Transport Airlines

EasyJet coming of age as it challenges British Airways with inaugural Moscow flight

Mar 18, 2013 1:45 am

Skift Take

EasyJet is on a roll, and it’s airfares will look a lot better to some business travelers than the larger British Airways’ pricing. EasyJet’s modest entry into Russia should shake things up a bit.

— Dennis Schaal

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EasyJet

EasyJet will fly to Moscow from London Gatwick and Manchester airports. EasyJet


EasyJet Plc’s inaugural flight to Moscow today will see the U.K. discount carrier go head-to-head with British Airways as it targets a bigger share of Europe’s lucrative business-travel market.

EasyJet will serve Moscow twice-daily from London Gatwick and four times a week from Manchester after winning route rights by guaranteeing a 125-pound ($186) round-trip fare for three years. BA’s cheapest economy ticket costs 311 pounds.

“Business between Britain and Russia is buoyant and EasyJet will particularly facilitate smaller companies,” said John Strickland, director of JLS Consulting in London. “There are plenty of Russians with the income and willingness to travel.”

While ranked second to Ryanair Holdings Plc among Europe’s low-cost airlines, EasyJet has dropped its early no-frills approach in favor of a model that offers ancillary services like lounge access and flexible tickets to draw corporate traffic. The move comes as network carriers including Deutsche Lufthansa AG and BA-parent IAG SA trim short-haul capacity, dropping 800,000 seats on EasyJet routes in the first quarter alone.

Luton, England-based EasyJet, which will enter Britain’s benchmark FTSE 100 Index for the first time today following a 40 percent jump in its share price so far this year, was chosen by the U.K. Civil Aviation Authority to operate Moscow flights in October, edging out Virgin Atlantic Airways Ltd.

Mature Carrier

Under a bilateral treaty, two British airlines may serve the route, complementing Russian operators OAO Aeroflot and OAO Transaero. A vacancy arose when IAG bought Lufthansa’s BMI unit, leaving BA as the sole U.K. carrier between the countries.

“It’s one of many signals that EasyJet has come of age,” said Edward Stanford, an analyst at Oriel Securities in London with a “buy” rating on the stock. “It’s also symptomatic of the consolidation in the industry that the opportunity has arisen.”

EasyJet, which will serve Moscow’s Domodedovo hub using 180-seat Airbus SAS A320 planes, aims to carry more than 230,000 people on the London route in the first 12 months of operations. That’s equivalent to almost 30 percent of the 783,000 who flew between the cities on scheduled flights in 2012, CAA data shows. It’s also seeking 60,000 passengers on the Manchester route.

At four hours, the trip is longer than most EasyJet flights. Of the 59.2 million passengers carried by the company last year, only 6.3 million were on services above three hours.

Luxury Option

Moscow is also one of four EasyJet routes on which British citizens need a visa. The charge adds about 115 pounds for a single-entry tourist pass to a launch fare that’s been set at 94.98 pounds, 30 pounds below the guaranteed minimum.

The other countries requiring additional paperwork are Egypt, Jordan and Turkey.

While EasyJet told the CAA that 70 percent of passengers on the new route would probably originate in the U.K., that number includes Russian expatriates who wouldn’t need a visa. The comparatively low ticket price will in any case make the cost of the permit “more accessible,” JLS’s Strickland said.

British Airways charges 944 pounds for a business fare to Moscow, according to its website, and last year added a first- class service with flat-bed seats and a concierge on a single daily flight operated by a Boeing Co. 747-400 — making the route the shortest on which its premium product is available.

BA’s two other daily flights to Domodedovo use Boeing 767s with an economy, premium-economy and business-class setup.

Italian Coup

“If you look at the way British Airways has upgraded their service in terms of capacity and a full long-haul product, airlines are able to sell these top end fares,” Strickland said.

EasyJet Chief Executive Officer Carolyn McCall said in November that Moscow is a route the discount carrier probably wouldn’t have won just a few years ago. New opportunities are opening up as it gains credibility with both passengers and regulators as a business-friendly airline, she said.

A day after winning over the U.K. authorities, Italian regulators chose EasyJet to end Alitalia SpA’s monopoly on services between Milan Linate and Rome Fiumicino airports.

The carrier will offer five flights a day starting this month using Airbus A319 planes, opening up what McCall has described as Europe’s “last great monopoly route.”

EasyJet attracted 10 million corporate travelers in 2012, about 6 percent of its total traffic. Since McCall joined from Guardian Media Group Plc in July 2010 the company’s share price has more than doubled in percent to 1,073 pence, giving it a value of 4.25 billion pounds.

–Editors: Christopher Jasper, Benedikt Kammel

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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