What is Sir Stelios Haji-Ioannou up to with his revelation that he plans an airline called Fastjet?
The founder of easyJet, whose family still owns 38% of the airline, has been wrangling with the board of the orange-liveried low cost carrier for nigh on two years. He has been unhappy with the business strategy that strays from the ground rules of a low cost airline operation, such as mixing different types of aircraft, and a drive towards ancillary revenues.
However, it was thought peace had broken out with the signing of a “binding comfort letter” last October.
That agreement had many clauses, including allowing easyJet to use the name on license from easyGroup for a further 50 years. Also in the agreement was a clause saying Sir Stelios cannot acquire an interest of more than 10% in any other airline licensed in any EEA country (nor Switzerland) and if he does it must not involve an executive role.
If Sir Stelios follows through with his Fastjet plan then easyJet will fight tooth and nail on legal grounds.
For his part the Greek multimillionaire believes that easyJet has broken a clause saying that he and the board should not criticise each other publically.
But will Sir Stelios really launch a new airline in a now fiercely competitive market? Originally the barriers to entry were relatively low – just lease a couple of ageing aircraft and find some landing slots at less desirable airfields. Then sell tickets cheaper than a pair of jeans. This is what Sir Stelios did to launch easyJet.
But times have changed. The cost of fuel may fluctuate but it is still on an upwards trend while air passenger duty means margins are even slimmer if the airline absorbs some of the cost. Airline launches of all hues this decade have foundered with the list including Silverjet and Eos.
Every passenger has to be fought over and between them Ryanair and easyJet have a huge advantage of scale.
They are also gradually moving away from the boots and braces low cost model with easyJet, under CEO Carolyn McCall, targeting business passengers and introducing added value services.
Maybe Sir Stelios is just sabre-rattling to get the board to bend more of an ear to his demands. Whatever the outcome, it’ll be easyJet’s rivals, including British Airways, who will be happy as a potential legal row will distract the airline’s focus and resources.