EasyJet's CEO Calls Recent Fines 'Illegal' and Warns of Increased Flight Costs
The CEO of easyJet, Johan Lundgren, has publicly criticized hefty fines imposed on the airline and several other budget carriers for charging customers for hand luggage and seat reservations. He labeled these penalties as 'illegal' and warned that they would inevitably raise costs for travelers. Earlier this month, Spain's Consumer Rights Ministry fined easyJet approximately €29 million (€242 million), while Ryanair received the largest fine of €108 million. Other airlines, including Vueling, Norwegian, and Volotea, also faced penalties.
As Lundgren prepares to step down at the end of the year after leading easyJet for seven years, he expressed his belief that these fines are detrimental to consumer choice. 'We are offering people choices to do and get what they pay for,' he stated during an interview on BBC Radio 4's Today programme. Lundgren highlighted that one-third of easyJet’s customers do not opt for any additional services, demonstrating that the available options are not mandatory but rather cater to those who wish to customize their travel experience.
He further elaborated that the implementation of these fines would lead to increased base fares, thus making air travel more expensive for those who prefer not to utilize additional services. 'It’s going to make it more expensive to fly and travel for people who don’t want to have this type of product,' Lundgren commented.
This announcement comes in the wake of easyJet reporting an operating profit of £597 million for the fiscal year ending September 30, marking a 25% increase from the previous year—though it fell short of analysts' expectations. Lundgren highlighted the growth in ancillary revenue, derived from fees for baggage, seat reservations, and onboard meals, which saw an increase of 4% to £24.45 per seat compared to last year. He pointed out that consumers continue to opt for these extras when they perceive them as valuable.
According to Lundgren, the fare increase this past summer was merely 1%, reflecting the continued demand for foreign travel, which allowed easyJet to transport 89.7 million passengers in the year ending September 30—a growth of nearly 7 million travelers compared to the previous year.
The airline also reported a surge in demand for its package holidays and anticipates a 25% increase in holiday customers over the upcoming year. Lundgren's successor, current Chief Financial Officer Kenton Jarvis, will officially take over on January 1, 2025, although Lundgren is expected to remain with the company until May.
Additionally, easyJet announced plans to increase shareholder dividends to 121 pence per share from 45 pence in 2023, costing the airline £92 million, pending approval from investors at its annual shareholder meeting.
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