Lord Hesketh, the charismatic chairman of British Mediterranean Airways, celebrates the airline's first anniversary in style.


Guynter Endres/BEIRUT and DAMASCUS

BRITISH MEDITERRANEAN Airways' charismatic chairman Lord Alexander Hesketh might not be the archetypal airline boss, but he has achieved success in one of the world's most problematic markets.

On 28 October, in Damascus, he led the first anniversary celebrations of the UK's newest intercontinental airline in his own inimitable style. Since that same day in 1994, British Mediterranean has served Beirut in the Lebanon, followed in May 1995 by extensions to Amman, Jordan and Damascus in Syria.


The lure of the air

The transfer of the 1970s' doyen of UK motor sport to the still-faster world of the modern passenger jet aircraft was entirely accidental, he says, although admitting to a long fascination with flight. Having succumbed to the lure of the air - he is also a non-executive director of British Aerospace - Lord Hesketh views the past 12 months with a great deal of satisfaction.

Accepting that it is far too early for British Mediterranean to have made a profit, he says that there are many positive elements to draw encouragement from, all of which should lead at least to break-even at the end of its second year. Among these he cites the growing market, the support of local businesses and tourism authorities, and the excellent performance of its single Airbus A320.

Another positive development has been the hiring of Des Hetherington as managing director. His part in the turnaround at Kenya Airways and his experience with DHL in the Middle East are proving invaluable in a region where, in spite of much goodwill, bureaucracy and communications problems can still place a strain on an operation.

His marketing experience and understanding of the Middle East, and Hesketh's diplomacy honed during his period as Government Chief Whip in the UK House of Lords, would appear to be the ideal combination.

Two recent political developments augur well for the future growth of traffic on the London-Beirut route. Because of considerable pressure being exerted by Hesketh, on 23 October the UK Government removed Lebanon from their list of countries whose nationals require visas when transiting through London on the way to the Americas. Two days later, the US Government lifted its travel ban to Lebanon, imposed at the height of the war in 1985. Both decisions will encourage traffic through London.

Clearly, operating a single aircraft was a gamble, but one that paid off, with no major operational problems so far. The major contributing factors are given as the superb reliability of the Airbus and the technical competence of British Airways engineers.


BA help and opposition

BA Engineering is keeping the aircraft in the air, in spite of the machinations of another branch of BA which is trying to bring the airline down. The dispute between the two airlines flared up following the Lebanese Government's recent offer of three extra services between the two capitals. BA quickly claimed these for itself, which would have given it parity at five services each.

Hesketh has no doubt that British Mediterranean's success in developing the Lebanese market, which had been slumbering throughout 17 years of civil war and is only just awakening, has led to a growing situation of conflict with BA.

The spectacle of a mega-carrier trying to muscle in on another's increasing dominance of a single market - British Mediterranean claims it has captured a 40% share of traffic between London and Beirut - may be unedifying. To try to subdue, or even force out, what he regards as an "absolute minnow" (compared to BA), says Hesketh, is faintly ridiculous.


Flying the nest

BA is clearly concerned, however, arguing that the fledgling airline has now flown its nest and no longer requires feather-bedding by the Civil Aviation Authority. To understand, at least in part, the BA position, people have to look not at what the "minnow" has achieved, but what it plans for the future, says David Burnside, once BA's head of public relations and now a director of British Mediterranean. It may be only Beirut, Amman and Damascus today, he reflects, but it is the plan to enter the barely competitive high-yield Saudi Arabian market next year which has set the alarm bells ringing.

Even if some industry observers give British Mediterranean little chance once BA trains its big guns on it, Hesketh believes that his airline will come out victorious with its reputation enhanced. "BA is doing much to frustrate our efforts, but we will win the battle," he declares.

In this confident stance, he has the full support of the airline's backers. Passengers, too, are expansive in their appreciation of the airline which, many say, offers a better alternative to the incumbent carriers on these routes, both in terms of service and price. This is not just talk - passengers are voting with their cheque-books.

The indications are that the CAA is leaning towards allocating at least two of the extra Beirut services to British Mediterranean. This would meet its original resolve to pass any increase in traffic rights to the young airline and give British Mediterranean the daily service it had wanted from the beginning. The Saudi Arabian and Kuwaiti applications (routes are planned to Dhahran, Jeddah, Riyadh and Kuwait) are less certain, with tough negotiations lying ahead.

If British Mediterranean does get these rights - and Hesketh says that he believes it will - the airline will require two new aircraft. The A310-300 and Boeing 767-200ER are front runners, but Hesketh admits to taking a close interest in the Airbus A330, which would suggest plans beyond those currently made public. An extension further eastwards must be on the horizon.

Either way, the acquisition of two widebody aircraft will require a near-trebling of the current £7 million capital. Present shareholders have agreed to invest further sums so as not to dilute their interest, but UK financial institutions are being courted to participate.

Quoting the adage that a man has the best chance of making his fortune between the ages of 45 and 50, Lord Alexander Hesketh - who celebrated his 45th birthday in Damascus - is hoping that at least some will come from British Mediterranean Airways.


Tricky business

Under the UK-Lebanon bilateral air services agreement, UK airlines are authorised to operate seven flights a week between London and Beirut. Negotiations with the UK Civil Aviation Authority in 1994 resulted in British Mediterranean Airways (BMA) operating five of those services and British Airways two, with an understanding that, should more routes become available, BMA would be allowed to operate seven flights a week before BA was allowed any increase. BA appealed unsuccessfully to the UK Department of Transport (DTp)

BA is now calling for the situation to be reviewed, requesting that it be given first option on extra flights should there be an increase in the total quota. The carrier has applied formally to the CAA for the review, saying that it should be allowed to operate at least the same number of flights on the route as other UK airlines.

A renewal date for the bilateral agreement has not been set but, according to the DTp, the capacity agreement is "under constant review" and will be looked at "...in the light of the summer traffic figures".

BMA is worried that its expansion plans will be damaged by the BA move. Managing director Des Hetherington says that the one-year-old airline is at a critical development stage. "Just as we are expanding," he says, "British Airways is requesting a re-negotiation of the capacity arrangements on our core business route, which would make it impossible for us to expand to a daily service... if additional frequencies become available."

BA, with up to 1,400 passengers a month travelling to Beirut, and with load factors of 80%, says that "...the market clearly demands more BA services on the route".

Source: Flight International