Low-cost king

At just 28 years-old Sir Stelios Haji-Ioannou set up his own airline. Today he runs 17 different companies.
Low-cost king
By Diana Milne
Fri 05 Sep 2008 04:00 AM

At just 28 years-old Sir Stelios Haji-Ioannou set up his own airline. Today he runs 17 different companies under the famous easyGroup brand. Now he plans to emulate that success in the Middle East.

Sir Stelios Haji-Ioannou makes it all sounds so easy. Describing how he started his now multibillion-dollar business empire with the launch of easyJet, he says: "I was just a rich boy. My father gave me some money."

"I arrived at this place called Luton Airport, rented a couple of planes and said, ‘Let's start an airline that goes from Luton to Glasgow and Edinburgh'."

If you'd asked me a month ago when the oil price was at $146 a barrel, I was very worried. At $109 a barrel, life will be a lot easier.

"And that's all I had ambitioned for at the beginning. My only concern was, ‘Can we survive? Can we have a couple of planes flying up and down and not lose money?'." And while this is by no means a rags-to-riches tale - Stelios's father was the famous Greek shipping tycoon Nedi Haji-Ioannou - the easyGroup founder's achievements are no less remarkable.

Today Stelios (as he likes to be known) has a personal fortune of $2.58bn. Aside from having been a pioneer in the UK's budget airline sector, he has set up 17 brands under easyGroup - so many, in fact, that during our interview he has to refer to a list he keeps handy, admitting: "Even I forget sometimes. I'll pull out the list, hold on."

While you'd expect the average tycoon to be embarrassed to admit he can't remember the names of his own companies, Stelios, who ranked 49th in the Sunday Times 2007 Rich List, is unashamedly not a man who concerns himself with the details of running his business.

"I make a distinction between successful managers of businesses and entrepreneurs. There are competent people who know how to run businesses and I'm not one of them - and there are entrepreneurs.

"We're a different animal," he says.

His strength is in generating ideas and making them work - well, most of the time anyway. The easyJet business has been a ground-breaking success flying 157 aircraft on 392 routes throughout Europe.

And unlike several of his competitors in the UK aviation market, Stelios is confident that it will survive rising oil prices.

"easyJet has one of the strongest balance sheets in the industry so I have no doubt it will be one of the winners.

"If you'd asked me a month ago when the oil price was at $146 a barrel, I was very worried. At $109 a barrel, life will be a lot easier."

However, it is fair to say that his other lines of business have met with mixed success.

In 2004, according to the UK's Sunday Times newspaper, the cumulative losses of his businesses outside easyJet reached $254m, and in its first year of business easyInternetcafé alone cost the company around $160m.

easyCar, which launched in April 2000, suffered first year losses of $42m and easyCinema failed to grow beyond one cinema, converting to a DVD rental business soon after its launch.

But Stelios says he has no choice but to take risks and to regard each new launch as a process of trial and error.

"Not all of them are as successful as the others. I'm not going to sit here and say I have not made mistakes. "I have made mistakes and some people say I should focus on fewer brands," he admits. "But if only I knew which ones would be successful in advance I would focus on those. There is no other way of carrying out entrepreneurship unfortunately."

"If only you could go to a consultancy and ask which brands would work and follow their advice and be guaranteed to succeed. Then everybody would be an entrepreneur."

But if anyone is qualified to judge which new businesses will be a success, it's Stelios. And today he has his sights set firmly on seizing new business opportunities in the Middle East.

"The whole easyGroup is about diversification so it's a case of picking the right brands, picking the winners, and coming over to the Middle East and seeing whether we can introduce them into a booming region, certainly not a region that is going into recession.

"The biggest problem in the UK at the moment is that the economy is going into recession, which means that people will have less and less money to spend."

"So I'm looking forward to investing and spending more time in Dubai and in the Gulf," he says.So far he has announced the launch of his budget hotel chain easyHotels in the Gulf in partnership with Nakheel, with plans to launch five properties in the region - the first of which will open in Dubai by the end of next year.

He admits the process has not been easy and that the company has had to adapt the easyHotel model to fit the requirements of the Dubai authorities.

"The irony is that easyHotels Dubai will be the most comfortable, luxurious easyHotels anywhere."

When I first started the business, I was only focusing on surviving the first winter.

"It's not the end of the world, but the concept had to be adapted slightly more upscale in order to comply with the Dubai tourism authority's minimum requirements."

"They've asked us to do certain things the British licensing authorities have not insisted on. There are minimum requirements about windows and everything else. Which may sound normal to people, but at the end of the day I was very impressed with the British authorities - and nobody can accuse them of being anything other than very strict - who were very happy to allow rooms without windows. Provided there is enough air conditioning and ventilation and fire escapes."

But he has no intention of stopping at hotels and, when he visits Dubai in October, will be on the lookout for other opportunities to establish his brands in the region.

"We work largely on the basis of franchising so, in the same way that we found Nakheel for easyHotel, I hope that I'll be able to find other reputable local companies to take on other EasyGroup brands in the UAE.

"I'm talking about anything from bus operations to and from the airport on easyBus to pizza delivery with easyPizza. These are the more humble, pedestrian day-to-day activities that every city needs."

Stelios has particularly high hopes of establishing a Middle East branch of easyOffice - a company that provides office facilities to let on a weekly basis, payable by credit card.

And in a city where soaring office rents and construction delays make sourcing and renting office space on a long-term basis tough for new arrivals, it would be a very smart move.

"Being such an entrepreneurial place, I think it would be an excellent opportunity for someone who owns their own business, who doesn't want to be tied up on a long lease, to take a franchise on easyOffice and be able to operate it on a short-term, flexible, prepay, by-the-week basis," he points out.

"If you go to easyOffice.co.uk, you will see that you can book office rooms in London by the week and pay by credit card, and I think that would be a very welcome opportunity for Dubai."

"But again we need a local partner in real estate," he goes on to say.

The man in charge

Sir Stelios Haji-Ioannou 41, who prefers to be called just by his first name, is best known for creating easyJet PLC when he was 28. Stelios is often credited as the pioneer who changed the European aviation scene for the benefit of millions of consumers.

easyJet is one of Europe's leading low-fares airlines, and as of June 2008 operates 157 aircraft on 392 routes between 101 airports in 26 countries. easyJet currently carries over 40 million passengers a year. The airline was partially floated on the London Stock Exchange in 2000 but Stelios remains the largest single shareholder and a member of its board of directors.

A serial entrepreneur, Stelios has established more than 17 ventures, the first of which was Stelmar Shipping at the age of 25, a company that he floated on the NYSE in 2001 and sold in 2005. Stelios separately owns easyGroup IP Licensing Ltd, the company that owns the "easy" brand and licenses it to the airline but also to other companies.

An up-to-date list of the easyGroup licensees includes include easyCar, easyHotel, easyBus, easyOffice, easyPizza and easyCruise. In November 2006, at the age of 39, Stelios received a knighthood from Queen Elizabeth II for services to entrepreneurship.

On the giving back side, Stelios is active in supporting education, encouraging entrepreneurship and promoting environmentally sustainable development strategies. First amongst various philanthropic projects he has started is the environmental charity CYMEPA (www.cymepa.org.cy) in Cyprus in 1992. On education he has pledged 200 scholarships over 10 years at his alma mater (the LSE and the City University). In 2007 he created the Stelios Award for Disabled Entrepreneurs in the UK, in partnership with the disability charity Leonard Cheshire (see www.lcdisability.org/stelios).

Stelios is keen to state, however, that he won't be setting up a budget airline in the region - despite the strength of the market - claiming there is already formidable competition in this area.

"Short-haul flying is our core market but I think Emirates (flyDubai) would be a formidable competitor, as well as all the other low-cost airlines that have started now."

While Stelios is always brimming with plans for the next big idea, he says he never looks further down the line than five years ahead. It is because of this that he didn't realise the full potential of his easyJet business until four years after it had been set up.

"When I first started the business, I was only focusing on surviving the first winter. It was only three or four years later that I realised that I was onto something. There was a brand and people had this sort of aspiration and good will and love for the brand."

He is hoping to spread this love to the Middle East. And if his success in the European markets is anything to go by, the region's entrepreneurs had better watch out.

Sir Stelios Haji-Ioannou will be the guest of honour and keynote speaker at the CEO awards next month on October 13th at Raffles Dubai.

The EasyGroup story so far

1995 - Stelios creates easyJet and starts flights between Luton and Scotland

1996 - easyJet opens international routes to Amsterdam, Nice and Barcelona

1997 - The website easyJet.com goes live

1997 - First order for 12 brand new Boeing 737 aircraft placed by easyJet

1998 - easyJet acquires a Swiss airline and becomes Geneva's de facto home carrier

1998 - BA launches go airlines in response to easyJet; Stelios is on their first flight

1998 - easyJet is elevated by the media to the role of BA's arch rival and credited with sparking a price war

1998 - As the airline becomes a "brand", Stelios starts to work on brand extension and founds the easyGroup

1999 - The TV docusoap on easyJet is first broadcast on Britain's ITV to an audience of 9m viewers

1999 - The first easyInternetcafé opens in London with queues stretching round the block

1999 - Marketing magazine lists the launch of easyJet as one of the great marketing moments of the 20th century

2000 - easyJet PLC is partially floated on the London Stock Exchange

2000 - Stelios enters the Guinness Book of Records as the youngest ever scheduled airline chairman when he started easyJet aged 28

2000 - easyInternetcafé in Times Square, New York, enters the Guinness Book of Records as the largest internet café in the world

2001 - easy.com, the global portal site for all easyGroup businesses, goes live

2001 - easyMoney.com offers the first online credit cards

2001 - easyJet PLC acquires go airlines, nearly doubling in size

2002 - easyJet PLC orders 120 AIRBUS A319 with a further 120 under option

2003 - easyCinema.com opens for business

2004 - easyBus.co.uk starts operating routes from London

2004 - easyHotel.com starts offering great value hotel rooms in more than 20,000 hotels worldwide

2004 - easyPizza.com delivers the first pizzas to homes in the UK

2004 - easyMusic.com goes live, offering downloads of music tracks from 25p

2005 - easyCruise.com starts accepting online bookings for the summer of 2005

2005 - easyCinema.com offers DVD rentals online in the UK.

2005 - easyMobile.com offers sim cards and airtime online in the UK and Holland, sparking a price war.

2005 - easyJet reaches 100 aircraft in the fleet.

2005 - SKY TV starts broadcasting a docusoap based on easyCruiseOne

2005 - The first franchised easyHotel opens in Basel, Switzerland

2005 - easyCruiseOne sails to the Caribbean for the winter itinerary in Barbados and five other islands

2005 - easyMobile.com offers sim cards and airtime online in Germany

2006 - easyPizza.com expands with nine new franchised outlets on the UK's south coast

2006 - easyMoney.com launches additional comparison services for credit cards, loans, and current and savings accounts

2006 - easyCruise.com announces the itinerary for its second vessel, easyCruiseTwo, which will sail from Amsterdam to Brussels

2006 - easyHotel.com announces a major expansion plan with 38 new hotels to open in the Middle East and North Africa

2006 - The Queen's birthday honours list announces that Stelios receives a knighthood for services to entrepreneurship

2007 - easyOffice.co.uk launches, offering over 4000 serviced offices for rent worldwide

2007 - The first easyOffice location opens in Kensington High Street in London

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