18 August 2008

Easyjet and Stelios head to court over ancillary revenues

This is probably one of the more bizarre cases. Stelios is suing his baby in the High Court in the UK over the amount of ancillary share of gross revenues.

At 16% it was reasonably OK to assume that the airline's business was in transporting people. At the time that EasyGroup was created and then spun out EasyJet that would have been appropriate.

My natural instinct is to support Stelios in this. However I really think he is being just a little unreasonable. While I do not know the reasons that precipitated the need for this move - I believe that an unfavorable to EasyJet verdict will harm the airline. Now everyone needs additional revenue to counter the high price of oil.

That said - I will put up another argument. There shouldn't need to be ancillary revenues to support the airline. But the inability due to lack of cojones of the airlines to charge the right price openly is plain for all the world to see. So EasyJet which is now a Hybrid Value Carrier no longer a pure LCC will suffer as a result.

Let's follow the case and see what happens - it should be interesting


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