Earlier this year, serial entrepreneur Stelios Haji-Ioannou, the man who gave Europe its first budget airline, cashed in £14 million of his easyJet shares to fund what he calls a "little shopping spree." Boldly expanding his no-frills model into new markets, Stelios (he insists on first-name in formality) plans to open the first easyHotel in London this year with prices from £ 5 a night, an easy Bus fleet and easy Cruise, ready to sail next summer. Also on the list: easy Pizzas and easy Tele com, a mobile-phone service.
Can he make it work? The soaring success of easyJet and its rivals was Europe's great business story of the late 1990s, and yet more carriers are emerging to serve the 10 nations that joined the European Union last week. While copycatting the idea may look like a no-brainer, though, some experts doubt Stelios's expansion plans have much of a future. "The no-frills model is very fragile." says Chris Voss of London Business School. "Stelios is applying it rather indiscriminately."
The entrepreneur's record is mixed. He launched easyJet in 1995, when he was 28, and it now has 70 planes and revenues of £932 million last year, up nearly 70 percent from 2002. But his first attempt to clone the no-frills model, a Europe-wide chain of Internet cafes launched at the height of the bubble, has since struggled to make money. His first easy Cinema-tickets for just 50 pence is suffering because big distributors, fearful of undercutting their other business, refuse to allow cheap screenings of new blockbusters.
The larger problem: reducing prices is not enough to make no-frills work. Stelios, for example, likes to sell direct to the customer, preferably online, and avoids corporate accounts on the theory that only individuals care enough about price to be loyal no-kills customers. He chooses only sectors in which the volume of business will clearly rise as prices fall. There's no point, say, in offering a cut-rate burial service. Says Stelios: "The demand for funerals isn't going to go up—regardless of the price."
If one travels on the Mediterranean cruise in the future,
A. he/she will become a cheapskate.
B. it will cost him/her more money.
C. it will become more economical.
D. there will be no free services.