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Topic: Willie Walsh : "Let Weak Airlines Fail"
Username: Gonzalo
Posted 2013-04-11 05:41:16 and read 17301 times.

“The weak do not have the right to stay”
“They should be allowed to disappear – that’s what regulators should allow to happen. If you look at the capacity from Spanair, that was replaced overnight by other carriers. With Malev, around 60 per cent of capacity was replaced.
Governments have been concerned in the past about losing access if an airline went under, but those days are over now. If there is demand then the capacity will be replaced.”


http://www.businesstraveller.com/new...ie-walsh-a-let-weak-airlines-faila

Are this words a "subliminal message" or just a fair comment ?

Thoughts ?

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Pe@rson
Posted 2013-04-11 05:47:31 and read 17257 times.

Quoting Gonzalo (Thread starter):
Willie Walsh : "Let Weak Airlines Fail

So IAG is down to BA then (and forthcoming Vueling).   

Quoting Gonzalo (Thread starter):
just a fair comment

Yep.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: tonystan
Posted 2013-04-11 05:58:49 and read 17132 times.

So why didn't be just let Iberia fail?

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: lightsaber
Posted 2013-04-11 05:59:25 and read 17148 times.

Quoting Gonzalo (Thread starter):
Governments have been concerned in the past about losing access if an airline went under, but those days are over now. If there is demand then the capacity will be replaced.”

He isn't talking about AI now, is he?   

But he is right. If there is demand, service is replaced quickly. The USA has lost numerous airlines and we manage to continue on.

Lightsaber

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: sunrisevalley
Posted 2013-04-11 06:32:16 and read 16921 times.

Quoting tonystan (Reply 2):
So why didn't be just let Iberia fail?

Perhaps he is saying indirectly and based on hind sight , that the takeover of IB was a bad move.   

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: spartanmjf
Posted 2013-04-11 06:38:06 and read 16861 times.

I don't think he is talking about IB - that was an investment opportunity in which there was/is thought to be a sustainable future. Perhaps he is talking about some European and other 'flag carriers' that continue to go from crisis to crisis.

I mourn the loss of BN, EA, TW, and PA, but in the end they disappeared and life went on. In the United States, perhaps if the PA and BN failure models has been allowed to continue, airline profitability and competition would have been enhanced.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: eljas
Posted 2013-04-11 06:59:11 and read 16705 times.

" "Alliances will not guarantee your success,” he added. “You have to have a robust business yourself and be profitable in your own right."

Perhaps taking a stab at the increasing likelihood of VS joining Skyteam?

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Gonzalo
Posted 2013-04-11 07:14:07 and read 16562 times.

Quoting sunrisevalley (Reply 4):
I don't think he is talking about IB

Hmmmm... maybe he's not talking about IB as a whole, but "sending a message" to the IB Unions ?   

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: LHRFlyer
Posted 2013-04-11 07:25:56 and read 16478 times.

Quoting spartanmjf (Reply 5):
I don't think he is talking about IB - that was an investment opportunity in which there was/is thought to be a sustainable future.

And Iberia has not had any form of bailout, internally or externally. IAG was very clear at the outset that its restructuring would have to be funded by itself from its own resources.

Willie Walsh is still very much in favour of industry consolidation:

http://www.bloomberg.com/news/2013-0...s-more-mergers-ceo-walsh-says.html

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: VV701
Posted 2013-04-11 08:43:26 and read 16066 times.

Quoting lightsaber (Reply 3):
He isn't talking about AI now, is he?

He is specifically talking about European airlines, And he is specifically talking about European governments not allowing airlines to go under:

'Walsh said there was no justification for European carriers to receive handouts from their governments because lost capacity would soon be replaced by other airlines if “demand was there”.'

So, no. He is not talking about AI. And although comment about IB is reasonable it is clear that it is commercial and not government activity that is keeping it going. If Walsh sees a future for IB then he is right to make an investment to secure that future. Similarly he is not saying that no commercial organisation or other non-government investor should step in and rescue any failing European airline.

All he is really saying is that EU rules on need to be followed and not worked around.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Gonzalo
Posted 2013-04-11 08:47:48 and read 16049 times.

Quoting LHRFlyer (Reply 8):
Willie Walsh is still very much in favour of industry consolidation:

http://www.bloomberg.com/news/2013-0....html

From the link you posted :


"Airline alliances like Oneworld, of which IAG is a leader, exist only because of restrictions on mergers, for which the three main global groupings are a “poor substitute” Walsh said today at the CAPA aviation conference in Powerscourt, Ireland.

This man really knows how to touch some fibers  

In any case, it will be nice if he could say where is, in his view, the red line for trying to save a troubled airline or just let it go.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: goosebayguy
Posted 2013-04-11 09:05:29 and read 15945 times.

I don't believe Willie's commenting on IB. I tend to believe that IB might have ultimately failed had it not merged with BA. The merger though has secured IB's future because Walsh will take the necessary action to trim costs keeping IB competitive. Just the medicine IB needs. I'm thinking that he is commenting on Alitalia. LOT etc.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: lightsaber
Posted 2013-04-11 09:54:15 and read 15719 times.

Quoting LHRFlyer (Reply 8):
IAG was very clear at the outset that its restructuring would have to be funded by itself from its own resources.

   IB will be an interesting 'case study.'

Quoting VV701 (Reply 9):
All he is really saying is that EU rules on need to be followed and not worked around.

Which airlines is he referring to? Which airlines are getting subsidies/relief?

Lightsaber

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: summa767
Posted 2013-04-11 10:18:29 and read 15556 times.

Quoting lightsaber (Reply 12):
Which airlines is he referring to? Which airlines are getting subsidies/relief?

SAS and Alitalia come to mind..
The former is undergoing restructuring, and that may work to make it viable.

In the case of IB, I am sure that WW does not regard it as a weak airline, and he knows that if becomes more competitive, it can turn its fortunes around.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: jayeshrulz
Posted 2013-04-11 11:03:40 and read 15126 times.

I'm sure he's talking about Kingfisher Airlines. Wasn't IT was supposed to join OW? But sadly its dead. For now.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-11 11:13:16 and read 14945 times.

Quoting lightsaber (Reply 3):
But he is right.

He's not right, and BA is itself proof of that. No significant airline gets to where it is (be it in good or bad shape) on its own.

Until recently, British Airways was one of the most protected airlines in the world....it's quite rich for a former CEO of that airline to state that airlines be allowed to fail when the British did everything possible to ensure BA could not fail even during its darkest days.

[Edited 2013-04-11 11:13:46]

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: tonystan
Posted 2013-04-11 11:16:38 and read 14882 times.

Quoting avek00 (Reply 15):

Quoting tonystan (Reply 74):

Until recently, British Airways was one of the most protected airlines in the world....it's quite rich for a former CEO of that airline to state that airlines be allowed to fail when the British did everything possible to ensure BA could not fail even during its darkest days.


Explain!

[Edited 2013-04-11 11:17:34]

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: SonomaFlyer
Posted 2013-04-11 11:23:20 and read 14780 times.

Quoting avek00 (Reply 15):
Until recently, British Airways was one of the most protected airlines in the world....it's quite rich for a former CEO of that airline to state that airlines be allowed to fail when the British did everything possible to ensure BA could not fail even during its darkest days.

BA was privatized years ago. It could be considered protected in that it has a strangle hold on slots at LHR but that is due to long running services from that airport and the fact LHR is their only hub.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: SCQ83
Posted 2013-04-11 11:47:16 and read 14390 times.

A consolidation in Europe is unavoidable. The one country / one carrier is unsustainable for the smaller Eastern European airlines (MALEV, B&H, Armavia... gone; Cyprus on the verge of bankruptcy).

Multiple carriers in large European countries don't have much future either. BMI absorbed by BA, Spanair gone... probably Russia and Germany are the only countries that can support more than one legacy. And in the Geman case, look at AB's shape!!

The model seems to be a major consolidated "legacy" carrier in major economies and pan-European low-costs (Ryanair, easyJet, Wizzair, Vueling, Norwegian...) From a customer perspective, I don't think this consolidation is bad (contrary to the US). Some of those carriers are dinosaurs with an uncompetitive product and pricing. The Hungarian sample is quite good... MALEV was gone and those routes have been largely replaced by Euro legacies with better network/product/prices and Ryanair/Wizzair which offer a way cheaper product (competing against each other in many routes) and started new destinations.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: lightsaber
Posted 2013-04-11 11:53:32 and read 14286 times.

Quoting SCQ83 (Reply 18):
The one country / one carrier is unsustainable for the smaller Eastern European airlines (MALEV, B&H, Armavia... gone; Cyprus on the verge of bankruptcy).

I would go so far as to suggest that one country/one carrier for larger European nations is not sustainable (e.g., AF/KLM). Or LH buying up European airlines like they're chips.

There needs to be a European wide market with anchors in major hubs.

Lightsaber

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-11 12:33:39 and read 13742 times.

Quoting tonystan (Reply 16):
Explain!

No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

It is the height of irony for a BA head to call for weak airlines to shut down when BA was allowed to operate as a financial basketcase for years on a playing field rigged unabashedly in their favor by their national government. There is absolutely some room for free-market thinking in the airline business, but the notion that international commercial aviation ever was, or presently is, an environment largely governed by market forces is an absurdity unsupported by facts.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: EK413
Posted 2013-04-11 12:41:10 and read 13613 times.

I guess he doesn't care if BA went under when the airline was in financial trouble "Don't worry VS would pickup the demand over night"...

EK413

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: GCT64
Posted 2013-04-11 14:08:37 and read 12556 times.

Quoting Gonzalo (Reply 10):
"Airline alliances like Oneworld, of which IAG is a leader, exist only because of restrictions on mergers, for which the three main global groupings are a “poor substitute” Walsh said today

I think he is saying he would like to merge IAG and AA and isn't allowed to. It is not exactly "shock horror" news that BA & AA have wanted to get closer for a long time.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: brilondon
Posted 2013-04-11 14:54:06 and read 12030 times.

Quoting LHRFlyer (Reply 8):
Willie Walsh is still very much in favour of industry consolidation:

Wow!!! He wants the market all for himself, now there is a news bulletin.

I understand where he is coming from. He thinks that airlines need to be able to stand on their own feet and be able to compete without government assistance. Or am I reading things into his comments that were not there.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Bongodog1964
Posted 2013-04-11 15:09:40 and read 11891 times.

Quoting avek00 (Reply 20):
No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

BA was privatised in 1984, from that date it has stood on its own. UK government policy was to encourage competition, BA were told that VS would be allowed into LHR in order to provide competition, so no protection here. Bermuda 2 didn't favour BA, it was a neutral treaty that restricted carriers from both the UK and the US to a maximum number of routes from LHR to the US. BA had to fly some US routes from LGW as a result, just as the US airlines did. Meanwhile BA received no protection on any other routes as it wasn't Govt policy to do so. It was the US that wanted to keep Bermuda 2

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Boysteve
Posted 2013-04-11 15:14:53 and read 12432 times.

Quoting avek00 (Reply 20):

No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

It is the height of irony for a BA head to call for weak airlines to shut down when BA was allowed to operate as a financial basketcase for years on a playing field rigged unabashedly in their favor by their national government. There is absolutely some room for free-market thinking in the airline business, but the notion that international commercial aviation ever was, or presently is, an environment largely governed by market forces is an absurdity unsupported by facts.

I think you need to calm down. At BA Willie Walsh never supported Bermuda II and neither has BA for a long while, therfore he is free to voice his opinion with being abused for whatever the situation may have been 40 years ago! For 20 years or so BA wanted the rules changed to allow them to get into bed with AA first and foremost. BA had problems many years ago but no-one currently present at BA was part of that. BA has stood on it's own two feet for many years and long before airlines such as AF stopped receiving state subsidies. Chill, the bloke is not out of order for having an opinion. Disgaree with it rationally of course, but don't attack him for having a brain.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: tonystan
Posted 2013-04-11 15:34:50 and read 12107 times.

Post privatisation in 1984 BA restructured and quickly became anything but a basket case!!!!

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: airproxx
Posted 2013-04-11 16:39:23 and read 11772 times.

Quoting EK413 (Reply 21):
I guess he doesn't care if BA went under when the airline was in financial trouble "Don't worry VS would pickup the demand over night"...

This is exactly what I thought!
I can not imagine that Mr. Walsh could consider the possibility of applying such a policy to its own group ....

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: BlueSky1976
Posted 2013-04-11 20:57:00 and read 9327 times.

Fair and true comment. I can definitely agree with it, especially in context of seeing what is going on at one of the prime examples of mismanaged so-called "national treasure carriers" at my home country, Lot Polish Airlines.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: goosebayguy
Posted 2013-04-11 22:25:03 and read 8823 times.

Quoting avek00 (Reply 20):
No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

Its not really that simple. If I recall correctly those two American airlines had rights to further flights in Europe. That was never allowed in the USA to BA. BA has not had direct public money since the 1980's whereas many American carriers have. Yes BA has most of the slots at LHR but then other airlines have similar at their home airports. LH have more at Frankfurt etc. American airlines are the same with their hubs.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: RyanairGuru
Posted 2013-04-11 22:33:53 and read 8773 times.

Quoting Bongodog1964 (Reply 24):
It was the US that wanted to keep Bermuda 2

  

I'm legitimately intrigued by the revisionist version of history being pushed above. BA has not been "protected" since before Thatcher.

Quoting EK413 (Reply 21):
I guess he doesn't care if BA went under when the airline was in financial trouble "Don't worry VS would pickup the demand over night"

But if BA failed it would be due to poor management, not because the UK government refused to subsidise it. Therefore, yes, that would be a perfect example of what he would want.

Quoting airproxx (Reply 27):
I can not imagine that Mr. Walsh could consider the possibility of applying such a policy to its own group ....

I disagree. He would sooner close IB down than go cap-in-hand to the Spanish government. Ditto BA.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: jumpjets
Posted 2013-04-12 02:34:10 and read 7189 times.

Just wondering where Chapter 11 bankruptcy protection fits into this scenario - I don't pretend to understand how this works but it seems to me that a large badly run company can be protected from its legal obligations at the expense of other often smaller businesses who have been foolhardy enough to do business with them. Once the dead wood has been pruned a new business emerges stronger and better - maybe not a bad thing but if we are to chastise BA for being state supported some 20 yrs ago I think its fair to bring this into the debate.

I know its not simply there to protect Airlines but any MBAs out there like to hypothesise what would have happened to the US airline industry if [like here in the UK] Chapter 11 hadn't existed.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: blueflyer
Posted 2013-04-12 02:44:32 and read 7170 times.

Quoting SonomaFlyer (Reply 17):
It could be considered protected in that it has a strangle hold on slots at LHR but that is due to long running services from that airport and the fact LHR is their only hub.

Air France, KLM and Lufthansa have a bigger share of the slots/traffic at their respective home airports than BA does at LHR...

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Viscount724
Posted 2013-04-12 03:12:27 and read 6952 times.

Quoting avek00 (Reply 20):
Quoting tonystan (Reply 16):Explain!
No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

LHR-USA access was also restricted to 2 British carriers, and they only had rights to select US destinations.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: par13del
Posted 2013-04-12 03:30:07 and read 6807 times.

Quoting jumpjets (Reply 31):
I know its not simply there to protect Airlines but any MBAs out there like to hypothesise what would have happened to the US airline industry if [like here in the UK] Chapter 11 hadn't existed.

From a tax payor perspective, not much, from private industry, well either the pieces of the fallen carriers would have been picked up much cheaper or other carriers who have grown much quicker. Carriers like WN and Spirit may be larger as the oppertunity to create and grow would have appeared much sooner, heck they may even have
One thing overlooked in Chpt.11 is the source of funds, it's not tax payor money but private industry money. Investors have been there for most of the troubled carriers, they were not for EA, PanAm, TWA or a few other's so they are gone.
UA, CO, DL had investors and AA sold everything to ensure that they had enough funds to operate in Chpt.11 while they looked for investors so....

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: airproxx
Posted 2013-04-12 04:42:08 and read 6256 times.

Quoting RyanairGuru (Reply 30):

I disagree. He would sooner close IB down than go cap-in-hand to the Spanish government. Ditto BA.

Yes, but would he apply the same policy if BA itself was in danger?

That said, I agree with him. The highly subsidized companies become mechanically uncompetitive and lose their service obligation and profitability. This state of mind is felt into employee behavior, and it becomes extremely difficult to retrieve a commitment to excellence. This is my personal reproach to AF, and it's true that BA is more in the tradition of companies that know how to question themselves.

Cultural thing probably ...

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: RDH3E
Posted 2013-04-12 09:38:10 and read 5534 times.

Quoting GCT64 (Reply 22):
I think he is saying he would like to merge IAG and AA and isn't allowed to. It is not exactly "shock horror" news that BA & AA have wanted to get closer for a long time.

I think we will some day see a world where this is possible and you'll have BA/IB/AA/QF/JL, DL/AF/KL/KE , UA/LH/NH/SQ.

[Edited 2013-04-12 09:38:35]

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: delta2ual
Posted 2013-04-12 09:51:31 and read 5500 times.

At the end of the day, we would be hard pressed to find any airline in the world that did not receive some sort of help from their respective government at some time in their history.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: mayor
Posted 2013-04-12 09:59:12 and read 5482 times.

Would not WW's pronouncement apply to their ATI partner, AA?  

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: slider
Posted 2013-04-12 12:01:43 and read 5343 times.

Quoting Bongodog1964 (Reply 24):
BA was privatised in 1984, from that date it has stood on its own. UK government policy was to encourage competition, BA were told that VS would be allowed into LHR in order to provide competition, so no protection here. Bermuda 2 didn't favour BA, it was a neutral treaty that restricted carriers from both the UK and the US to a maximum number of routes from LHR to the US. BA had to fly some US routes from LGW as a result, just as the US airlines did. Meanwhile BA received no protection on any other routes as it wasn't Govt policy to do so. It was the US that wanted to keep Bermuda 2

Thanks to Margaret Thatcher, I might add. Had she not had the prescience to force privatization of BA, they'd have really cratered I think. There was still some protectionism given the lack of opening up LHR, but there's plenty of blame to go around on that one.

Walsh's orginal comment is spot on though.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: VV701
Posted 2013-04-12 12:27:52 and read 5252 times.

Quoting jayeshrulz (Reply 14):
I'm sure he's talking about Kingfisher Airlines.

Sorry to be repetitive but he said he was talking about European airlines:

"Walsh said there was no justification for European carriers to receive handouts from their governments because lost capacity would soon be replaced by other airlines if %u201Cdemand was there%u201D.

Quoting avek00 (Reply 20):
No explanation should be necessary, but I'll provide a brief one. Until the latter half of the first decade of the 2000s, British Airways received considerable protection from market forces by a British government policy consensus that limited the ability of potential competitors to challenge BA. The most notable of these arrangements was the Bermuda II air services agreement that governed USA-UK air services, and limited Heathrow access to two US carriers flying to/from select US gateways.

Incorrect. Since 1993 EU Civil Aviation Competition has been controlled by the European Commission and not by the national governments within the EU. This has been essential as the EU is a single commercial aviation market. Even the distribution of slots at LHR and competition matters like the IAG purchase of BD have been matters for the EC and not the British Competition Authorities. So to assert that the British government has protected BA from competition "until the latter half of the first decade of the 2000s" could not be further from the truth. It would have been illegal.

This all ensures a highly competitive market. For example it enabled an Irish airline, FR, to establish bases throughout Europe. Their largest is at London Stansted Airport (STN). During Summer Season 2012 FR operated a total of 1,774 flights to and from 115 different short haul destinations out of STN. Clearly the establishment of such an operation did not protect BA from competition.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-12 13:59:31 and read 5141 times.

Quoting Viscount724 (Reply 33):
LHR-USA access was also restricted to 2 British carriers, and they only had rights to select US destinations.

So? Bermuda II was, on balance, heavily weighted in favor of the British side, affording competitive protections to British Airways until it was superceded by the US-EU Open Skies deal in the second half of the first decade of the 2000s.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Bongodog1964
Posted 2013-04-12 14:22:14 and read 5073 times.

Quoting avek00 (Reply 41):

So? Bermuda II was, on balance, heavily weighted in favor of the British side, affording competitive protections to British Airways until it was superceded by the US-EU Open Skies deal in the second half of the first decade of the 2000s.

The main beneficiaries of Bermuda 2 were AA and UA. They had their access to LHR with all other US airlines sent down the road to LGW, BA and VS were only allowed a set number of US gateways between them I recall it was either 15 or 16, and had to operate their other US routes from LGW.

Your interpretation is highly inaccurate.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: RDH3E
Posted 2013-04-12 15:18:38 and read 4991 times.

Quoting VV701 (Reply 40):
1,774 flights to and from 115 different short haul destinations out of STN

Each day??? That would mean that between the hours of 6am-10pm (rough estimate) they had a flight departing or arriving every 33 seconds.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: VV701
Posted 2013-04-13 07:22:44 and read 4583 times.

Quoting RDH3E (Reply 43):
Each day???

I said

Quoting VV701 (Reply 40):
During Summer Season 2012 FR operated a total of 1,774 flights to and from 115 different short haul destinations out of STN.


So, no. The (IATA) Summer Season is always EVERY day between the last Saturday in March and the last Sunday in October . In 2012 it was all those days between 1 April and 27 October inclusive. So FR operated 1,774 flights into and out of STN during Summer Season 2012 that was 210 days long.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: sweair
Posted 2013-04-13 07:46:53 and read 4569 times.

DY is just waiting for SK to go away, why would they order so many aircraft otherwise..   SK would be replaced by LH, BA and DY in a few weeks.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: VV701
Posted 2013-04-14 03:19:09 and read 4056 times.

Quoting VV701 (Reply 44):
So FR operated 1,774 flights into and out of STN during Summer Season 2012 that was 210 days long.

Sorry. Got it all wrong. Cannot even see where I got the number "1,744" from.

The actual number of flights scheduled to be operated by FR in and out of STN during the current (2013) 210 day Summer Season is 52,650. Last summer over the same period it was 51,882. Again my apologies.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: jfk777
Posted 2013-04-15 05:14:32 and read 3492 times.

Quoting avek00 (Reply 15):
Until recently, British Airways was one of the most protected airlines in the world....it's quite rich for a former CEO of that airline to state that airlines be allowed to fail when the British did everything possible to ensure BA could not fail even during its darkest days.

30 years ago was a different time, almost all Flag airlines were still government owned or only recently privatized.

Quoting Bongodog1964 (Reply 24):
BA was privatised in 1984, from that date it has stood on its own. UK government policy was to encourage competition, BA were told that VS would be allowed into LHR in order to provide competition, so no protection here. Bermuda 2 didn't favour BA, it was a neutral treaty that restricted carriers from both the UK and the US to a maximum number of routes from LHR to the US. BA had to fly some US routes from LGW as a result, just as the US airlines did. Meanwhile BA received no protection on any other routes as it wasn't Govt policy to do so. It was the US that wanted to keep Bermuda 2

The Bermuda 2 may have been "nuetral" as it applied to British Airways, TWA and Pan AM but the UK had no second airline until 1991 when AA and UA replaced PA and TWA at LHR, every UK airline until then was "Gatwicked"; Virgin, B Caledonian and Laker. BA was protected against other UK airlines at LHR except for BMI. which flew only domestically. There was a third US airline at LHR before the 1977 Bermuda 2 treaty, it was Miami based National Airlines. The USA made a lousy 11th hour deal for the Bermuda 2 in 1977, the Brits waited until the very past moment to make a deal knowing they could get Jimmy Carter, he had to get Delta rights to London from Atlanta. DL would have to use LGW not LHR. The Bermuda 2 lasted 30 years, the US airlines controlled about 70 % of the flights in the 1970's by 2008 BA and Virgin had about 60 % of the market.

The British Government even tried to "Gatwick" Air Canada, the Canadians politely declined the UK's offer to be "Gatwicked".

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Quokkas
Posted 2013-04-15 05:55:47 and read 3408 times.

Quoting slider (Reply 39):
There was still some protectionism given the lack of opening up LHR,

Please could you expand on that point. I am not disputing it but am not sure what you mean by it.

As far as I understand, the airport itself is owned by Heathrow Airport Holdings, which in turn is owned by a consortium that includes, among others, the Caisse de dépôt et placement du Québec (a Canadian investment body), the Government of Singapore's Special Investments Corporation and Ferrovia of Spain. While the airport raises money from landing fees, etc, how much it charges is limited by Regulation but they can not discriminate between airlines.

As far as I understand, slot allocation is not controlled by Heathrow Airport Holdings but a separate company, ACL. BA isone of the major members of this company but not the only one and, according to the company blurb, any airline is free to join. The company does claim to be independent but in the sense of not being a government entity. I can see how BA being a major member of ACL might possibly give it an advantage but I have no knowledge of whether it actually does.

I may be wrong in my understanding and I note that you did use the word "was", suggesting past tense. But do you think that there still may be some residual protectionism and if so, of what kind?

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: jfk777
Posted 2013-04-15 06:47:18 and read 3294 times.

Quoting Quokkas (Reply 48):
As far as I understand, slot allocation is not controlled by Heathrow Airport Holdings but a separate company, ACL. BA isone of the major members of this company but not the only one and, according to the company blurb, any airline is free to join. The company does claim to be independent but in the sense of not being a government entity. I can see how BA being a major

ACL does control the Heathrow slot allocations. But the market is really about demand and lack of supply, why else would Continental have paid $ 200 million for 4 slots pairs. The influx of alliances, the big 3 Middle East airlines and Lufthansa's merger with BMI changed the slot landscape. LH kept many BMI slots for its own group of airlines, by the time BMI was sold to BA it had about 50% of the slots when LH purchased it from SMB. LHR slots are very valuable and continue to be sold all the time, recently JET Airwys of India sold 3 to Etihad Air.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Quokkas
Posted 2013-04-15 07:07:39 and read 3250 times.

Quoting jfk777 (Reply 49):
LHR slots are very valuable and continue to be sold all the time

Thanks for the insight. I appreciate your response.

So it would appear that from a slot allocation view there is no protectionism, so long as airlines can freely bid for slots and trade them. That could be a disincentive to some but in a free market appears reasonable. Of course, the aviation industry is not the freest of markets but that's the subject of another debate.  

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-15 09:18:53 and read 3093 times.

Quoting jfk777 (Reply 47):
30 years ago was a different time, almost all Flag airlines were still government owned or only recently privatized.

Perhaps, but the airline industry's development is not ahistorical by any means, and soundbites/talking points of "let weak airlines fail" are amateurish and counterproductive without appreciating how past protectionist behavior gave some airlines significant financial and structural advantages that often prevent operation of a truly free market even in the present day.

Based on the history of the component airlines, a head of IAG has little credibility to advance an argument that weak airlines be allowed to fail.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-15 09:24:25 and read 3072 times.

Quoting Bongodog1964 (Reply 42):
The main beneficiaries of Bermuda 2 were AA and UA.

Not true. Bermuda 2 ensured, above all else, the absence of true transatlantic free market competition at the UK's most important airport, London Heathrow. Everything else in the USA-UK market is small potatoes compared to Heathrow flying, and British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: avek00
Posted 2013-04-15 09:27:54 and read 3053 times.

Quoting Boysteve (Reply 25):
At BA Willie Walsh never supported Bermuda II and neither has BA for a long while

Support of Bermuda 2 is not at issue here, in fact it's irrelevant. The point is that BA benefitted from a protectionist air rights regime in the UK for many years.

[Edited 2013-04-15 09:28:22]

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: jfk777
Posted 2013-04-15 09:53:19 and read 3012 times.

Quoting avek00 (Reply 52):
British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.

Bermuda 2 started in 1977 when the UK "renounced" the Bermuda 1 treaty. BA was "allowed", not all others. British Caledonian had to fly from LGW, even to LAX and JFK. Under the Bermuda 2 the UK was allowed to appoint 2 LHR airlines for flights to the USA, but only BA was. Virgin did eventually in 1991 when TWA and PA sold their LHR slots.

BA did eventually have a large USA LGW operation when they merged with B Cal those flights to the US south were Gatwicked so BA had to fly them from there.

Quoting avek00 (Reply 53):
The point is that BA benefitted from a protectionist air rights regime in the UK for many years.

No more true statement has ever been said.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: superjeff
Posted 2013-04-15 10:09:30 and read 2988 times.

Quoting jumpjets (Reply 31):
wondering where Chapter 11 bankruptcy protection fits into this scenario - I don't pretend to understand how this works but it seems to me that a large badly run company can be protected from its legal obligations at the expense of other often smaller businesses who have been foolhardy enough to do business with them. Once the dead wood has been pruned a new business emerges stronger and better - maybe not a bad thing but if we are to chastise BA for being state supported some 20 yrs ago I think its fair to bring this into the debate.

I know its not simply there to protect Airlines but any MBAs out there like to hypothesise what would have happened to the US airline industry if [like here in the UK] Chapter 11 hadn't existed.

Chapter 11 isn't a guarantee that you can avoid debts or even survive (Braniff, Eastern, TWA, and Pan Am are all examples of airlines that didn't survive Chapter 11, and even US almost didn't survive it - they were lucky America West came along and acquired them). The real problem is, I think, deregulation, which may have resulted in reduced fares in some cases, but also reduced the industry to a commodity.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: Boysteve
Posted 2013-04-15 12:15:27 and read 2867 times.

Quoting avek00 (Reply 53):
Support of Bermuda 2 is not at issue here, in fact it's irrelevant

Avek,
I mentioned Bermuda II simply because you included it in your post (reply 20) to which I responded! I am not sure why you were quite so vociferous about something that is irrelevant but never mind.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: VV701
Posted 2013-04-15 19:40:25 and read 2643 times.

Quoting avek00 (Reply 52):
British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.

Bermuda II as signed in 1977 only allowed two named American airlines to fly from LHR to those US gateway cities listed in the agreement. They were PA and TW. It also allowed one named British airline, BA, to fly to a similar but not identical list of US gateway cities.

Other American and British airlines were not permitted to fly from LHR to anywhere in the USA. So when VS started North Atlantic operations to EWR on 22 June 1984 it, like American airlines other than PA and TW, flew from LGW.

In 1991 following the collapse of PA and the deep financial problems of TW, Bermuda II was amended. It named AA and UA as the two replacement American airlines. At the same time VS was added to BA to give the UK numerical parity with the USA in terms of permitted operators.

In terms of US gateway cities (not airports) listed in Bermuda !! it is important to note that BA and from 1991 both BA and VS were not allowed to serve the main (home) hubs of American airlines who were excluded from Heathrow thus ensuring more balanced competition. So there were no BA flights from LHR to the likes of ATL, DFW and IAH. But BA got around this restriction to some extent. While they operated a direct LGW-IAH service they also operated indirect services latterly operating LHR-ORD-IAH to feed onward services to oil producing areas in the Middle East and Africa.

Topic: RE: Willie Walsh : "Let Weak Airlines Fail"
Username: RyanairGuru
Posted 2013-04-15 23:33:15 and read 2542 times.

Quoting jfk777 (Reply 47):
BA was protected against other UK airlines at LHR except for BMI. which flew only domestically

Umm, sorry, but BD were not a domestic only airline.

Quoting jfk777 (Reply 54):
BA did eventually have a large USA LGW operation when they merged with B Cal those flights to the US south were Gatwicked so BA had to fly them from there.

BA didn't have to serve those cities from Gatwick because they were ex-BCAL, but because they were not allowed to fly them under Bermuda II. The cities in question (ATL, DFW, IAH) could not be served from LHR pre-Open Skies.

Quoting VV701 (Reply 57):
It also allowed one named British airline, BA,
Quoting VV701 (Reply 57):
Bermuda II was amended. It named AA and UA as the two replacement American airlines. At the same time VS was added to BA to give the UK numerical parity with the USA in terms of permitted operators.

Precisely, it had nothing to do with keeping BCAL or VS out of LHR. jfk777 makes it sound like the UK had unused authorities but refused to distribute them. That is patently untrue.


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