FLUG REVUE January 2004: easyJet establishes base at Berlin

EASYJET OPENS BERLIN SCHOENEFELD BASE

By Sebastian Steinke

This could be the final breakthrough for Berlin Schoenefeld Airport. The spectacular decision about easyJet's new base was announced by its Chief Executive Ray Webster on 5 November, in the presence of Berlin's Governing Mayor, Klaus Wowereit, Brandenburg's Minister of Economic Affairs, Ulrich Junghanns and CEO of Berlin International Airports, Dieter Johannsen-Roth. easyJet currently carries 20 million passengers a year on 500 flights a day.

easyJet A319

Starting in May 2004, within two months the British pioneer in low-cost operations will have created a network comprising eleven new European routes served out of Schoenefeld's terminal area B, which is to be leased in its entirety. According to Webster, this is just the first step in a longer-term growth programme centred around Berlin. “We know a great deal about the German market following our analysis of Deutsche BA and it is clear that Berlin is already one of the most attractive inbound destinations in Europe. As the German economy returns to full strength and the European Union expands eastwards in 2004, Berlin is likely to be one of the major cultural and business growth markets of the future.”

In May the British will launch their biggest foreign base so far in Schoenefeld, with direct flights to eleven European destinations. Six aircraft, five of which will be brand-new, British registered A319's and be stationed from the start in “SXF” (the IATA code for Schoenefeld), will constitute the core of the new low-cost hub by the river Spree. It will reach geographically from Scandinavia to the Aegean, to Spain, France and of course England. Fares will start at Euro 25 for bookings made a long time in advance. Between 300 and 400 new jobs will be created during the initial phase, and these Webster plans to fill predominantly with German personnel from Brandenburg and Berlin.

First Ryanair (see FLUG REVUE 6/2003), then Germanwings, which since this autumn has been flying to Schoenefeld instead of Tegel, and now easyJet – within the space of a year CEO of Berlin International Airports Johannsen-Roth has succeeded in luring the three most important growth candidates to his strategically important airport location of the future to the south of the German capital. This means that Schoenefeld airport, for many years a problem child, will probably finally be able to stand on its own feet as regards passenger development. Until, that is, significant expansion is possible to eventually take over all the air traffic of the region under the designation Berlin Brandenburg International Airport (BBI).

Berlin's Governing Mayor Wowereit, who was personally involved in easyJet's move to Berlin, was at pains at the press conference to establish a link between this joyous occasion and renewed optimism as regards the outlook for the BBI airport project. Its financing was assured, Wowereit said in agreement with representatives of the state of Brandenburg and the Government. After the formal public planning decision expected in 2004, construction could begin immediately. It is the hope of the airport holding company that the project will be completed within 61 months of the official go-ahead.

What is particularly remarkable about easyJet's commitment is its long-term perspective. As far as easyJet's plans are concerned, Berlin is evidently no longer a test but a definite development location. Even if the airline was not prepared to divulge any details of the contract, similar contracts between it and the airports of Liverpool and Luton run for a term of over 20 years. Within five years easyJet expects to have ten aircraft stationed in Schoenefeld. These will be used to improve frequencies and probably also to fly some domestic German routes. The total number of passengers passing through the airport is expected to more than double to over 3 million by the end of 2005.

Ray Webster explained that the founder of the Easy group, Stelios Haji-Ioannou, had had his eye on the Berlin market back in 1996, but at that time credit card use had not yet been sufficiently widespread in Germany to support the easyJet business model, which is based entirely on internet and telephone sales. In short, according to Webster, “The market was not advanced enough then.”

According to information provided by all those involved, easyJet's move to Berlin is not being subsidised and is expected to be economically viable in the long-term. As Webster pointed out, “We don't believe in handouts, this isn't the Ryanair model.” CEO of Berlin International Airports Johannsen-Roth added that basically every airline was granted the same terms, in accordance with the “principle of non-discrimination”. He is expecting further customers to settle in Schoenefeld, but despite partnership negotiations, they had “not given anything away”.

This ramp-up of activity on the part of easyJet is likely to significantly step up the struggle among the low-cost airlines over the best points of departure in Berlin. In particular, Germanwings could soon move to Schoenefeld with similar expansion plans in order to deny the British any edge in the “Prussian” growth market, which is also viewed in Cologne as extremely promising. Only a day after easyJet's press conference, local matador Air Berlin announced that it was to start its own parallel flights to Barcelona. On a witty note and with a touch of hypocrisy, Ryanair spokesman Paul Fitzsimmons even congratulated its “high-fare competitor easyJet” while at the same time recommending to the EU Commission that it should examine easyJet's move to Berlin for hidden subsidies as rigorously as Ryanair was currently being investigated in Charleroi, Belgium.

easyJet CEO Ray Webster is not bothered over such matters. “We were the first to introduce credit card and telephone bookings, do away with free meals on board, allow changes of booking online and dispense entirely with travel agencies. If other airlines want to copy us, fine.”

There was only one route, Webster said, on which easyJet competed directly with Ryanair, namely, the London Stansted-Rome Ciampino service. By contrast, easyJet's real competitors were the classic scheduled carriers. His airline was already registering a similar mix of private and business customers to the traditional airlines. Ray Webster is sure of one thing, “The system of hub transfers will not survive the next round of reorganisation in the air travel market. We shall replace the traditional airlines.”

From page 78 of FLUG REVUE 1/2004

Last updated 9 December 2003

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