Stelios's peaceful landing with easyJet

The deal ends a bitter two-year dispute after the no-frills carrier agreed a multi-million pound a year package for Sir Stelios.

The deal also ends Sir Stelios's right to appoint himself as chairman of easyJet's board and will give the company more freedom to use the name and enter co-branding agreements with other companies.

EasyJet chief executive Carolyn McCall said: "It is definitely a benefit for us to have that clarity and the freedom to develop our ancillary revenues as we choose. What we've got clarity on is the area of air travel and passenger air travel."

EasyJet, which announced plans to operate its first flights from Leeds Bradford Airport last week, will pay Sir Stelios 0.25 per cent of its revenues each year, to be capped at 3.9m and 4.95m for the first two years, plus another 300,000 annually.

In return, Sir Stelios, who owns 37 per cent of the airline with his family, has revised the terms of the licence agreement, giving easyJet more freedom.

He described the agreement as a "win-win for all concerned".

Ms McCall said the deal was a separate issue from Sir Stelios's disagreement with easyJet over its business strategy, which he has revolted against.

She said she was confident the agreement would get shareholder backing at an extraordinary general meeting.

"We have already spoken to shareholders over the weekend and they have been very supportive of this. They see it as a good brand licensing agreement for all sides," she said.

The deal will mean easyJet "white label" services related to passenger travel, such as car hire and hotels, will probably be preceded by the slogan "brought to you by easyJet" rather than the "easy" prefix.

Shares in easyJet, which have risen 18 per cent in the last month, closed up 0.6 per cent, a rise of 2.7p to 454.3p last night.

The new agreement will allow easyJet to use the brand for 50 years, with a minimum commitment of 10 years.

The dispute started in August 2008 when Sir Stelios said he would pull easyJet's right to use the brand name unless flight punctuality at Gatwick Airport improved.

Sir Stelios has also been in a branding dispute with online matchmaker Easydate. He said last month that unless Easydate stops using the name and online domain, he would take "further action to protect the easy name".

Sir Stelios – who was paid 1 a year under the existing brand licence agreement – said the payments should outweigh any competitive disadvantages to easyGroup.

He said: "The way low-cost airlines make money has changed over the 10 years since the original licence was signed. This amendment allows the airline to now grow its business even further by removing some of the restrictions imposed by the original agreement.

"I am content this is a fair deal for both sides. The agreed amendments will result in increased competition from the airline for the other easyGroup licensees (such as easyHotel, easyCar and easyBus).

"However, the agreed royalty payable provides appropriate remuneration for easyGroup thereby aligning the interests of both parties."

Sir Stelios could previously appoint himself as chairman and appoint two directors, but will no longer have this right.

Easyjet has unveiled plans to operate services from Leeds Bradford to Geneva in Switzerland. If the route proves a success, the company says it will consider launching further destinations.

Recovery in air travel industry

A marked recovery in the embattled air travel industry saw Heathrow enjoy its busiest September on record, according to airport giant BAA.

More than 6.2 million passengers flew from Heathrow last month, marking the highest numbers ever seen for the month and a 7.6 per cent rise on a year earlier.

BAA said much of the increase was driven by a bounce back in business travel as the global recovery picks up pace, with airlines also re-starting routes and schedules axed at the height of the recession. BAA said traffic across all of its six UK airports – Heathrow, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen – rose 3.3 per cent year-on-year to 9.99 million last month.

A spokesman for the group said there was some evidence that travellers sought to take trips last month that had been cancelled earlier in the year because of the volcanic ash cloud crisis.