Stelios Haji-Ioannou
Stelios Haji-Ioannou started easyJet in 1995. It has since helped to change the face of European aviation and now is one of the region's largest carriers, as well as a part of easyGroup, Haji-Ioannou's holding company. Preferring to be called by his first name, Stelios last month spoke to delegates here at the Institute of Travel Management conference and said easyJet now is "perfectly suited" for business travelers. He fielded questions from conference moderator John Stapleton and delegates. An excerpt follows.
Open Skies would allow for more carriers to fly to the United States. Is this something you contemplate?
No. EasyJet has a business model that is specifically designed and works best for short flights. Our equipment--the Boeing 737s and Airbus 319s--have a range of about three or four hours ... so we are not interested in the transatlantic. The current business model of British Airways and Virgin Atlantic is probably as efficient as it gets. They have three classes and the people in the front pay way too much in relation to the total average cost, subsidizing the people in the back. They are basically running the companies more efficiently than if you had one class. If you filled up the plane with easyJet-type seats, you would actually end up charging more, perhaps, than what some of the people in the back of the plane in economy actually pay. I do not think we should compete in that market. It is not our business. It is a different business, best-served by them.
The U.K. air passenger duty[raised in February by U.K. Chancellor Gordon Brown] does not have any effect at all, does it?
The irony about the APD is that it only affects the poorer people. It will not stop business travel, it will not stop wealthier people. It is a grossly unfair tax, because it will only stop some people who cannot afford it. If you look at it in terms of efficiency of the air transport system, it may stop the last 2 or 3 percent from getting on the plane, not the plane taking off. All the emissions will be there. It will just carry 82 percent load factor, not 85 percent load factor. So it actually has not achieved anything.
And what about climate change?
I think the debate is over. Whether the science is correct or not, I am not qualified to comment. The fact remains that it is a business issue and people need to take it seriously. In a way, acting responsibly is good for business generally. Not wasting energy is not a bad thing. If you take it at the macro level, if you ground the entire aviation fleet, all that would be negated by a couple years growth in China. The problem is global. How do we take a global approach to solve this problem and not just tax the poor guy who goes on one flight on holiday every year? And how do we get China to play ball? And get America to play ball? That's why aviation should be part of the Emissions Trading Scheme. A European solution would be better than a U.K. solution. Even better, a global one. And in the same way they are looking at the size of an engine in a car, they should look at how efficient it is to operate an airline.
What do you wish you knew then [when you started easyJet] that you know now?
People tend to overestimate change in the short to medium term and underestimate change in the long term. I started in '95 and found the pace of change very frustrating. You could not get businesspeople to fly easyJet. My biggest enemy at the beginning was the whole air miles system ... the fact that all these corporate executives were flying BA so they could collect their miles to go on holiday. It was very difficult to change traditions. They felt it was an entitlement to sit in front of the curtain and get a free meal and free bottle of wine, which some put in their pocket to take home. But it finally changed ... The way easyJet goes about its processes is a lot more transparent. It is very obvious what it costs and what it gives you. You can make judgment and say, "I really want to be in front of the queue and be first on the plane and choose my seat, or take my chances [because] it does not matter if I sit in the front or the back."
You say you want more business travelers, but a lot of these guys like their creature comforts and do not like to queue up with "commoners." They like to reserve seats and go in a bit of style. Why should they choose easyJet?
There always is a conflict of interest between the user of a service and the company that pays for a service. More and more shareholders are telling even senior executives that they need to set an example, not waste money themselves and send a message to employees. Yeah, the temptation is there to live it up a little, but at the same time they are employed by companies that have obligations to shareholders to produce returns. I was sitting next to someone from the Bank of Scotland today on the flight up. I did not know who he was and we started chatting, and he said, "The Bank of Scotland has now made a policy to, when possible, fly easyJet." It shows there is enough pressure from the finance department that if it makes sense for the company, you have to accept it.