EasyJet’s Stelios tells Swissair to get out of shorthaul

EasyJet's founder Stelios Haji-Ioannou Keystone Archive

EasyJet's founder and chairman Stelios Haji-Ioannou has been offering advice to Swissair's new executive chairman Mario Corti. He told swissinfo that he thinks the loss-making Swiss carrier should focus on the long-haul market, leaving the European market for the likes of his low-cost airline.

“The only hope for a company like Swissair is to concentrate on its core competences and its core brand of values, which is an expensive service, a business class service, offering connecting flights through Zurich, its main hub, and to get out of the regional European market and the charter airlines,” explained Stelios.

Stelios, who was speaking at the British Swiss Chamber of Commerce in Zurich, also said that he thought Corti had a tough job ahead of him at Swissair, which suffered losses of SFr2.9 billion in 2000, and that he wouldn’t like to have taken on that sort of challenge himself.

Stelios, who was born in Greece in 1967, made his home in Britain. There he has become something of a people’s champion in the world of business. His no-nonsense, “no-frills” style has not only endeared him to his public in Britain, but also here in Switzerland where easyJet Switzerland runs low-cost air routes from Geneva and Zurich.

“When I was looking for routes out of London that worked for the British I very quickly identified that the British go to Geneva in the winter to ski, and that’s very useful for us as our other routes are mainly summer routes – so it was very attractive for us to develop a market that’s at its peak in the winter months,” explained Stelios.

But with Switzerland not a member of the European Union, this leader of the low cost airline business had to bide his time until the right opportunity cropped up before making his move into the Swiss market.

That opportunity occurred in 1997 as Stelios was informed of the planned sale of the financially troubled TEA charter airline, which was then based in Basel.

“We acquired a stake in the company and then we looked at the business plan and saw that there was clearly no future in charter airlines,” said Stelios. “Then, after Swissair did us the favour of getting out of Geneva, there was definitely a business case for basing a low cost airline there. And that’s what we did: uprooted the airline and moved it to Geneva from Basel where it now works as easyJet Switzerland.”

Most of easyJet Switzerland’s flights are focused on Geneva, where the airport authorities were more than keen to welcome newcomers after Swissair decided to focus its operation on Zurich in 1996.

However, easyJet’s leader is pushing for more opportunities for his company in Zurich, where the airline currently runs one route only from Zurich to London. That compares to four routes running out of Geneva.

“Once we’ve gone into a city we like to connect to the other cities in our network,” added Stelios.

“Among the reasons we can’t expand in Zurich at present is that it’s very congested. There are just not enough slots, and it’s also very expensive. Secondly, the British government has described Zurich as a non-EU airport – but Basel and Geneva enjoy EU status. This means that passengers pay five pounds departure tax to go to Basel or Geneva, but if we fly into Zurich they pay twenty pounds – that’s four times as much.”

Stelios told swissinfo that he was asking the Zurich Airport managers to become a little more rational about what they charge. He also said that the British government has to classify Zurich as part of the European Union regime for departure tax.

“This may happen in my view within a year if the bilateral treaties between the European Union and Switzerland are actually ratified,” added Stelios.

Stelios thrives on fighting such bureaucratic idiocy, and recent reports in Britain’s Financial Times newspaper have said that Swissair’s Mario Corti has agreed to co-fund a legal challenge to the British government’s decision to leave Zurich Airport with non-EU status.

However, it wasn’t that long ago when easyJet was fighting Swissair in much the same way.

Former Swissair chief executive, the now disgraced Philippe Bruggisser, once took it upon himself to press the Swiss government to ban easyJet from flying from Geneva to Barcelona because it infringed Swissair’s government-agreed monopoly.

Stelios fought back in that summer of 1999, offering customers free flights if they contributed to a fund for protecting consumers against Swissair.

Then he discovered that he could charge passengers if he flew the route as a charter airline. This could be done as long as he offered passengers accommodation at the other end. Hey presto, Stelios put up four tents on a campsite just outside of Barcelona.

Now though, easyJet is far from being the young maverick on the airline scene, as its recent market launch in London gave it a capitalisation of nearly twice that of Swissair.

The airline side of the business, which was started up in 1995 as a low-cost, “no-frills”, point-to-point airline, took advantage of the deregulation of the European airline industry at that time.

By 1998, Stelios had formed easyGroup as a holding company, followed quickly by easyEverything, a chain of Internet cafes and then easyRentacar, the first Internet-only car rental business

The most recent businesses in the easyGroup fold are currently based in Britain, but Stelios told swissinfo that his Internet café business could soon be coming to Switzerland.

“I just have to hear from the right partner and then we could get this started over here,” explained Stelios. “I am aware though that the Swiss market for Internet services is very different from the market in the UK.”

It certainly seems that we in Switzerland can expect more of the easyBrand being stretched our way in the years to come. And if we continue to see as much innovation and low pricing coming out of the easyGroup, we can certainly expect that Stelios will keep the Swiss business scene on its toes.

by Tom O’Brien