easyJet Winning The Mother Of All Fare Wars

Stelios Haji-Ioannou, the easyJet chairman today announced at the Aviation Club in Brussels in the presence of senior European Commission officials that easyJet would not be applying to the European Commission for interim measures against the British Airways low cost subsidiary, go on the London-Edinburgh route. This is the only route where easyJet and go are in direct competition. easyJet were concerned by the BA subsidiary`s use of predatory pricing on the London-Edinburgh route when the price collapsed from £29 one way to £15 one way, but this has had little effect upon the easyJet financial performance.

“easyJet continues to make a profit on the London-Edinburgh route and we are achieving the same load factors on that route as we were before go joined in. From what I hear, go are flying some very empty aircraft,” said Stelios. “It would not be realistic to apply for interim measures with the European Commission whilst the BA subsidiary is failing to take passengers away from easyJet,” he continued.
Stelios identified the British Airways failure, “The London-Edinburgh route is an important business route and British Airways are too restrictive upon their subsidiary`s yield management. BA have ordered go to offer their lowest fare only to passengers who will stay two nights in their destination. Business passengers do not want to stay two nights in their destination, and anyway British Airways want to keep the lucrative business travellers to themselves. The result is that business travellers are not using go, and British Airways are losing their business passengers to easyJet as a result of the present economic climate. How can I tell the European Commission that I need protection when British Airways are making such a mess of things all by themselves?”

The easyJet decision not to ask the European Commission to apply interim measures on go will not affect the easyJet High Court case against British Airways. easyJet served a writ on British Airways last year, accusing them of providing illegal cross subsidies to go. British Airways attempted and failed to have the writ struck out of court, in other words easyJet convinced the judge that they have an arguable case.

If the BA subsidiary were to indulge in predatory pricing or any other anti-competitive activity on an easyJet route which managed to threaten the easyJet financial performance, then easyJet would once again take the necessary legal steps to ensure fair competition.