Willie Walsh
British Airways CEO Willie Walsh last week spoke here during the Business Travel Market, touching on such topics as challenges and opportunities on transatlantic routes, air traffic growth in the Middle East, BA's short-haul network and the carrier's plans for London Gatwick and London City airports. He also addressed the recent work stoppages by members of the BA cabin crew union, saying, "In the last round of strikes, we flew all of our flights at London Gatwick, all of our flights at London City, and at Heathrow we flew 60 percent of our short-haul services and 80 percent of our long-haul services. If there is further industrial action, we will build on that platform and we aim to fly 100 percent of our long-haul services." Meanwhile, Walsh said he would not "waste time and energy pursuing" a reversal of the U.K. government's decision to scrap plans for a third runway at London Heathrow. "I campaigned long and hard for a third runway at Heathrow because I think the U.K. economy would have benefitted," he told delegates. "If the government believes that you can stop growth in the aviation industry by not building a third runway at Heathrow, they are going to see that growth is going to continue, but the growth will just bypass the U.K." Walsh also answered several questions from attendees.
Does British Airways have a fear about your tie-up with American Airlines creating a situation where you have almost a two-tiered system, and at over capacity, because the North Atlantic routes are full of empty seats?
The transatlantic is an excellent market. If you look at the premium statistics that the International Air Transport Association produces, you would see that the transatlantic market held up much stronger through the recession than other major, long-haul, premium markets. Globally, premium travel fell by just under 16 percent; the transatlantic premium market fell by 12 percent; transpacific was down by 20 percent, and premium travel within Asia was down by about 20 percent. So transatlantic business remains robust. It is a very competitive market; it's likely to continue to be competitive and indeed at British Airways we see opportunities for further growth in that market. Had it not been for this downturn, we were looking at expanding our network in North America, targeting at least two if not three additional cities in the U.S. I don't doubt that it will be only a matter of time before you see BA expanding on the transatlantic. I'm much more optimistic than you are about the transatlantic market and very excited about the creation of this joint business with American and Iberia. The main reason for it is that it will allow oneworld as an alliance to offer you much more competitive deals on an alliance basis. We do lag behind the other two because we don't have antitrust immunity like Star Alliance and SkyTeam. This will create a level playing field; you are going to see more competition, it is definitely going to benefit the consumer and I am very excited about the prospects.
BA seems to have pulled away from Gatwick. Can you tell us the policy for Gatwick?
Gatwick is very much a part of British Airways today, and Gatwick will be very much a part of British Airways going forward. We are delighted with the relationship we have established with the new owners at Gatwick, and we intend to focus on not just maintaining our presence there but growing our presence in the years ahead. But we don't see Gatwick replicating the hub that we have established at Heathrow, and that is why I believe any future hub activity--in the absence of a third runway at London Heathrow [following the U.K. government's decision to oppose it]--will move to other European hub airports, such as Frankfurt, Amsterdam or Madrid.
Following launch of the New York [JFK] flights from London City Airport, are there any more plans for long-haul flights from London City?
The response has been fantastic. It really has surprised me by how quickly it has established itself as an option, particularly for business people in this city. The feedback we have received is fantastic. The challenge with London City is the length of the runway. We did look at other opportunities to develop long-haul services out of London City, but realistically the only options for long-haul services is to the East Coast of the United States. Over time, we could well look at Boston, Washington and Chicago. A lot of the customers that are flying with us from City to JFK have been pushing us to start additional services. We are excited about it; we have two aircraft operating there and if it continues to develop the way it has been, we will definitely look at adding services. Whether that is in the form of additional capacity to New York or service to another city, we have not decided yet, but it is definitely an opportunity.
Given competition from low-cost carriers and rail, what is the future of British Airways' short-haul operations?
It's very much an integral part of our business. There's no question that 10 or 20 years from now BA will continue to operate both a short-haul network and a long-haul network primarily focused at London Heathrow, but we will maintain a strong presence in the short-haul market and we will continue to look for opportunities to expand that.
What are your views about the emergence of the Middle East carriers?
The Middle East is fascinating. In this one area of the world, we have seen growth through this recession; demand has continued to increase. It is an important market for British Airways. Many of my European counterparts will bitch and moan about the way the Middle East carriers operate; they think that it is unfair competition. I don't buy into that. Emirates [Airline] has been flying to the U.K. for over 20 years now. I just got a copy of its [financial] accounts the other day, and they look like a normal set of accounts to me. I have much more experience in dealing with Emirates, and have no doubt that they acted in a rational, commercial way in every way that I have seen. Clearly, all of the Middle East carriers are very ambitious and are looking to establish global hubs in the Middle East. Whether you can establish three hubs in such a small area is going to be challenge, and I may well agree with that part--that there isn't room for three in the Middle East--and that they may actually develop only two hubs that succeed in establishing a truly global presence. But I see it as just another bit of competition to British Airways, and I see the decision of the [U.K.] government not to build a third runway as being a positive for the Middle East because there is no question that the absence of a third runway at Heathrow will provide growth opportunities to further hubs in the Middle East. The next 10 years will be fascinating to watch in the Middle East.