EasyJet chief calls for break-up of BAA

The new chief executive of easyJet, Andy Harrison, called for the break-up of the airports operator BAA yesterday and launched a swingeing attack on his low-cost rival Ryanair for being "nasty" to its crew and passengers.

Mr Harrison also served notice that the Luton-based no-frills carrier would redouble its cost-cutting efforts this year in an attempt to close the profit gap with Ryanair, and said one of the initiatives easyJet intends to trial is a £5 "priority charge" for passengers who want to board aircraft first.

Speaking publicly for the first time since he took over three months ago from Ray Webster, Mr Harrison said it made no sense that BAA should be allowed to control London's three big south-east airports. "This hardly enhances competition and it leads to over-engineered and overpriced schemes like the second runway at Stansted. I would much rather have Heathrow, Stansted and Gatwick owned by at least two different companies. If there was competition and BAA could not just keep putting up its prices, then we might see these big projects being built for less.

"We are putting £1bn on capital into our airline with all the new aircraft on order but, if anything, our prices are coming down. Only a monopolist would justify putting up its prices to fund its investment."

Mr Harrison said the potential bid for BAA from the Spanish construction and transport group Ferrovial was an interesting development which could act as a trigger for a break-up, but he said it would serve no purpose if one monopoly operator was replaced by another.

EasyJet has set a target of doubling profit per passenger from £2 to £4, but even that would leave it trailling Ryanair, which makes £5 per passenger. To achieve that, easyJet wants to reduce its unit costs, excluding fuel charges, by 3 to 5 per cent this year, while increasing the size of the airline by 15 per cent to 127 aircraft and 35 million passengers.

Cost-reduction plans include a facility to allow passengers to check in online. The initiative was launched three weeks ago, and Mr Harrison estimates will be used by one-third of easyJet passengers in three years' time.

Mr Harrison, a former chief executive of the RAC motoring group, said he also expected a "significant" extra contribution to profits from higher sales of on-board refreshments, car hire and hotel bookings, which account for just £80m of easyJet's £1.3bn in annual revenues.

A trial of the £5 priority boarding charge will be introduced on easyJet's Luton to Edinburgh route at the end of this month. The idea is aimed primarily at business travellers who book late, pay more than the average £42 fare and want the convenience of being able to choose their seat.

It is one of the ways in which easyJet is moving further away from the ultra no-frills model adopted by Ryanair, which is to start charging passengers for putting luggage in the hold. "It's part of our policy of care and convenience," Mr Harrison said. "We care for our staff so that they care for the customer. A smile costs nothing but some of our competitors almost seem to make a virtue out of being nasty and unkind. I can't understand it when an airline is a service business."

Mr Harrison, who has recently obtained a private pilot's licence, said he was not concerned about the 16 per cent stake in easyJet owned by FL Group, the holding company of Icelandair. He forecast more consolidation in the low-cost sector but said bmibaby was "not on my shopping list", preferring to grow easyJet organically through its ambitious expansion plans on the Continent.