Tycoon Making Big Play for Global Internet Empire

When a competitor launched a no-frills airline two years ago, the owner of easyJet and 10 co-workers donned orange jumpsuits, boarded the rival’s inaugural flight and passed out free tickets for their own carrier.

That irreverence typifies easyJet chairman Stelios Haji-Ioannou, whose growing network of “easy” enterprises uses the Internet to build a common brand and to cut transaction costs radically.

“What I do is genetic engineering for businesses,” said Haji-Ioannu, whose other ventures are easyRentacar, an online agency, and easyEverything, a string of cybercafes that each feature hundreds of computer terminals. “The Internet is one of the means that I have used to beat the competition.”

Last month, the burly 33-year-old son of a Greek shipping magnate shed his orange jumpsuit for more dignified clothes--but not a tie--in an effort to sell 25% of privately held easyJet to investors in London and New York to help fund an ambitious expansion plan.

That task is complicated by Haji-Ioannu’s flamboyance and no-frills “easy” business model--which for 5-year-old easyJet means no printed tickets, no assigned seating and no free refreshments.

Haji-Ioannu acknowledges that some customers find the “easy” approach too rigid and impersonal because it offers only online services. So anyone wishing to ask questions, extend car rentals or change flights by phone can be frustrated.

And though easyJet also offers steep discounts for those who book far ahead, it also levies stiff fees for last-minute flight changes.

EasyRentacar, meanwhile, is the only car rental company in Europe that does all its business online.

“At easyRentacar, we have what we call a ‘revenue-prevention department,’ ” Haji-Ioannu said. “People call us and ask, ‘Can I order on the phone?’ and the answer is no!”

“The consumer has to be educated to do business with us,” said Haji-Ioannu, who got an early start in business with help from his father, Loucas. In 1992, Stelios started Stelmar Tankers, a Cyprus-incorporated firm that runs 12 ships.

On the Web, easyJet has jumped into the top-10 British travel sites for the past four months, said Mari Kim Coleman, of the Internet-monitoring company Jupiter MMXI Europe.

Investors also seem to be taking the easyJet model seriously, in part because “there is a lot of room for growth” in the discount airline business for short hauls in Europe, said Jonathan Wober of Deutsche Bank in London.

Business is booming at competitors, including 15-year-old Ryanair of Dublin. And Royal Dutch KLM airlines started a no-frills service, Buzz, last January.

British Airways jumped into the discount market two years ago, setting up Go. But British Airways said in November that, though Go was profitable, it was selling the division to concentrate on its money-making premium services. EasyJet had long accused British Airways of unfairly subsidizing Go.

Perhaps more enticing to investors, easyJet has also rung up impressive revenue growth. Sales more than doubled from $194 million in 1999 to $554 million in the year ended in September, with $31 million in profits.

Based at Luton Airport just north of London, easyJet owns nine Boeing 737-700s and leases 10. The company plans to buy 32 new 737-700, at a cost of $1.1 billion, to use to expand its network from the current 28 routes serving 16 European cities, said Toby Nichol, easyJet’s director of corporate affairs.

Most of the routes are designed to carry leisure travelers from such northern European cities as Aberdeen, Amsterdam and London to destinations in the sun--Barcelona, Malaga, Monaco and Nice, or near the snow, in Zurich. EasyRentacar operates from virtually the same locations.

Some investors may be scared off by the size of the easyJet aircraft order, for which easyJet is counting on a 25% annual growth in passengers, industry analysts say.

Others may balk at Haji-Ioannu’s lack of airline experience and his vaunting ambition.

“He is the kind of person that people will have an opinion about. They might feel that he is too busy running his cybercafes and that sort of thing,” Wober said. “He has been effective brand-building. But it is not clear how investors will react.”

EasyEverything has 14 cybercafes across Europe, including five in London. And on Nov. 28, Haji-Ioannu opened a cybercafe with 800 terminals occupying 18,000 square feet in New York’s Times Square under the easyEverything banner.

Other cybercafes will follow in Asia, he said, while 2001 plans envision a Web-based price-comparison service, easyValue, and an online consumer-loan operation, easyMoney.

It may be too early to tell how investors will react to Haji-Ioannu, but his businesses do seem to appeal to the budget-conscious.

“These airlines are fine as long as you know what you want--and you stick to that,” said Andy Cohen, a New Jersey native living in London. He chose easyJet’s round-trip price of $134 to fly from London to Aberdeen, compared with $450 on a conventional competitor.

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On the Web:

https://www.stelios.com

https://easyjet.co.uk

https://www.ryanair.com

https://www.easyeverything.com/frames/map--index.html

https://www.go-fly.com

https://www.easyrentacar.com