'A change in tax will make Heathrow uncompetitive'

After Willie Walsh took over as the chief executive officer of British Airways, he has guided the carrier to a full merger with Spanish airline Iberia and realised the objective of a transatlantic joint business with American Airlines.

In a freewheeling chat with Sneha Kupekar, the Irishman says the company will lobby against any change in the departure tax and believes Emirates must be looking at its new codeshare with Kingfisher with envy.

Edited excerpts:

If FDI rules are relaxed, will BA look at investing in Indian carriers?

The current rules do not permit investments by foreign airlines in Indian carriers. I don't think there is any immediate plan to change the same.

However, the future of the aviation industry is consolidation, and I am sure if an opportunity is provided, many will grab it. BA, on its part, is in the process of completing the merger with Spanish airline Iberia and has formed a holding company for the same -- the International Airline Group.

The group would be looking at mergers and I would let you speculate that the group's ambition would be looking at investing in an Indian carrier.

Is BA in favour of the UK government's plan to levy departure tax per aircraft instead of the current per passenger basis?

The departure tax, started as a passenger duty on a per passenger basis, was originally a sort of environment tax. However, government figures now show that the revenue generated so far has exceeded the environmental cost, ie, the CO2 emissions that are generated.

So, the revenue generated goes towards the treasury. However, government debates and consultations on whether to change the tax are still on.

In the recent budget, this proposal was resisted and any change would be made only after further consultations with all the parties concerned. We continue to lobby against any change to the tax as it will make Heathrow Airport uncompetitive.

How is BA helping Kingfisher join the Oneworld Alliance?

We welcome Kingfisher Airlines' decision to join the Oneworld Alliance and are its sponsors for this. We continue to help them in every possible way to become full members by late 2011. It's only appropriate that our first codeshare with an Indian carrier will be with Kingfisher.

The codeshare has been approved by the Indian government and will be applicable from September 15. BA's code will be placed on 11 destinations within India and the Chennai-Colombo route, while Kingfisher's code will be placed on nine domestic routes, from Heathrow to the UK and continental Europe.

This will enable customers to book tickets on both carriers' websites, frequent flyers will be able to earn loyalty points and use lounges on these flights. A through check-in will also be provided on codeshare flights.

How is BA positioning itself in India vis-a-vis Emirates?

Competition from Emirates, Qatar Airways or Etihad is nothing new. The competition goes back to almost 25 years. They are ambitious in their Europe and North America plans as well.

The change in bilateral agreement between the UK and India in 2004-05 for direct UK-India flights opened up competition from Indian players such as Jet Airways, Kingfisher and Virgin Atlantic, and indirectly, from Emirates as well.

India is the second-largest market for British Airways after the US, and it's one of the main reasons why we have introduced the Boeing 777-300 ER in Mumbai first and will subsequently roll it out to Delhi, Chicago and Dubai.

We will continue to focus on stronger positioning in India and I am sure Emirates will be looking at our new codeshare with Kingfisher with envy.

How is the aviation market picking up now?

The International Air Transport Association figures of growth in the industry look positive. We are also seeing positive growth in our passenger and cargo numbers. Strong growth in long-haul international routes, improving yields in premium cabins, all point to a strong recovery.

Though the growth is at a slow pace, it is still moving forward. There is no evidence at this stage of a downturn again. However, in the event of a downturn, we know what we need to do and are prepared with our game.

I'll be an optimist and say that we don't expect a downturn situation to arise.

Image: Willie Walsh