Luton to clip easyJet wings

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The Independent Online

London Luton Airport has made veiled threats to impound easyJet aircraft if the low-cost airline does not pay increased landing charges.

London Luton Airport has made veiled threats to impound easyJet aircraft if the low-cost airline does not pay increased landing charges.

The direct action, which could start in two week's time, could bring the feud to the boil and is sure to lead both sides to the courts.

It is also threatening to cast a pall over easyJet's planned £400m flotation on the stock market this autumn.

Stelios Haji-Ioannou, easyJet's founder and chairman, has mounted a high-profile war of attrition against London Luton and its 65 per cent shareholder, Barclays Private Equity, in an attempt to stop the airport raising its charges from the current £1.60 a passenger.

Graham Roberts, London Luton's chief executive, says he needs to increase easyJet's charges to at least £7 per passenger to make money. But easyJet has said this is an abuse of London Luton's market position, and has appealed to the Civil Aviation Authority to intervene.

Last week, though, easyJet suffered a setback, when Chris Mullins, the aviation minister, refused to intervene, saying that London Luton was not in the some dominant position as the other London airports - Heathrow, Gatwick and Stansted, that are all owned by BAA.

This means that when the existing deal runs out, on 1 October, London Luton believes it is free to charge easyJet its published tariff rate, which is up to £12 a passenger.

Mr Roberts said he would levy those charges and if easyJet did not pay he "would use all sorts of devices to obtain the money". It is understood these include impounding easyJet planes and preventing them from taking off.

Ray Webster, easyJet's chief executive, said that it would take legal action to prevent this happening. It has already said it is willing to go to judicial review or the European Court over Chris Mullins' ruling this week, and Mr Webster said that easyJet would seek an injunction to stop London Luton raising the airport charges next month.

Mr Webster argues that, as London Luton was late giving notice that it was ending the original pricing agreement, which goes back five years, it cannot increase charges until next May.

The row over London Luton comes at an embarrassing time for easyJet, as it is putting the final touches to plans to float. Mr Haji-Ioannou will decide next month whether to go ahead with a float this year, or put it off until next.

Mr Webster said that easyJet's budgeting assumes that it will be paying much higher fees to London Luton.

The airline has already decided to put on hold planned expansion at London Luton, and instead has developed routes out of Schipol in Amsterdam, Liverpool and Geneva.