Budget Airline Battle Royale: easyJet vs. Stelios

easy.com

Sir Stelios Haji-Ioannou founded easyJet in 1995 at the tender age of 28. The airline—along with Ryanair and a few other major players—came to change European commercial aviation in significant and consequential ways.

Flying became much cheaper overnight. Legacy airlines, until that point the only game in town, struggled to keep up with the altered commercial terrain. Customers got used to fewer perks and fees for various things. You know the drill, though it’s easy to forget how quickly the terrain has changed.

easyEverything

From the outset, there was a kind of magic in the “easy” brand. It was in fact very easy, and, well, distinctively orange. Haji-Ioannou set up an umbrella conglomerate called easyGroup in 1998 to serve as a clearinghouse for various other ventures. None of these have been as successful as easyJet, and, in fact, many have floundered.

Even those easyGroup businesses with higher profiles, like easyBus (which links city centers to airports) and easyHotel (which operates inexpensive lodging in Basel, Berlin, Budapest, Dubai, Larnaca, London, Sofia, and Zurich) are not turning profits. The conglomerate has allowed its owner to move ahead on a variety of projects while keeping easyJet, its most profitable component, front and center.

Troubles in easyLand

But all is most definitely not rosy in easyLand. For a few years now Haji-Ioannou, who is the largest shareholder in easyJet, has tried unsuccessfully to obtain dividends from the airline. And now the storm between the two interests has reached fever pitch.

Earlier this month, Haji-Ioannou sued the airline he founded. At issue is whether or not easyJet violated an agreement not to generate more than a quarter of its income from hotel, car rental, and other services that might technically compete with other easyGroup businesses.

This approach seems awfully arcane. Let’s review. The largest shareholder of a company is suing that company for making more money than it otherwise would because its ancillary income might technically be competing with other, unprofitable (or, at best, less profitable) businesses he owns. OK then.

Pan Kwan Yuk and Pilita Clark, who looked at the case in detail a few days ago in the Financial Times, join the general speculation that perhaps this suit is an attempt on the part of Haji-Ioannou to simply obtain the easyJet dividends he has been itching to receive.

In any case, this skirmish has turned out to be one of the more interesting ongoing events in the European low-cost carrier universe—especially so given this season’s relative paucity of new route announcements.

About the author

Alex Robertson Textor
About the author: Bitten by the travel bug at 11, Alex Robertson Textor has fond childhood memories of ultracheap Spanish hotels (the kind with Styrofoam shelving) and supermarket lunches scarfed on park benches. Formerly an academic, Alex has spent the last several years redirecting his professional life into full-time travel journalism and editing. He has published articles in the New York Times, Guardian Unlimited, Condé Nast Traveler, Arthur Frommer’s Budget Travel, and the San Francisco Bay Guardian, among other publications.
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