easyJet has just posted its fifth successive year of record profits, following significant investments in digital platforms and data analytics. Not only this, but the budget airline has also hired its first Head of Data Science in an attempt to further take advantage of predictive AI.
The company, which has just turned 20 years old, saw its annual profits increase by 18% to £686 million. The airline’s load factor, an industry indicator of how many seats on a flight were booked, rose from 90.6% to 91.5% over the year.
Chief executive Carolyn McCall took the opportunity to say that the outlook for the longer term is “positive” and that the airline will continue to focus on its technology investments. She said:
We expect demand in our markets to be sustained and for easyJet to continue to be a winner in its markets. We will see passenger growth of 7% a year, sustaining margins through rigorous cost control and the benefit of fleet up-gauging, resulting in positive profit momentum.
We remain totally focused on our network advantage, digital leadership and offering our customers great low fares and service. We continue to invest in profitable growth, ensuring our digital advantage and giving our customer good value fares.
Digital is key
The company’s results make a particular point of highlighting how it is driving increasing levels of loyalty and attracting passengers through the “quality and innovation” of its digital platform. For example, easyJet cited that over the last year 74% of seats were booked by returning customers, which is a six percentage point increase on 2010.
easyJet adds that its digital platform is a “key point of differentiation” with its competitors.
Investment in the development of our digital customer proposition also contributed to the increased cost per seat. For example, easyJet highlighted that on the day its summer 2016 season tickets went on sale, the company commanded 33% of all UK airline web traffic. Across all channels it had 2.6 million visits, up 30% on the prior year and in the early moments of the launch it was selling 800 seats per minute.
Throughout the year, easyJet said that it had 500 million visits across all platforms, which was an 18% increase in the last two years. Web conversion also grew by 13% over the same period.
The airline used its results to highlight further investments it will be making. It said:
We will be investing substantially in our digital capability over the next three years, as we continue to innovate and maintain our leadership position in the sector. Our initial focus will be on enhancing the digital customer interface, to be delivered by summer 2016, followed by the development of support systems that will lead to easyJet having the first fully-integrated e-commerce platform in the airline industry. In the longer term we are committing to the acceleration of our use of data science to improve efficiency, increase revenue and drive greater customer satisfaction.
The digital programme will offer increasing amounts of personalisation, introducing a more relevant booking journey based on previous behaviour to drive higher footfall, higher conversion rates and higher attachment rates. It will also enable greater self-management capability through the entire journey chain, from booking to check-in, through the airport and in the event of disruption.
We are subsequently building an e-commerce platform that will give us a competitive advantage for the long term. Its primary objective is to give us significantly better flexibility and capability than we currently have, specifically around our ability to offer customers bespoke, attractive options.
Lastly, we have started to explore ways to innovate in other areas across the business. In June we showcased new technology such as engineering drones and prognostics software. Looking to the future, we are investing in research around Artificial Intelligence to exploit the large amounts of data generated by our operations.
Data, data, data
Alongside its impressive results, easyJet took the opportunity to announce that it has hired its first ever Head of Data Science, with claims that the position will be used to “accelerate its already industry leading use of artificial intelligence”. Alberto Rey-Villaverde, who has been at easyJet for a number of years, according to his LinkedIn profile, will be using AI to help improve efficiency, reduce cost and increase revenue and customer satisfaction.
Chief executive McCall said:
Since our launch 20 years ago easyJet has always taken advantage of innovation and leading edge technology to continually improve our business. Tapping into the huge potential of AI by accelerating our use of data science right across the airline will improve our efficiency, bring down costs, increase revenue and drive greater customer satisfaction.
Whilst Rey-Villaverde commented that he will be using data at the airline to help easyJet become morepredictive. He said:
easyJet is a large but relatively simple airline. We are the fourth largest airline in Europe but all bookings are made through easyJet.com, we fly one aircraft type and we only fly short haul. This combination of simplicity and scale produces an enormous amount of data.
AI can make sense of this huge volume of data and make it work for us, making sense of patterns and trends and help us provide for them.
To date analytics has been about diagnostic capability and looking backwards. Now advanced AI is more focused on predictive capability so we can better understand the future and plan for it.
Some of the areas it hopes to apply AI and advanced data analytics include predictive maintenance, resource planning, flight scheduling and its loyalty programme.