Willie Walsh

Scottish independence could be a “positive development” for British Airways, according to Willie Walsh, who on the BBC Breakfast show said the Scottish government recognised the “huge impact” air passenger duty had on the economy.

Mr. Walsh was asked whether the airline was making contingency plans for independence, and he said “No, because we’ll continue to fly to Scotland.

Willie Walsh pokes fun at Ryanair

Willie Walsh

“If anything, it might be marginally positive because I suspect the Scottish government will abolish air passenger duty, because they recognise the huge impact that that tax has on their economy. So no, it’s probably going to be a positive development, if it does happen, for British Airways.”

The Scottish government has pledged to reduce, then possibly abolish, the duty after a “Yes” vote in the referendum.

BA employs about 1,300 staff in Scotland, including aircraft engineers and cabin crew.

Willie Walsh has been critical of the UK government, saying that its policies have discouraged tourism and foreign investment, and there was a rather embarrassing attempt by the Patrick McLoughlinto muscle in on the A380 launch to Hong Kong which was soundly slapped down in October last year.

IAG boss Willie Walsh was annoyed to learn that the new aviation minister had declared to the leaders of the aviation industry that the transport secretary, Patrick McLoughlin, was in Hong Kong launching British Airways’ new A380 superjumbo service. Mr. Walsh pointed out that not only was McLoughlin not on board the plane, he had not been not invited, and was not going to be allowed to take the credit.

A a conference on Tuesday Mr. Walsh stated: “The government has not done anything to launch our new services to China.”

 

British Airways A380 in air possibly to China

The A380 in flight

In fact, he said, its policies on air passenger duty and Chinese visas were harming British aviation and business.

“It’s not happening. I’m not going to sit here and let the government take credit for something we are doing on our own without their support.”

This was in response to Mr. Goodwill announcing at the opening the Airport Operators Association conference in London which is the air industry’s major annual event that – “The secretary of state, Patrick McLoughlin, cannot be with us here today because he’s in China, promoting our interests.” “He will shortly be launching British Airways new A380 service from Hong Kong – and is coming back to the UK on that maiden flight.”

Willie Walsh said that with today’s final price proposal for Heathrow, the Civil Aviation Authority has left the airport’s customers with the burden of forking out almost an extra £1bn over the next five years.

Mr. Walsh said the CAA had neglected its new primary statutory duty to further the interests of passengers by endorsing a settlement that allows the UK’s monopoly hub to ignore its inefficiencies and over-reward investors by imposing excessive charges on users.

Willie Walsh

Willie Walsh

Willie Walsh, head of British Airways’ parent group IAG, said: “It is a bad day for our customers who have been let down by the CAA. With this settlement, Heathrow will continue to levy charges well above other major hub airports.

“As the only hub airport in the UK, Heathrow exerts monopoly power over its users. Like other airlines at Heathrow, we cannot move to a better-run UK hub that offers customers real value for money. No such alternative exists today but these excessive charges combined with a complacent management team at Heathrow make an alternative hub look more attractive and more realistic.”

“We want a Heathrow that is efficiently run, fairly rewarded and priced comparably with other airports. We will carefully consider our next steps.” What those steps will be is anyone’s guess, but in 2010 pre the merger with IAG Willie Walsh threatened to favour Madrid over Heathrow.

British Airways parent IAG has continued its aircraft shopping spree with an order for up to 220 A320s.

Vueling is part of British Airways parent group IAGThe shopping lists consists of 58 firm orders and 62 options for Vueling, the low cost subsidiary based in Barcelona that IAG only took full control of in April of this year. Unlike IAG’s other Spanish holding, Iberia, which has been bleeding heavy losses, Vueling has been consistently profitable and this new order is a mark of just how much faith IAG’s top brass have in the airline.

Vueling currently operates an all Airbus fleet of 70 aircraft and although some of the new aircraft, set to be delivered from 2015 onwards, will be used for fleet replacement, an equal number will be used to aggressively chase market share in an already cut-throat European market.

British Airways Willie WalshCommenting on the order, Willie Walsh, CEO of IAG stated: “Vueling has managed to successfully expand its business profitably by targeting both growth markets and those areas where weak competitors are reducing capacity. These new aircraft will enable Vueling to continue that expansion and replace some of its older fleet with modern, fuel-efficient aircraft, leading to further unit cost reductions.”

On top of the 120 A320s earmarked specifically for Vueling, IAG also has options for a further 100 of the aircraft which may ultimately be assigned to either Vueling, Iberia or British Airways.

British Airways currently operates an all Airbus short-fleet out of Heathrow but has a number of ageing 737s based at Gatwick that need replacing. However, while IAG seems keen to commit to Vueling’s short-haul expansion, for British Airways the emphasis is very much on the renewal of its ageing long-haul fleet with 12 A380s on order, 42 787s 18 A350s & 6 777-300s. The first of the airline’s new A380s and 787s were recently delivered to the airline and go into normal service next month to Los Angeles & Toronto respectively.

 

Heathrow Airport has submitted new proposals for slightly lower charges at the UK’s busiest airport.

Due to its near monopoly position, the fees that Heathrow can charge airlines are capped by the CAA (Civil Aviation Authority) and set over 5 year periods. The currrent pricing regime ends in March 2014 and, earlier this year, Heathrow set out proposals that would have seen it raise its prices by RPI plus 5.9% over the 5 year period from 2014-2019.

A poll tax on flying

Willie

Not surprisingly, these proposals were met by howls of derision from airline groups, most vocally British Airways, who claim that Heathrow is already too expensive. Willie Walsh, CEO of British Airways parent company IAG, submitted a counter proposal that charges at Heathrow should actually grow by RPI minus 9.8%.

Although Heathrow could easily brush off such a stark proposal from British Airways, it was unable to hide its dismay when, in April of this year, the CAA published its initial findings which suggested a cap in charges of RPI minus 1.3%. Only now, some 3 months later, has the airport responded with a counter-offer, this time of RPI plus 4.6%.

British Airways Terminal 5 Check-InAnnouncing their new proposal, the airport published the results of a survey of some 1,178 Heathrow passengers. In this survey, it is claimed, passengers said that they would rather see improved services and investment than lower fares. At the same time, Colin Matthews, CEO of Heathrow Airport Holdings warned that global investors would no longer be prepared to invest in Heathrow, or other UK infrastructure projects, if they were unable to make a fair return on their capital.

On Monday, British Airways, Virgin Atlantic and other airlines operating to Heathrow again rejected Heathrow’s proposals for a rise in fees and reiterated their call for an overall reduction.

Ironically, this heated disagreement about airport charges, which net Heathrow some £1.3 billion a year, comes at the very same time that Heathrow and its major customers are in full agreement over the need for a 3rd runway at the airport.

The CAA will publish its next report in October.

Heathrow Terminal 5

Heathrow Terminal 5