time, which was outsourced, was effectively giving business away.
He invited Garry Wilson, a fellow former Tui executive, to “come and see if we can make it work” by persuading the airline’s passengers, who buy 100 million seats a year, to “trade up” to a package deal. As well as this captive audience, other factors including new technology were on their side.
“When we launched in 2019, we brought everything in-house, our own technology, marketing, our own kind of pricing and reservation system, plus relations with hotels,” Wilson, 52, the chief executive of easyJet holidays, said. Far from being a hindrance, pandemic lockdowns “gave us a real opportunity to do loads of stuff that we had planned to do. We said, ‘Let’s really invest now so that when we come out of Covid we’re in a much stronger position to then grow’.”
The resulting business model is highly flexible. It does not commit to hotel rooms and has low fixed overheads. Services are offered digitally, so there are no travel reps. Five thousand hand-picked hotel partners can increase or decrease the number of rooms they offer on the website and can experiment with prices. “If the prices are too high, the holiday just won’t sell and they will find somewhere else,” Wilson said. “So it’s a kind of self-regulating virtuous circle.”
The company has made the most of the easyJet brand, which stands for “value and ease”, according to Wilson, as well as its network and scale. “You’ve got a brilliant network in terms of the amount of flights that we have and where we fly to. Whereas with the traditional tour operators, you may be able to fly to your Greek island one day a week or two days a week, with us you can fly three times a day, so the flexibility we were offering customers was huge.”
What he calls the “big bet” of setting up the holiday business has paid off thus far. In 2022, its first full year of operations, the company carr
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