Dogfight over Heathrow as Easyjet buys new planes

Heathrow's submission to the Aviation Commission concludes - astonishingly - that the airport should be expanded. Will Easyjet's founder be there to witness it?

by Emma Haslett
Last Updated: 04 Jul 2013
The management of Heathrow Airport has submitted its final report to the Aviation Commission, the body set up (and led by MT diarist Sir Howard Davies) to decide how to expand London’s capacity for air traffic. It has two choices: build a third (and probably fourth) runway at Heathrow, or back the mayor’s ‘Boris Island’, his futuristic plans for a floating airport in the Thames Estuary, on the other side of London.

In its submission to the commission, Heathrow’s management has reached the entirely unsurprising conclusion that the airport should, indeed, be expanded. The report argues that adding capacity at Heathrow would be good for businesses, many of which have clustered in west London because of its proximity to the airport, and thus and jobs and passengers.

‘Why build from scratch a new hub when we can build on the strength that already exists around Heathrow today?’ asks Colin Matthews, Heathrow’s chief executive.

It’s a reasonable argument, but Boris isn’t convinced. Daniel Moylan, the mayor’s adviser on planning, says expanding Heathrow is ‘politically, environmentally and socially impossible’ – and that creating a new hub in east London would ‘create tens of thousands of new jobs’.

The Davies Commission isn’t due to report until summer 2015, so it has plenty of time to give both proposals consideration. In the meantime, though, Easyjet’s headquarters at Luton airport are the focus of the business world’s attentions, with another storm brewing between the airline’s founder (and main shareholder), Sir Stelios Haji-Ioannou, and its chief executive, Carolyn McCall.  

At the Paris Air Show yesterday, the airline put in an order worth $20bn (£12.8bn) for ‘as many as’ 235 new Airbus A320 and A320neo aircraft. The planes are more fuel-efficient than their predecessors, which McCall reckons will help the airline save money and ‘deliver [its] strategy’. But in January, Sir Stelios warned the airline not to buy any more planes, insisting that the expense will cripple it.

If it goes through, the order will not only replace 85 of Easyjet’s oldest planes, but it’ll increase its fleet to 298 by 2022.

That’s if Sir Stelios doesn’t block the transaction. In January, Sir Stelios offloaded 200,000 shares (although he still owns 37% of Easyjet), warning that if the airline makes any more purchases, he’ll sell off even more. For McCall, who has had more than her fair share of showdowns with Easyjet’s outspoken owner, that probably can’t come soon enough.

Easyjet’s wasn’t the only big order at the Paris Air Show. Step forward, Adam Scott, the Goldman Sachs banker-turned-chief executive of Odyssey Airlines, a new ‘all-business-class’ which will begin operating from City Airport from 2016. Scott, who has no history whatsoever of running an airline, placed a $628m order for 10 110-seat CS100 jets from Canadian manufacturer Bombardier. The only problem is that the jets haven’t been tested yet, and City airport doesn’t have permission to operate them.

You’ve got to hand it to these ‘vampire squid’ alumni – they don’t do things by halves…

- Image: Flickr/.curt

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