easyJet has agreed to the terms of a six-month interim charging structure that will apply to its operations at Luton Airport. This will be applicable from 2 February 2001 to 1 August 2001.
The easyJet prospectus, at the time of flotation in November 2000, said (page 26): “..the Company received an offer from London Luton Airport at a price per departing passenger which represented a discount to the tariff of £7.89 proposed by the airport, but nevertheless a significant increase over the current price. The Company rejected this offer and proposed an alternative framework for negotiation.”
The company had no alternative but to take the prudent approach and pay the discounted per-passenger charge proposed by Luton Airport for a period of six months. This will give both parties the opportunity to agree a new long-term contract.
It will also provide easyJet with the time to assess whether the rate of return on investment in Luton Airport can be proved to be excessive and whether steps can be taken by an appropriate authority to modify the charges.
In light of the new arrangement, easyJet will now pursue more rigorously its expansion plan out of its other operating bases in Amsterdam, Geneva and Liverpool. The three new routes started in January (Amsterdam to Belfast, Edinburgh and Nice) are showing encouraging signs.
Ray Webster, Chief Executive of easyJet, said:
“We had tried for something better for both our customers and shareholders, but at the end of the day we had to accept the interim per-passenger charge proposed to us before flotation and hope that a longer-term agreement can be reached.”