BA chief warns over Middle East threat

16th Sep 2010
BA chief warns over Middle East threat

British Airways chief executive Willie Walsh has warned European airlines not to underestimate the threat posed by growing carriers in the Middle East.

In a wide-ranging address to an industry audience in Brussels, Mr Walsh argued Middle Eastern carriers – including Dubai’s Emirates, Etihad of Abu Dhabi and Qatar Airways – are capable of transforming long-haul services in a similar to fashion to the revolution seen in low-cost short-haul travel.

“We have been very slow in the UK and in Europe to recognise the new competitive threat,” added Mr Walsh.

The BA chief was particularly concerned by the so-called home country rule: an agreement between the US and Europe that prohibits government credit guarantees to airlines in the home countries of Airbus and Boeing.

The deal excludes BA, Lufthansa and Air France-KLM from government credit assistance to buy aircraft while allowing export credits to the Middle East.

Emirates Expansion

Mr Walsh argued the situation amounted to Europe “funding the expansion of Emirates”.

Emirates has continued to expand its fleet in recent months, placing an order for 90 Airbus A380 superjumbos.

Walsh continued: “These are our competitors. We’re financing our competitors by providing them with cheap access to capital.

“There’s something not right there. I do not take this threat lightly. I think this is a very significant threat.”

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Willie Walsh warns over threat from Middle Eastern carriers

Fight Back

Mr Walsh – who is also chairman of the Association of European Airlines – outlined how BA was combating the threat posed by rival Middle Eastern carriers.

The British flag-carrier has introduced new World Traveller and World Traveller Plus cabins to its new Boeing 777-300ER aircraft in an attempt to rival the luxury offered by Etihad et al.

The new cabins will also be rolled out across British Airways Boeing 777-300ER, 787 and Airbus A380 aircraft as they are delivered.

In a wider context, the BA chief said airlines have endured a “fight for survival” over the past two years, following the collapse of Lehman Brothers at the height of the financial crisis.

However, the position of British Airways and the global aviation industry continues to “stabilise and improve” – with the flag-carrier expecting to break even this year, before tax.

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