Last week, easyJet became part of the FTSE 100 index, making it officially one of the top British companies. There are people saying that the airline has now reached a natural plateau and growth will be much more restricted in future. I think this is wrong for two reasons.

Firstly, there are still countries in Europe where easyJet has plenty of room to expand. It is a European airline now, not just a British one. Of course, growth needs to be controlled, but there is plenty of room – even in markets where they already have a large share such as Britain.

Secondly, and much more important, the airline looks to have tremendous scope to improve simply by doing what it already does, but just a little bit better. I do not mean they should cut costs (they tried that under the last management regime with disastrous results). They simply need to use their strong position more effectively.

An interview for a US business magazine with one of their senior sales executives gave a couple of examples of what they can do.

Can you guess the seventh largest country market for easyJet sales? The answer is not so surprising if you think about it – the USA. Yet it is only recently that easyJet have created a dedicated site for US sales – using the American date format and replacing words like “holiday” with “vacation”. So simple – yet it is amazing the airline has got to the size it has without doing this before.

Then the executive mentioned their weekly sales email sent to all their customers. In the past, a fairly standard email was sent to all passengers giving news of new routes and special offers. The email was translated into other languages but was otherwise standard. Now, personalised emails are being created based on the regular airports used by the customer.

Again, another obvious way to get better sales at hardly any extra expense.

What the executive did not mention though is just as important. The current system used by easyJet to maintain its mailing list is hopelessly inefficient. I heard (maybe incorrectly) it was outsourced to an Indian company which has not done a good job. Whatever the case, an awful lot of passengers do not get regular emails and even those who try to sign up often fail to get their names added.

When easyJet started, it grew rapidly and became very successful but its back office and management was often shambolic. The period of cost-cutting under the last management made this worse. Implementing an efficient mailing list is just one example of many and the gains to be made could be substantial. Now that it is under sensible management, I am sure there is plenty of room for the airline to improve its profits just by growing at a reasonable pace and doing what it already does – but just a little bit better.

Ever since Stelios left the easyJet board, he has concentrated on being a thorn in the side of the company. Informed and intelligent criticism is one thing but Stelios has gone far beyond this. His public spats with the board have become increasingly bitter and childish – and lost him respect from other financial backers of the airline. 

The airline is actually doing very well without Stelios. The airline’s board acted swiftly to replace an unsuitable CEO and, since then, passenger numbers, customer satisfaction and profits have soared. You might imagine that a man whose family still owned 37% of the airline’s shares would be happy and reluctant to wash any dirty linen in public.

His latest broadside offers the airline a very tempting solution to the problem. On Monday, Stelios announced that he has sold 1% of his shareholding as a public warning to the board. If they follow a strategy of increasing the fleet, rather than concentrating on paying out more to shareholders, he and his family will sell the rest of their holding.

The board has actually been very cautious in its growth strategy but there are some opportunities for budget airlines to keep growing in the difficult European market and easyJet would be foolish to walk away from them just to please its troublesome founder.

It must be very tempting for the board to call Stelios’ bluff. Announce a fleet expansion, get him to sell his shares as he has promised and then reduce the order to a more sensible level.

That could be a very neat solution.

For the last couple of years Stelios has been conducting an increasingly acrimonious dispute with the board of easyJet. It has to be said that easyJet’s management did go through a serious blip but that seems to be behind it now. Stelios has continued to pick fights with the board over a range of subjects. Nothing they can do is right and they are subject to public lambasting by the truculent founder.

The Board has made many efforts to appease Stelios, not least agreeing to the payment of a large dividend but Stelios is not finished yet.

Now, he says, he is going to start his own airline, Fastjet.

So far, little work seems to have been done on this or, if it has, it has been kept remarkably quiet. It could be just another spoiling tactic in the on-going battle.

Without knowing the precise deal between the airline and the owner of the easy brand, it does look very much as if Stelios is out of order in this. Surely you cannot charge a hefty fee to a company for the right to use your name whilst you are secretly setting up your own rival?

Margins are tight in the airline business. I have long thought that the fee the airline pays to easy group was a waste of money. Now, maybe it gives the airline a chance to walk away, paint their aircraft green or some other tasteless colour and call themselves “Simple Jet”. They will save unnecessary expenditure and lose a very irritating and negative presence.

Stelios seems to think that the name easy stands for something valuable. In fact, few of the easy-branded ventures have been a success – and several were dismal failures. To the public, “easy” means the airline. If the airline changes its name, Stelios loses income and the value of his cherished brand diminishes.

There is clearly no point in trying for a peace agreement because war will only break out on another front in a few weeks. The Board of the airline should say good-bye to Stelios and his over-hyped brand name. And if he really does start his own airline, what are the odds on its survival?

According to an interview in yesterday’s Sunday Times, easyJet are trying to re-position themselves towards the middle of the market. They now avoid using the terms “budget” or “low-cost” airline.

That is fair enough. Increasing fuel prices are hitting all airlines but they affect the budget carriers more than traditional carriers. An airline like easyJet has the same cost of aircraft, the same insurance costs, the same airport charges and almost the same staff costs as traditional carriers. The small saving they can make by squeezing more people on to an aircraft becomes a smaller percentage as the cost of fuel increases. Quite simply, the budgets are going to find it tougher and tougher to compete.

It is all very well saying you want to move the airline into the middle of the market and go out to attract business flyers but passengers still want value.

EasyJet’s attempt to offer flexible fares has produced some laughably high fares (£750 return to Glasgow anyone?). A recent move to increase the charge for card payments has provoked wide criticism but it is just another in the list of charges the airline makes that the traditional airlines either do not charge for or charge more modestly.

As prices increase and easyJet declares itself a “mid-market airline”, will passengers still accept long queues to check-in, queues to board, no pre-assigned seating and no free service on board?

Easyjet have a fairly simple task on flights from the regions – if you want to fly from Bristol to Barcelona then there is no competition. However, when they are flying from London airports, it is a very different question.

If they are not going to be so competitive on fares they will have to be more competitive on what they offer.

So far, they have only come up with half the plan.

Fares have to increase but they need to offer more. You cannot survive as an airline charging mid-market rates and offering budget service.

The market was deeply unimpressed with easyJet’s latest financial results yesterday and marked the shares down heavily. It seems everyone else is to blame for easyJet’s poor figures:

- Fuel was one of the main factors they pinpointed but it is going up for all airlines

- Yes, they were hit by strikes across Europe and snow in Britain but neglect to point out that they should have done very well indeed when Heathrow was closed before Christmas.

- And, it seems, people are not checking in as many bags as before – could that possibly be because business travellers in the autumn do not have as much baggage as holidaymakers in the summer?

One gets the impression that the new boss might just be having a clear-out. None of the reasons above adequately explain the figures.  As we have said many times, the company has been grossly badly-run from an operations point of view since its inception. Last summer’s debacle was only the tip of the iceberg. The only mystery is how the airline has been able to perform so well in the past.

There are some signs that Ms McCall might have grasped the problem. If so, they might not have to come up with so many limp excuses in the future.

Yesterday was a good day for European airlines without major delays at most airports so even easyJet managed to run without too many delays. However, there seemed to be a problem at Madrid in the evening and this illustrates all too clearly easyJet’s woes – it is also a good example of what you should do when considering whether to claim compensation under EU regulations.

Flights between Madrid and London were delayed in the evening but look at the difference:

Ryanair’s flight to Gatwick was one hour 15 minutes late

Two British Airways flights to Heathrow were delayed by about an hour

Iberia’s flight to Heathrow was around forty minutes late

and

easyJet’s flight to Gatwick was three-and-half hours late

Whilst there could be a special reason for the easyJet flight being delayed by so much more than other flights last night, it does seem just another example of easyJet being significantly worse than the competition. It is likely that any passenger approaching them for compensation under EU regulations would be given the brush off under the “circumstances beyond our control” clause. That would be fair enough but why was easyJet so much later than all the other airlines?

EU regulations require the airline to provide refreshments for delays of two hours or more and compensation of €250 for delays of three hours or more.

There will be many instances this summer when easyJet has delays of this magnitude which can only be blamed partially on “circumstances beyond their control”.

In these cases, we recommend you look at the departure and arrival times of other airlines and either take the matter to an agency such as www.euclaim.co.uk who hold vast amounts of data on aircraft movements and will pursue the airline on your behalf if they feel they are partially to blame, or you could take legal action yourself.

Note

To the relief of many of our readers, we will lay off easyJet for a while now. The point has been made. However, it is only through bad publicity and paying claims that the airline will be made to improve. We really need the tabloids to take up the cudgels so we just hope The Daily Mail is up to the task!