RCS - easyGroup Holdings - Cure notice to easyJet
RNS Number : 0876Q
easyGroup Holdings Ltd
28 July 2010
easyGroup IP Licensing Ltd
10 Sydney Place,
South Kensington,
London,
SW7 3NL
The Company Secretary
easyJet Airline Company Limited
Bedfordshire
LU2 9LY
cc. The Board of easyJet plc.
27th of July, 2010
Dear Sir
Cure Notice
We refer to the brand licence made between easyGroup IP Licensing Limited ("EGIP"), easyJet Airline Company Limited ("easyJet") and others on 5 November 2000 ("the Brand Licence").
Further and without prejudice to Bird & Bird's letter to Herbert Smith dated 19 July 2010, this cure notice is served under clauses 11.3.1 and 11.3.2 of the Brand Licence in accordance with clause 15.1 thereof. Save where the context may indicate otherwise, the capitalised terms used in this notice bear the meanings ascribed to them in the Brand Licence.
In addition to the recent and continuing press coverage regarding easyJet's poor punctuality and cancellation rates, in the past few weeks the number of customer complaints received by easyGroup IP Licensing Limited and by me personally has increased significantly. No doubt easyJet will also have received a corresponding increase in the number of complaints regarding these issues. The press coverage and complaints demonstrate the damage to the goodwill and reputation that is occurring in the mind of the public.
Breach
Your current punctuality and flight cancellation rates are completely unacceptable and contrary to the brand values upon which easyJet and the other easyGroup companies have built their reputation. The goodwill associated with the "easy" brand will be damaged in the minds of customers that experience such bad punctuality and reliability as it will in the minds of people reading the scathing articles in the press. Results that show a large UK airline with the resources and reputation of easyJet performing worse than Air Zimbabwe has the potential to cause irredeemable harm to the reputation of the airline, the "easyJet" brand and the "easy" brand if continued for a period of time.
The airline is currently being run in a way which is materially detrimental to and inconsistent with the good name, goodwill, reputation and image of easyGroup IP Licensing and its intellectual property rights. As a result you are in material breach of clauses 3.4, 3.6 and 6.1.8 of the Brand Licence dated 5 November 2000 by virtue of the conduct specified hereinafter:
1. easyJet has failed and is failing to use its best endeavours to preserve and promote the goodwill associated with the EIPR;
2. easyJet has not used and is not using its best endeavours to exploit the EIPR in accordance with good business practice and high professional standards; and
3. easyJet has used and is using the EIPR or carrying on its Licensed Activities in a manner which (as compared with the standards of the industrial, professional, ethical, national and cultural context in which the use complained of takes place) is (or on a reasonable analysis is highly likely in due course to be) materially detrimental to or inconsistent with the good name, goodwill, reputation or image of EGIP and/or the EIPR.
By this cure notice EGIP requires easyJet to remedy its breaches of each of the clauses 3.4, 3.6 and 6.1.8 of the Brand Licence within 90 days.
Cure
easyJet is required to remedy its performance on punctuality in respect of:
a. the percentage of its flights that are cancelled:
b. the percentage of its flights that depart on-time (measured as within 15 minutes of the advertised time); and
c. the average minutes delay of its flights.
The UK's Civil Aviation Authority ("the CAA") publishes UK Punctuality Statistics on its website (www.caa.co.uk) which shows the performance of easyJet and its competitors with regard to the punctuality and cancellation of scheduled flights ("the CAA Data"). This data shows that easyJet's punctuality performance is falling short of the level to be expected of a competently run airline operating in Europe. In particular, easyJet's overall performance in relation to the percentage of cancelled flights (an average from column R of the CAA Data spreadsheets), the percentage of flights leaving within 15 minutes of scheduled departure time (an average from column K of the CAA Data spreadsheets), and the average minutes delay (a weighted average of column Q of the CAA Data spreadsheets) collectively fall short of the standards required of easyJet under clauses 3.2, 3.6 and 6.1.8 of the Brand Licence.
Whilst it not for the Licensor to specify how to reach the levels of punctuality and cancellation that are acceptable to the public and consistent with the brand image, which easyJet should be endeavouring to preserve and promote, and while it is understood that such levels will likely vary over time in light of the industry expectations, for the purposes of this cure notice the Licensor would accept that the following levels (to be measured on a monthly basis when the CAA Data is published) are reasonable requirements for compliance with the Brand Licence (provided that easyJet's statistics in these categories are also not and do not become materially worse than those of its competitors):
a. less than 1% of easyJet flights that are cancelled.
b. at least 70% of easyJet flights depart on-time (measured as within 15 minutes of the advertised time); and
c. the average minutes delay of easyJet flights does not exceed 15 minutes.
Deviations from these measures will be acceptable where it is a result of circumstances beyond easyJet's control which it cannot be reasonably expected to have anticipated and addressed.
Should you fail to have remedied the breach of these clauses by 26 October 2010, easyGroup IP Licensing Limited will have the right to issue notice of termination of the Brand Licence.
A copy of this letter will be sent by Bird & Bird to Herbert Smith as a matter of courtesy. Should you have any queries regarding this notice or the conduct to which it relates you are invited to raise it with us either directly or through Bird & Bird.
Yours faithfully
Sir Stelios Haji-Ioannou
For and on behalf of
easyGroup IP Licensing Ltd
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