HARDtalk: Michael O’Leary and Willie Walsh on stage at the AOA Annual Conference
‘HARDtalk’ is a BBC TV show where public figures are given a, er, ‘hard’ time by a major TV anchor. The format was copied by the excellent Airport Operators Association (AOA) Conference in London this week and the AOA even hired the BBC’s John Humphrys – a legend in the UK where he is the British answer to Walter Cronkite (he’s also about the same age).
The two adversaries – Ryanair CEO Michael O’Leary (MOL) and International Airlines Group (IAG) CEO Willie Walsh – were not interviewed TV-chat show style together, but one after another, and sandwiched between Sir Howard Davies, the head of the UK Airports Commission charged with exploring further airport capacity in the UK.
Significantly, Humphrys spent rather a long time talking to MOL about his much-written about conversion to Glasnost-style cuddliness. Later, Walsh would claim he did not believe that MOL had genuinely had a change of softer heart, but would pay him a compliment at the same time: “He plays journalists for suckers, the guy’s a genius.” Humphrys did not seem to notice this, and pressed on with the focus on the recent policy change, which MOL said had a lot more to do with message delivery than the need to change service policy: “There are many things you can do already that we are not credited for, such as reserving a seat or buying priority boarding – we have just not communicated or marketed efficiently – we need to promote a great service message.” Rejecting the suggestion that he had launched the ‘nice’ campaign purely for financial reasons, MOL explained that the next 12 months would be “less revolutionary and more evolutionary, delivering the Ryanair message in a humble way”.
Then Humphrys asked him that as he was so rich, might he consider retiring soon, at which point he switched back to ‘old’ MOL again: “I’m a lot poorer than many of the robber-baron airports sitting in this room… I have four children under the age of eight, so I have no desire to spend any more time at home for another 10 years until the youngest gets to boarding school. I’ll stay till then.” However, there was an important business message hitched to this: “There’s still lots of room for growth in Europe and we want to work with airports that want to grow their traffic.”
There was praise for some new friends such as Manchester Airports Group (MAG) – a significant foe less than five years ago – especially following the recent deal with MAG-owned London Stansted, and there was more usage of the ‘e’ word: “We’re evolving with terrific London Stansted – they will hopefully be allowed to build another runway – it will probably only cost them $300 million, not like the $3 billion they would spend at Heathrow where they wasted billions on Terminal 5, which was three years late.” (anna.aero note: The T5 opening was problematic, but it opened on time).
Besides the new ‘nice’ MOL, a more traditional tease centered on questions of Ryanair’s move into long-haul. Once again the unreconstructed MOL answered: “The A350, but particularly the 787 would be perfect for our long-haul ambitions, but there has just been no bust in the prices of these planes despite the five-year downturn, and the aircraft just aren’t cheap enough.” Once again he explained that Ryanair’s ambitions would focus on the North Atlantic “from 10 of Europe’s largest cities, but would not be London or Dublin focused” – possibly a refreshing outbreak in honesty in confirming what Willie Walsh would also maintain; that services from London were already too competitive and ‘low-fares’ in all but label.
Walsh’s depression and health
Indeed, when it was the turn of the International Airlines Group CEO, Walsh dismissed Ryanair’s long-haul speculation entirely: “80% of my business is long-haul and we don’t compete with Ryanair on these services because I don’t believe that Ryanair can achieve a significantly lower cost base, particularly on the Atlantic. If you look at the actual new Norwegian fares from London Gatwick, the fares are more like $500 – the fuel price per passenger is something like $125 in any case – whereas BA already has available fares for little more than $300 from Heathrow.”
Walsh, who has famously concluded that a third Heathrow runway “will never happen in my lifetime”, has to put up with several jokes about his health as a consequence. But Walsh still pressed home his scathing criticism, not only about the chances of Heathrow’s third runway, but his non-belief in any British government acting on any Davies Commission recommendation for more airport capacity. “I am looking forward to the report but I don’t believe that the politicians will act on it – we have taken the view at IAG that nothing will happen – that is why we bought bmi and its slots.” Walsh continued in his downbeat view of the lack of (any) UK government aviation policies: “The chancellor does not want the EU’s Financial Transaction Tax because he says it will damage the City. He does not see exactly the same effect that Air Passenger Duty (APD) has on UK competitiveness. It’s the same for Chinese visas – we have just launched a route to Chengdu, but we can’t just say visit Britain and then put people through hell when they try to get here.”
In a bizarre turn he denied a Department of Transport announcement made earlier in the conference that the Secretary of State, Patrick McLoughlin, would be launching the airline’s introduction of A380 Hong Kong services. “He’s not done anything to assist us, this is just not true.” Indeed there did not seem to be anything much to shake Walsh’s gloominess (anna.aero has identified no new British Airways route launches this winter season, other than a Gran Canaria launch) – although there was one piece of parting resoluteness and optimism, a promise of more routes like just-launched Chengdu: “We will expand into Asia with the 787.”
More than one London runway?
Sir Howard Davies, head of the Airports Commission, which will advise the next UK government where to build more airport capacity (after the next election), told the conference: “More capacity in the South East UK is needed…we’re looking at the bids from the competing airports…it may transpire that we recommend packages of solutions, rather than one solution.” However, Sir Howard’s frightening prediction is that, even with a government go-ahead after 2015, the next new runway in the London area could not open until 2023.