21 Years On—What Made Jet2 So Successful?

DALLAS — On February 12, 2003, British carrier Jet2 (LS) operated its first revenue flight from its base at Leeds Bradford (LBA) to Amsterdam (AMS). On that crisp winter morning 21 years ago, few would have predicted that the airline would become the success story it is today—especially when there is little in common between the airline's origins and what it has evolved into.

It all began in 1971 when a gentleman named Art Carpenter established Carpenter's Air Services and Carpenter's Transport Ltd. The objective was to fly flowers from Guernsey (GCI), in the Channel Islands, to the UK mainland for further export. Four years later, Carpenter collaborated with other exporters to establish Express Air Freight, which used the venerable Douglas DC-3 to transport flowers to the mainland and freight back to the Channel Islands.

In 1978, the carrier received its first Handley Page Dart Herald, which proved to be the ideal workhorse for island connectivity. Express Air Freight became Express Air Services in 1980, and it acquired its first contract with the Royal Mail. This service allowed first-class mail for next-day delivery to be quickly flown between Bournemouth (BOH), Bristol (BRS), and Liverpool (LPL).

The Birth of Channel Express

Phillip Meeson, a former military and aerobatic pilot, purchased the growing company in 1983 after it had undergone yet another name change to Channel Express. Meeson, now in his mid-seventies, still holds a leadership position at LS and serves on the board as Executive Chairman.

Channel Express expanded in the 1980s and was listed on the UK Unlisted Securities Market in 1988 to raise capital for future growth. In addition to its long-standing Royal Mail contract, partnerships with TNT and UPS were formed, and the Lockheed Electra plus the dependable Fokker F27 were introduced in 1989 and 1990, respectively. The Dutch turboprop initially operated between Birmingham and Brussels on behalf of FedEx (FX).

In a nod to the Handley Page Dart Herald, the airline's holding company was named the Dart Group in 1991, after the Rolls Royce Dart engine that powered the Handley Page turboprop. The Dart Group also migrated to the London Stock Exchange's Official List, raising even more capital for future growth.

Bring on the Jets

Finally, in 1996, the jet age was reached, and the Airbus A300-B4 freighter was added to the fleet, with the carrier adopting the moniker 'Eurofighter.' The A300-B4 was a huge success, and its 45-ton capacity was used on routes as far east as Tel Aviv, which were flown on behalf of British Airways World Cargo.

The turn of the millennium saw the acquisition of two Boeing 737-300 QC 'Quick Change' aircraft in 2001, which would serve as the foundation for forming LS. The QC variant allowed the aircraft to be converted in 30 minutes from a 148-seat cabin to a 16-tonne freighter. Eight more QC 737s were ordered the following year, and a fourth A300-B4 was added to the fleet.

As Jet2 expanded, Channel Express operated in parallel, creating the unusual situation of two separate brands coexisting for several years. The Channel Express brand was merged into the now much larger LS identity in 2006, but the QC aircraft were still used for night mail flights until 2017. Nonetheless, LS still retains the same ICAO code of EXS, and the same "Channex" ATC radio callsign is still used today.

Future Fleet Growth

Following the phasing out of the QC variants, Jet2 solely focused on carrying passengers. The airline has been a staunch Boeing supporter, operating the 300 and 800 series of the Boeing 737 and a sizeable fleet of Boeing 757s.

That said, the airline turned to Airbus for future expansion and announced a significant order for 35 new Airbus A320neo aircraft in October 2022, with options to increase to 71 aircraft. This supplemented a previous order made in 2021 for 36 Airbus A321 neo aircraft with options to increase this to 60 aircraft.

As 2023 progressed, the carrier expected to operate 115 aircraft, offering 15 million seats for the upcoming summer season, with flights departing from ten airports across the UK. Interestingly, with the airline's Boeing 757 fleet being ETOPS-approved, ad-hoc transatlantic flights to New York were also flown in the run-up to Christmas years before the pandemic.

The "Customer First" Strategy

In keeping with its "Customer First" strategy, the airline believes in the power of visible branding. At many of their more prominent international destinations, ground staff is often attired in eye-catching red uniforms, giving passengers a visible point of contact. This is especially true for the airline's package holiday division, which has grown from strength to strength since its inception in 2007.

Several of their aircraft have been emblazoned with the slogan 'Friendly Low Fares,' which could be interpreted as a swipe at some of their competitors, perhaps less well-known for their customer-centric approach. During the height of the pandemic, as many passengers struggled to rebook flights or obtain refunds, many who booked with Jet2 told a different story.

The airline stated in its most recent financial report that over £1.7 billion was refunded to passengers during the pandemic, adding, "We firmly believe" how "our company responded to the pandemic will be remembered by our customers."

Market Consolidation

Jet2 has capitalized on the consolidation within the holiday market following the demise of Monarch Airlines and Thomas Cook Airlines, allowing the brand to strengthen its presence. The wholly-owned subsidiary is now the UK's second-largest tour operator, offering leisure breaks on the airline's 440+ routes.

Turning the assumption that package holidays were a thing of the past, the airline has said that the end-to-end package holiday is a more popular product in difficult economic times, with the carrier describing it as "higher yielding" and "resilient."

The ability to control and match its seat supply against resort capacity is also a plus. In contrast, stand-alone tour operators must block book seats with partner airlines but stand to lose financially if these seats are not filled.

A Promising Outlook after Two Decades

Last year, the carrier stated in its annual report that it wishes to maintain a simple corporate structure supported by a "well-capitalized balance sheet." If ever there was proof that adventurous expansion is not on the airline's agenda, this is it.

A recent robust winter season has followed in the footsteps of a successful summer in 2022, and initial indications are that the Jet2 board of directors now expects to outperform current market expectations and report a group profit before foreign exchange revaluation and taxation of between £370 million and £385 million for the fiscal year ending March 2023.

To commemorate the milestone 20th anniversary, the airline quipped that since that first flight, it has served more than 13 million cups of tea, and cheese and onion crisps have proven to be the most popular among passengers. With the future looking decidedly bright, it seemed like the airline was on track to deliver considerably more cups of tea and cheese and onion crisps in the years ahead.

Jet2's 2024 Growth

Last week, LS raised its annual profit guidance after a strong winter trading season and maintained a confident outlook for the summer months. The airline reported solid bookings during the 2023/2024 winter season, with a 21% increase in on-sale seat capacity and a 17% increase in passenger sectors booked.

The average pricing for flight-only and package holiday products was described as "robust." As a result, LS has tightened and slightly raised its guidance for group profit before FX revaluation and taxation for the financial year, expecting a profit outcome between £510 million and £525 million.

Further, the on-sale seat capacity for the summer 2024 period is currently 13% higher than that of 2023, and forward bookings are encouraging, with average load factors 1.5 percentage points ahead of summer 2023 at the same point. Package holiday customers are up by 17%, and the package holiday mix of total departing passengers is in line with summer 2023 at the same point in the booking cycle.

Chief Executive Officer Steve Heapy said, "We are pleased with how the 2024 financial year is ending and are encouraged by early bookings for summer 2024. Whilst recognising that there are many demands on consumer discretionary incomes, we believe that our customers cherish their time away from our Rainy Island and want to be properly looked after throughout their holiday experience. As a customer-focused and much trusted holiday provider, we remain confident they will continue to travel with us to the sunspots of the Mediterranean, the Canary Islands, and European Leisure Cities."

Jet2 will publish its full-year results on July 11. Shares in LS were up 4.3% at 1,383.46 pence each in London on Thursday morning.

Featured Image: Jet 2 Boeing 757-236 (G-LSAA). Photo: Daniel Crawford/Airways