If you’re outside of Europe, you likely haven’t been paying close attention to the awesome drama unfolding over easyJet. The airline’s operations appear to be falling apart and the founder is threatening to take the name away if it doesn’t improve. This is worthy of a TV special.
easyJet was started in 1995 by Sir Stelios Haji-Ioannou. He slapped his famed “easy” brand with bright orange colors on the airline and it took off from there. The initial idea behind easyJet was to be like a Southwest Airlines – low cost, low fare 
flying all around Europe but initially from its Britain base. I’ve always thought of easyJet as being Ryanair’s more convenient cousin. For example, easyJet flies most to primary airports while Ryanair focuses on alternates. easyJet also hasn’t gone to the extremes of cost cutting in terms of passenger amenities, but there’s a problem.
EasyJet’s on-time performance sucks, and for that reason, Ryanair is infinitely more convenient. You can follow FlightStats to see how dreadful easyJet’s performance has been on a daily basis, but the furor really came out of a report showing that the airline didn’t even get half of its flights out of Gatwick in the air on time in June. It’s not good.
Lots of excuses are coming out of the easyJet headquarters, but nobody really cares. Management has blamed air traffic control strikes, but other airlines don’t seem to be performing as poorly as easyJet. This is where it gets interesting.
Sir Stelios may be intricately tied with easyJet, but he’s pissed. Back in May, he left the board because he’s angry about the airline’s expansion plans, which he thinks won’t add value for shareholders. His family still owns 38 percent of the airline, but he stepped down from the board so he could act solely as a large shareholder to prevent management from going forward with these plans.
The on-time debacle has just added flames to the fire. When Ryanair chief Michael O’Leary came out swinging against easyJet and Sir Stelios for having a terrible on time record and failing to publish it, Sir Stelios got angry. He made it clear that he had nothing to do with it, and that led to one of the strangest things ever. In fact, I’m surprised it didn’t cause a rip in the space-time continuum.
O’Leary apologized. In print. No, he didn’t apologize to easyJet but rather to Sir Stelios for implicating him in the airline’s failures. Sir Stelios has taken that apology and started a crusade of his own against easyJet. He is now threatening the airline by saying that if on-time performance doesn’t improve within 90 days, he’s pulling the brand license. Yeehaw, this is getting good.
Sir Stelios had already been angry about the use of the brand, and this just adds flames to the fire. See, brand license requires that the airline generate at least 75% of its revenues from the core business of flying. This is meant to protect other easy-branded companies that have their own spheres. The airline, however, is arguing that the way that number is calculated is bull. So the two have been going at it in court.
In the end, this is just a disaster. How can an airline focus on running a business when its embroiled in a massive fight with its founder and 38% shareholder? It really can’t. I don’t blame Sir Stelios. He’s acting in his best interests, as he should. This whole thing is just a mess, and ultimately passengers will be screwed.
[Original photo via Flickr user alistairmcmillan]
But wasn’t O’Leary’s apology required by a court order? Anyway, it’s not the first time, though it says something that they’re infrequent enough to be logged:
http://www.guardian.co.uk/business/2010/jul/15/michael-oleary-apologies
I was thinking for a moment that they could just become “jet” but suspect that easygroup have managed to get rights over that shade of orange now (after a run in with the Orange mobile phone company).
While we’re talking about LGW: Cranky, would you be able to do a post on competition between London airports? BAA have sold Gatwick to GIP, who have a stake in LCY, and we now have the unusual (for here) sight of adverts aimed at consumers suggesting we use LGW instead of LHR. I haven’t seen anything on whether they’re competing on landing fees, etc.
Well, I’m not sure that O’Leary actually cares about court orders anyway, so it’s still a big deal in my mind. But O’Leary is also smart. He can retract his attack on Sir Stelios and it gives him more opportunities to slam easyJet’s poor on time record. All he has to do is say Stelios isn’t involved. Good deal.
I think that orange color is part of the deal, so they would have to repaint.
Good question about LGW. I’ll put it on the list.
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So what’s the real reason for easyjets poor on time record? Factor out the Iceland volcano, were are their problems coming from?
It sounds like crew scheduling (and crew shortages) are playing a part here. Not sure what else.
Well there’s a whole heap of background here :
http://insidetraveller.co.uk/blog/?p=1089, and in two more recent posts.
Many of those Ryanair-haters out there are increasingly concerned that all the goodwill they have wrapped up in Easyjet is just going to go pfut if EZY management can’t turn this one around. The thought of being driven into the arms of O’Leary is hugely depressing
Thanks so much for a cool read. Easy jet don’t sounds so easy!
I am not sure that it looks at all like that close up. I still choose easyjet over ryanair without a second’s hesitation: not transparently hating your passengers is a pretty big advantage. And a 38% shareholding is big, but it’s a minority, so the directors very properly don’t want to let Stelios call the shots as if it were still a family business.
The real core of the dispute seems to be that the board still has a growth strategy and is investing in more planes, Stelios wants to see some of that money in dividends. That’s his right, of course, but the fact of the dispute strongly suggests that he cannot muster the support of enough other shareholders to change the policy.
Protecting the separate spheres of influence of easy* companies is one thing, but arguing that baggage fees shouldn’t be counted as revenue related to flying strongly suggests that it is not the easyjet board which is seeking trouble here.
I pray that EasyJet fixes the problem quickly. It would be a travelers nightmare to be left a the mercy of RYAN AIR!
I fly Easyjet regularly from GVA-LGW but only if I’m going to the UK for family/leisure reasons.
When I have to travel for meetings, I always go by BA (I do sometimes return by Easyjet). This is simply because I can’t guarantee I’ll get there on time. Easyjet’s reliability has plummeted in the past months and I’ve never had a return journey that was not delayed on one of its legs.
I’ve also had numerous flights cancelled (for non-weather, ie Easyjet-specific reasons) and many, many hours of delays (because Easyjet don’t seem to have any spare planes in case of problems).
I have flown Swiss/BMI and BA and never experience any of the same kind (or extent of) problems. Yes, Swiss/BMI and BA can be more expensive – but not always. It is often a question of a few pounds, no more than that – in which case I tend to go for the scheduled airline.
I used to be a big fan of Easyjet. It’s a great shame that they’ve declined. Even Ryanair (which I really dislike) has spare planes in case of technical problems and despite the grating Michael O’Leary they do actually run a punctual service.
Stelios is right to be disgruntled with the airline, they’re sullying the Easy brand. It’s time they stepped up a gear, it won’t be long before I kick them into touch for leisure flights too.
Resident here in Geneva?
27/09/10 easyjet announce disrupted flights to Alicante due to spanish air traffic controllers strike on the 29/9/10 blogging on there website you can change or amend your flight or get full refund for disrupted flight.. NOT SO on conversation with them they refused to give refund unless flight cancelled we will have to see what office of fair trades say about this statement..