Sir Stelios Haji-Ioannou is taking easyJet, the airline that he founded, to the High Court to try to limit its ability to make money from activities that may clash with his other ventures. The surprising spat between the budget carrier and its founder stunned the City yesterday and threatens to limit the airline’s ability to raise revenues.

Sir Stelios founded easyJet in 1995, is still a board director and owns 16 per cent of the airline. He also owns the easyJet name through a company called easyGroup IP Licensing, which has brought the High Court action.

In legal documents filed with the court, Sir Stelios outlines his concern that easyJet has associated itself with nonflying activities such as hotels, car hire and insurance. When easyJet was floated in 2000 a rule was included in the brand licensing contract that required the carrier to make 75 per cent of its income from “core activities”. The airline calls this the 75:25 rule.

The dispute between the airline and its founder centres on the definition of “core”. EasyJet believes it includes activities associated with transporting passengers such as additional baggage charges, airport parking and hotels.

Sir Stelios is understood to be concerned that these clash with his other “easy” ventures. For example, the court documents highlight easyJethotels and easyJetholidays as potentially confusing with Sir Stelios’s brands such as easyHotels and easyCruise.

It is understood that the airline’s management and Sir Stelios have tried to resolve the dispute amicably, but these talks have broken down. In the High Court action, Sir Stelios also attacks some of the revenue-raising tactics used by easyJet, including the sale of scratchcards to passengers.

The court documents say: “A declaration that the sale of scratchcards held out to be in support of a charity, where the actual charitable contribution made is less than 50 per cent, is materially detrimental to or inconsistent with the good name, goodwill, reputation and image of the licensor [Sir Stelios].” EasyJet said that less than 5 per cent goes to charity.

The dispute has arisen as easyJet is seeking to raise revenues from ancillary services to offset fuel cost rises. The airline is limited in how quickly it can raise fares so has introduced additional charges, including fees for checking baggage and airport parking.

Sir Stelios said: “I feel it is best to ask a judge to interpret certain clauses in the brand licence and in particular the so-called 75:25 rule.”

Sir Colin Chandler, chairman of easyJet, said: “Based upon our clear legal advice, we fully comply with the 75:25 rule in the brand licence and significantly more than 90 per cent of revenues are derived from core activity.”

One analyst said that this puts easyJet’s model at risk if it is unable to raise ancillary revenues because ticket fares alone are not sufficient.

A date has yet to be set for the case.

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge