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Monday, November 17, 1997 Published at 17:06 GMT



Business

New BA low-cost airline meets legal threat

The budget airline EasyJet is taking legal advice after British Airways announced the launch of its own low-cost airline serving Europe from Stansted.

The operation, being developed under the project title Operation Blue Sky, will be run as a separate business within BA.

More than 150 new jobs are expected to be created by the new carrier in its first year of operation.

Initially, it will fly to cities in Italy, Spain, Scandinavia, France and Germany.


[ image: BA chief executive Robert Ayling]
BA chief executive Robert Ayling
BA chief executive Bob Ayling said: "By offering competitive fares and flying to Europe's most popular cities, this new airline will quickly become a favourite with the budget traveller.

"We expect hundreds of thousands of people who have never taken to the air before, to travel with the new company.

"This is a new and exciting sector of the European air travel market and British Airways wants to be part of it, becoming the best of the new low cost carriers, not watching from the sidelines."


[ image: Barbara Cassani]
Barbara Cassani
Barbara Cassani, the chief executive of the new airline, said there was "plenty of room" in the market for low-cost carriers.

But EasyJet has said it would be consulting with its lawyers over the BA announcement which threatened its own business.

The company said it was concerned that BA could plough huge profits earned from intercontinental flights into subsidising its low cost airline and put them out of business.

Sales marketing director, Tony Anderson, said: "They must be able to prove they're doing it to make money, not just to drive us out of business.

"The danger is that they will start cannibalising their own business. The passengers will get confused, the unions will go ballistic.

"I believe they will have problems but the danger is what damage they can do to us in the meantime."

EasyJet, based at Luton Airport, employs 300 people and has flights to destinations including Amsterdam, Barcelona and Geneva.

"It's not a surprise, we were aware for some time they have been looking at budget flights," Mr Anderson said.


[ image: Tim Jeans]
Tim Jeans
Ryanair's commercial director, Tim Jeans, was less strident in his view. He said BA's announcement would make his company "re-double its efforts" to lower costs.

Franco Mancassola, the chairman and chief executive of Debonair Airways, which has a fleet of seven aircraft, said: "If this airline is created with the sole purpose of destroying competition then we will seek every possible legal remedy that is available to us to stop this dominant position of abuse of power."



Barbara Cassani says there is room in the market for BA's new airline
Tim Jeans: Ryanair will strive to reduce costs further





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