BA’s Walsh talks more mergers, growth and Middle East competition

British Airways chief executive Willie Walsh was in bullish mood addressing a packed Aviation Club in central London yesterday. In a wide-ranging, and at times very funny, address, Walsh tackled a number of themes:

  • BA/AA/Iberia transatlantic JV antitrust approval – confident it will be confirmed in the very near future
  • Cabin crew dispute – calls new offer to cabin crew fair and reasonable
  • UK air passenger duty - wants the tax scrapped when aviation enters EU (or a global) emissions trading scheme.

WillieWalsh_resized.jpgBut problably the constant theme was his steadfast belief the UK carrier would continue to compete effectively and grow despite the capacity restraints in London’s airport infrastructure.  For more on this, read my story here on how he believes BA’s merger with Iberia through the creation of the International Aviation Group holding company will position it to exploit further consolidation opportunities.

One of the interesting aspects touched on by Walsh during the Q&A after his speech was in response to a question about the competitive threat posed by the mega Middle East carriers. Here was his take on it:

“The challenge in the Middle East is whether it can sustain three large global carriers. I struggle to see how you can create three global hubs so close to each other. It has never been done before. That is not to say it can’t be done, but the ambition there is very, very large by any scale. I think the next five years will tell a lot.

But the good thing about it is I think the carriers in Europe are wide awake to the challenge it represents and we are not sitting back waiting for something to break. We are taking action today to make sure we are in a position to compete effectively on a global scale with those carriers.

We’ve got to respond, and respond in a positive way, and not be like the industry was when Ryanair appeared on the scene. We all laughed, we all said it wouldn’t work

We’ve got to make sure we treat these ambitious carriers with respect and do whatever is necessary to make sure we compete with them.

We believe we can offer global reach, which they cannot yet do. The problem we face [in the UK], and its not a problem most of my European counterparts face, are concerns about the infrastructure. We can compete I believe effectively for a few years, maybe ten years. But 20 years? The UK is going to be bypassed because it won’t have the infrastructure to support the demand that exists. That is something the Government needs to be awake to and I’m not sure it’s recognised yet. The decisions taken today are critical for the future of this country and economy.”

 

 

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