The bosses of Emirates and IAG cast doubts on the future of airline alliances in a discussion at the World Travel Market in London.
Sir Tim Clarke, President of Emirates and Willie Walsh, CEO of IAG, discussed alliances, long haul low-cost possibilities, the effects of economic and political events on the industry, the future of the A380 and a possible third runway at Heathrow.
- Neither mentioned the supposed hot word – personalisation
- Emirates and IAG defend ancillary revenue charges
- Both doubted the future of alliances
- Long haul low-cost possibilities are close
- Future of A380 is in doubt
- Possible third runway at Heathrow is stupidly expensive
The highly enjoyable and informative discussion with two of the airline world’s most experienced and respected leaders was also like a cosy fireside chat between old pals.
Perhaps the format led to more revealing thoughts than normal.
It was enjoyable and informative but the most revealing part was when at the end when a question by a Canadian journalist about when the “nickle and dimeing” will end.
That roused the two from the cosy chat and both took somewhat aggressive stands to defend their recent extra ancillary charges.
Both defended their recent charges for items like seating (Emirates) and snacks in Europe (BA).
This was the section that got both most animated.
In general, both Sir Tim and Mr Walsh said that passengers will just accept the charges.
Mentioning the recent charge for selecting a seat, the Emirates boss got a little rattled and said that if passengers don’t want to pay for their seat in advance then “they can take their chance” at check-in.
Mr Walsh questioned the point of serving “crap food”.
Passengers question why airlines serve Mr Walsh’s “crap food”. Why not serve good food?
Both expressed doubts about the form and future of airline alliances.
Mr Walsh said he would be surprised if alliances exist in twenty years and questioned if they would in ten years.
Sir Tim said that alliances were “a tad anachronistic” and may take a different format in future. He added that they were thinking from the 1970 and 1980s.
Long haul low-cost possibilities
Both expressed admiration for the work of Norwegian and thought that Ryanair really want to go that way but shareholders might disagree.
Mr Walsh believes a low-cost long haul model could work and Sir Tim thought if could fail due to geopolitics as passenger access to other countries might not be as easy as now.
Future of the A380
Emirates is the biggest operator of the A380 by a long way. They would like an upgraded / re-engined version but think that Airbus has no appetite for that.
Mr Walsh said that BA has 12 A380s and they work well on parts on the BA network. Other parts would not be suitable.
He can see a case for three or four A380s at Iberia and maybe one at Aer Lingus.
Possible third runway at Heathrow
Heathrow says that a possible third runway would cost £17.6bn. That does not include the extra transport and health costs that are estimated at up to £20bn and £25bn.
On the proposed Heathrow expansion, Mr. Walsh said there was no justificaton for spending £17.6bn on the project.
Mr. Walsh said that only 1% of the £17.6bn was actually for the runway.
He mentioned that the plans included 800 million for a car park. Using Google he calculated that the car park would have 47,000 spaces.
Mr Walsh was scathing on AF-KLM saying they “had done nothing on costs”.
He thinks that BA and KLM should have gone ahead with their proposed merger.
He thought that, at that time the culture in KLM was good for the merger, but not at BA. But it could happen again.
Mr Walsh is obviously not a fan of the current Air France. He said that airlines have to be run commercially not politically.
(In 2000, BA and KLM abandoned talks on a £4bn merger, blaming political and regulatory hurdles. KLM merged with Air France in 2004.)