EasyJet losing reputation as budget airline, says Sir Stelios
Sir Stelios Haji-Ioannou has said that EasyJet has exceeded the terms of its brand licence and is in danger of no longer being seen as a budget airline.
He made the comments in submissions to the High Court yesterday as he sues EasyJet for breaching the terms of a brand agreement signed after it floated.
EasyJet was founded by Sir Stelios in 1995 and became a publicly listed company in 2000, with an agreement to license the EasyJet brand from Sir Stelios for £1 a year. Part of the licensing agreement says that EasyJet must not derive more than 25% of its turnover from ’ancillary services’, to avoid it coming into conflict with other companies in the Easy Group, including EasyHolidays and EasyHotel.
Sir Stelios is arguing that the company is now exceeding this limit and that the changing nature of its business may result in “changing the public perception of the EasyJet business and occupying space in market sectors which could otherwise be occupied by Easy licensees”.
The court case is likely to hinge on what is defined as an ancillary service. EasyJet charges extra for food and ’speedy boarding’, but could argue that these are core to its main business of being a budget airline.
Earlier this year Sir Stelios stepped down from the board of EasyJet to focus on shareholder activism, saying that the company’s management is pursuing the wrong strategy. He is strongly opposed to EasyJet’s plans to expand its fleet saying that the company should focus on delivering shareholder value rather than expansion at any cost. Sir Stelios and his family own 38% of EasyJet, making them the largest shareholders.
Sir Stelios protects the Easy brand fiercely, with a whole section of Easy Group’s website devoted to the steps it has taken to thwart what it calls Brand Thieves. It has won a number of trademark cases in Europe preventing other companies from using ’easy’ in their brand names.
The case is expected to run for 10 days.
