EasyJet - 4

[Shed-on-a-Pole]

easyflyer83 -

I am familiar with your posting record and note that you inject alot of common sense into the discussions to which you contribute. So be assured that it is with respect that I point out that your car parking analogy doesn't work here. When four people travel with EasyJet they pay four fares (one each); the "admin fee" is levied in addition to this for a reason which is not clearly explained. The product being purchased by the EasyJet customer is a flight / journey, not the opportunity to use a proprietary in-house booking facility. When one parks a car, the only sum paid is the price levied for parking a vehicle in a convenient secure location for a specified period of time. There is no additional "admin fee" charged for using the ticket machine in any car park I have come across. Therefore, the equivalent comparison has to be the fare (EasyJet) versus the parking charge (car park). The car park levies a single inclusive fee charged on the basis of one space being occupied; all cars are charged identical rates for equivalent parking.

Aside from the unequal application of the EasyJet "admin fee" (I will not repeat earlier points made on this issue) there can be no suggestion that GBP9.00 in any way reflects the cost of EZY's reservation system processing a transaction (regardless of how many heads actually book). I cannot see any justification for such an item to be charged separately from the headline fare. And this headline fare should ideally be comprised of all inherent costs incurred in supplying the service provided, plus a reasonable profit margin for the operator.

Moving on to your point about Stelios and EasyJet management bonuses. I agree with you that Stelios has a broad agenda which stretches well beyond bonus disputes. Bonuses are no more than the ammunition-du-jour in an ongoing public civil war within EasyJet; an excuse for further insults to be traded. I have actually posted on this subject in the past, suggesting that an amicable separation between the two parties would be the optimum outcome. This could be achieved by Stelios and related parties placing their shares with a willing institutional buyer, as selling into the open market would destroy the share price. EasyJet is a generally attractive business and it should be possible to find a party which would be interested in buying out the family's stake.

With regard to EasyJet's management performance, I would suggest that they have generally done a good job over recent years. They have moved into major airports, taken the image upmarket, improved OTP, made tentative inroads into the business market, and ... most importantly ... produced good load factors and healthy financial returns. Actually, this is one of the reasons why I am so disappointed by the recent "admin fee" fiasco. It is the first notable retrograde step by the EZY management in a long time, and the first decision in years which thrusts the company back downmarket in the direction of the industry spivs. Additional hidden charges are not the way to go, particularly inequitably applied ones.

I did make an earlier tongue-in-cheek remark suggesting that the management should perhaps forego some of their bonus in view of the "admin charge" blunder. In reality, I think that the good things the management team has achieved still outweigh the bad, and I do favour incentivising management teams generally for achieving profit targets and maintaining an elevated shareprice relative to industry peers. For me, the "admin fee" is an ugly own-goal which requires corrective action, but overall the company has done more right than wrong. A battle has been forfeited, but the war is not lost. I do hope that EasyJet will recognise the wisdom of resuming its gradual ascent upmarket, and that it will not follow up the "admin fee" with similar unsavoury stunts drawn from the realms of the lowest common denominator.

I certainly would like to see an amicable divorce agreed between EasyJet and Stelios as a matter of urgency. The company has bent over backwards to accommodate his demands, including special dividends distributed and fleet orders curtailed. Management must be given the freedom to structure the company to meet the challenges of the marketplace rather than the demands of a former majority owner with increased personal income seemingly his sole priority. As part of this process, EasyJet in turn needs to continue to improve its reputation and consequent appeal to business (as well as leisure) travellers. Dodgy hidden charges added late in the booking process undeniably damage the customer experience, an unexpected retrograde step which is sad to see at this point in EasyJet's development.

In conclusion, easyflyer83, I agree with pretty much all your points except that relating to the inequitable "admin fee" and the associated car parking analogy.

Best Regards. SHED.