EasyJet CEO slams ‘unfair’ fine for extra baggage fees

EasyJet on Wednesday reported record revenue from charging passengers for flight add-ons, such as extra baggage, for the entire year until October, as the budget airline’s CEO criticized a recent Spanish fine for the practice.

The easyJet group, which comprises an airline and package travel provider, said ancillary revenue, which includes additional baggage allowances, seat selection, priority boarding, in-flight dining and its holiday business, rose 22% to £ 3.59 billion pounds ($4.5 billion). year after year. Of these, £2.46 billion came from the airline segment, a 13% year-on-year increase.

Many airlines have reduced what they include in their flight fares in recent years, rather than relying on getting more out of individual add-ons, as competition to offer ultra-low-cost base fares intensifies.

Last week, Spain’s Consumer Rights Ministry imposed sanctions on five low-cost airlines, including easyJet, Norwegian, Spain’s Vueling and Ireland’s Ryanair, for “abusive practices such as charging extra for hand luggage or reserving seats.” adjacent to accompany dependent people”. EasyJet was fined 29 million euros.

“We completely disagree with that, we believe it goes completely against European law and European law is going to prevail over that,” easyJet CEO Johan Lundgren told CNBC’s “Squawk Box Europe” program on Wednesday. .

“It’s a very unfair idea that you can’t offer products and services aimed at those who want to use them. A third of our customers choose not to buy any supplements, so why should they worry about the cost of something that someone else Are you willing to pay?”

He added: “It’s a good thing for customers and keeps rates low.”

The Spanish Airlines Association (ALA), Ryanair, Norwegian and easyJet criticized the fines last week and said they would challenge them.

Airlines were also accused by Spain’s Consumer Rights Ministry of charging “disproportionate and abusive” charges for printing tickets and of omitting or failing to clarify pricing information on their websites, controversial practices that have also become increasingly common. in recent years.

EasyJet on Wednesday reported full-year pre-tax profit of £610 million, in line with analyst expectations and up 34% year-on-year.

Lundgren told CNBC that a record performance in the summer and reduced losses last winter had boosted performance, supported by “quietly strong” demand.

“The consumer across Europe is really prioritizing travel and vacations,” he said.

EasyJet shares ended the day down 0.4%.

The results come after rival Ryanair posted an 18% drop in half-year profits as passenger numbers rose but fares fell. The airline said pressure from consumer spending, a drop in online travel agency bookings and repeated delivery delays by the U.S. plane maker boeing everything weighed on performance.

Ryanair is a major customer of Boeing’s troubled B737-Max aircraft, which has suffered lengthy delivery delays, forcing several airlines to review their growth plans.

Both airlines, which focus on short-haul flights across Europe, have returned to profitability in recent years after suffering a spate of headwinds during the Covid-19 pandemic.

Correction: This story has been updated to reflect the company’s results that were released Wednesday.