Kenton Jarvis, the airline’s new boss, sees city breaks as a largely untapped market - Easyjet/Linkedin
EasyJet is plotting to reinvent the city break as a package holiday in an effort to gain an edge on rivals.
Kenton Jarvis, the new chief executive of the airline, plans to sell short-term city breaks as package holidays by offering tens of thousands more rooms with its flights.
The move represents a challenge to rivals including Ryanair, which has no holiday arm, and tour operator Tui, whose flights are focused mostly on beach resorts.
It also poses a threat to online travel agents such as Booking.com, which currently provide most of the accommodation for easyJet’s flight-only travellers.
The strategy will extend the reach of easyJet Holidays beyond its focus on beach breaks in a bid to boost sales at a division that is already the group’s most profitable.
It will also herald a new chapter for the airline that helped ignite the original boom in city breaks with its low-cost model.
The plan is part of a broader strategy set to be outlined by Mr Jarvis in the coming weeks after he succeeded long-time chief Johan Lundgren in December.
Visits to European capitals and cultural hotspots are enjoying a resurgence after a dip in demand following the end of Covid, when Britons who had been cooped up for months headed to the Spanish coasts or splashed out on luxurious long-haul trips.
City traffic at easyJet was more than half of its total before the pandemic, but dropped to 42pc after travel curbs were lifted. It has since recovered to 47pc and is still growing.
Mr Jarvis said: “These are really popular routes. Amsterdam, for example, will be one of our busiest destinations this winter. Yet at the moment almost everyone travels independently and books their own room.
“What we need to do is persuade people coming to us for flights that we can also offer quality accommodation at a cheaper price, which is true seven times out of 10.”
Mr Jarvis, who was easyJet chief financial officer before taking the top job, said the rebound provided an opportunity to target a vast and largely untapped market.
Even on flights to beach resorts only about 10pc of easyJet passengers currently book accommodation through the airline, with the figure falling to just 4pc for services to cities.
He said: “The opportunities are huge, but the challenge is that you’ve got to think about it differently.”
Unlike beach destinations, where the quality of the hotel is key, city-breakers care more about the specific location of accommodation.
Mr Jarvis said: “If you’re going to Rhodes you want a hotel that’s on the beach, has three or four restaurants, tennis courts and so on, but you’re not that bothered about where it is.
“But if you’re going to Paris you may want to be in Montmartre, or near the Louvre or the Musée d’Orsay, and the location becomes the most important thing.”
Kenton Jarvis: ‘If you’re going to Paris you may want to be near the Louvre – location becomes the most important thing’ - Antoine Boureau/AFP
In order to provide that choice, easyJet Holidays is taking steps to offer thousands more city hotels and to connect with all major chains in what the division’s chief, Garry Wilson, said will amount to “a step change in focus and approach”.
Mr Wilson, Mr Jarvis and Mr Lundgren all previously worked as executives at Tui, accumulating a collective 40 years of experience at the world’s largest tour operator.
Mr Jarvis joined easyJet in February 2021 after being approached by Mr Lundgren about the chief financial officer post. The new chief said he endured a “really hard first year,” with flights still grounded by the pandemic and easyJet suffering successive annual losses of more than £1bn.
Now though, things are on the up. Pre-tax profits for the 12 months to September were £610m after a record summer, thanks in no small part to the package holiday division.
EasyJet Holidays saw pre-tax profit jump by more than 50pc to £190m over the period – delivering almost one third of group earnings.
Those returns came from just 2.6m customers out of the 100m who flew with the airline during the 12 months, highlighting the potential gains if the company can convince more travellers to book packages rather than simply flights.
The airline has offered customers the ability to book rooms with all of its flights for more than a decade, but for most of that time did so simply by diverting them to online travel agents in exchange for a “small kickback” should they go on to book a room, Mr Jarvis said.
That changed with the foundation of easyJet Holidays in November 2019, which gave the company its own in-house tour operator able to combine flights and rooms.
While the business was put on hold during Covid, it has since ridden a surge in demand, spurred by the return to fashion of package deals that help control costs and offer full ATOL protection whatever the circumstances.
While it will be tough to strip more reservations from the likes of On the Beach, loveholidays and Booking.com, the airline has one major advantage, according to Mr Jarvis.
“EasyJet.com is one of the most visited travel websites in Europe,” he said. “That provides an awful lot of traffic to connect through to the Holidays website, whereas the online agents have to give an unbelievable amount of money to Google just to be visible.”
The company is working on an overhaul of its website so that people bound for locations such as Krakow or Prague are directed to a “flight plus hotel” option rather than an easyJet Holidays page plastered with shots of sandy beaches.
He said: “It’s one thing to offer a package holiday if someone is looking at Mallorca, but not if they’re going to Paris, because they don’t think of it as a holiday. It’s very definitely a city break. And if that’s how people think of it, that’s how you’ve got to present it.”
EasyJet’s first step in refining its city breaks has been to scrap the 23kg baggage allowance usually included in its packages after concluding that it was unnecessary for a short trip.
Jarvis said: “We’ve taken that off, which allows us to reduce the fare. Then it’s your choice. If you’ve got a small bag you don’t need to pay anything else, or you can choose to take an overhead cabin bag or put something in the hold.”
Recently introduced city options from the UK include Tromso in Norway, aimed at people hoping to view the northern lights, and Strasbourg, with a near 500-year-old Christmas market that attracts around 2m visitors over the course of a month.
EasyJet recently introduced flights from the UK to Tromso in Norway, aimed at people hoping to view the northern lights - Juan Maria Coy Vergara/Moment RF
EasyJet said the high frequency of its flights provides the flexibility to accommodate the short stays favoured for urban breaks more easily than a company such as Tui, whose package offerings typically span at least a week.
A focus on primary hubs such as Paris Orly, rather than the more distant airports used by discount rival Ryanair, also give it a head start in offering city-break packages.
Ryanair abandoned its own holidays programme in 2016 and Michael O’Leary, the airline’s chief, said a return is unlikely until the Irish firm has completed fleet-expansion plans.
At easyJet, the new chief is targeting a profit of £250m from easyJet Holidays over the medium term, based on an anticipated doubling of its market share.
Mr Jarvis grew up in Essex and studied biochemistry at Manchester University before becoming an accountant at PricewaterhouseCoopers and moving on to jobs in advertising and at German sports shoemaker Adidas.
He has worked in travel since joining Airtours Holidays as finance director. He moved to Tui in 2003 as head of finance for northern Europe, rising through the ranks over the course of 17 years to become chief executive of its airline arm.
