EasyJet Plc is overstepping the terms of its brand licensing agreement with EasyGroup, lawyers for company founder Stelios Haji-Ioannou’s told a London court.
Michael Bloch, lawyer for the holder of the “easy” and “EasyJet” brands, EasyGroup IP Licensing Limited, said there is a dispute about the services that can be offered under the “easy” name. Haji-Ioannou, who is also a party to the brand license, is to appear as a witness for EasyGroup.
“EasyJet does not own its name,” Bloch said today, the first day of a trial at the High Court in London scheduled to last two weeks. “We are concerned by the brand licensing and the way that EasyJet is operating under it.”
EasyJet, Europe’s second-largest discount carrier behind Ryanair Holdings Plc, signed a brand license agreement with Haji-Ioannou’s EasyGroup holding company in November 2000, shortly before its initial offering of shares to investors. The contract said the carrier must derive at least 75 percent of its sales from airline operations.
Bloch said the dispute hinges on what services can be described as “core” and which are “ancillary.”
EasyGroup said the sale of services such as food, travel insurance and car hire at the passengers’ destinations, and hotel accommodation to people who don’t fly with the airline, aren’t integral to its business, Bloch said in court papers. EasyJet said those services, along with luggage and priority boarding fees, are part of its main business.
Stelios, who prefers to be known by his first name, resigned from the airline’s board May 14, after failing to persuade its management team to rein in their expansion plans and start paying dividends. The entrepreneur, who set up EasyJet in 1995, still owns about 38 percent of the shares.
The carrier said services are integral to its airline business and items only have value when sold in connection with an plane ticket. EasyJet made 238 million pounds ($351 million) from baggage fees in the fiscal year ending Sept. 30 and said it wants to increase revenue with better in-flight food offerings.
In his dispute over strategy, Stelios wants EasyJet to sell aircraft, renegotiate a contract with Airbus SAS and begin paying dividends to shareholders.