easyJet Continues to Withhold Growth at London Luton Airport

World Airline News, April 13, 2001

Airline Says Luton Left Out of Expansion Due to Airport Fee Dispute

With the April 6 announcement of five new European routes, low-cost carrier easyJet kept its vow to not increase its services at London's Luton Airport as a result of an ongoing dispute over airport fees. None of the airline's new routes originate from Luton.

easyJet inaugurated service and established a base at Luton in 1995, and negotiated a start-up agreement with the airport operators to "support and grow its business," said Luton spokesperson Laura Goodes. "It was advantageous to them and it benefited the airport," she continued.

The airport and its new majority shareholder TBI plc argue that now easyJet has become a profitable and established airline, the carrier should be charged a fair and reasonable rate for airport fees.

easyJet maintains its major point of contention was never with the airport, but with the business practices of Luton's former majority shareholder Barclays Bank. "They want to make as much money as possible and sold their share to TBI for a massive amount," said airline spokesperson Samantha Day. She added that easyJet never had an argument with the airport, but is concerned that easyJet's passengers would pay for Barclays business methods.

Negotiations over airport fees between easyJet and Luton began in Oct. 1999 and since then easyJet has launched what some observers identify as a targeted media attack against Barclays through an Internet and publicity campaign.

One industry source told World Airline News easyJet took advantage of an already negative image of Barclays that resulted from its closure of some rural branches in the UK.

But easyJet argues that it is not using the press to further its agenda, rather that it is continuing its practice of being an open and friendly airline by explaining to its passengers how they would be affected by an increase in airport fees.

easyJet also contends Barclays built an over sized terminal building and then sought an excessive return on its investment by expecting airline passengers to pay for the terminal, according to company documentation.

Goodes dismissed easyJet's accusations that the terminal was too large. "They [easyJet] have been quoted as saying it's the Taj Mahal," she said. "The terminal was built for all passengers at the airport. We built the terminal for the future, not to operate at capacity from day one. We've had enormous growth over the last few years and we anticipate those numbers to grow," Goodes continued. She told WAN the increase in fees covered essential airport services such as safety and navigation of air-traffic control.

Goodes recognized easyJet's contribution to the airport telling WAN part of Luton's enormous growth, an increase from 1.9 million passengers in 1995 to over 6 million last year, was a result of easyJet's presence at the airport.

She also acknowledged easyJet is a great product and has revolutionized travel in the UK. But, according to Goodes, there was no guarantee easyJet's business plan would materialize into a successful venture.

"They were offering flights from Luton to Glasgow for the price of a pair of jeans. That was a big gamble for the airport," Goodes said.

The negotiations with easyJet at the end of the day are just a normal business transaction, according to Goodes. But the airport's new owners have said they do not plan to acknowledge the airline's attempts to publicize the negotiations. "We're not going to be swayed by their Internet campaign or publicity machine," Goodes said.

easyJet could possibly be in a more favorable negotiating position with TBI since the company owns Belfast International Airport. One of easyJet's new routes is from Belfast to Glasgow. Day told WAN the airline has a good relationship with TBI.

Both easyJet and officials from London Luton have expressed a strong desire to find a satisfactory resolution concerning the airport fees. The airline and airport agreed to a six-month arrangement that began March 1 with an increase in airport charges on passenger tickets from GBP1.70 (US$2.40) to GBP5.50 (US$7.88). That agreement expires Aug. 1, and according to Goodes, "We have to have a resolution by that deadline."

easyJet has maintained its stance that it plans no further growth at Luton due to the proposed increase in airport fees and Chief Executive Ray Webster supported that philosophy in an April 6 statement. "By the end of summer 2001, less than half our fleet will be based at Luton," he said. - Lori Ranson

easyJet's New Continental European Routes

easyJet takes delivery of three Boeing 737-700s throughout the summer and plans to use the aircraft on the following routes announced April 6.

Belfast/Glasgow - Four flight per day. One starting August 21 with three additional flights added September 3.

Belfast/Edinburgh - Two daily flights beginning September 3.

Glasgow Amsterdam - Two daily flights. One daily flight beginning August 21, and the addition of second daily flight beginning September 3.