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Willie Walsh: ‘Let weak airlines fail’

Published: 11/04/2013 - Filed under: News »

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Struggling airlines should be allowed to go under rather than receive state aid, according to IAG boss Willie Walsh.

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”.

“State aid has gone to carriers in the past which has allowed them to continue for a while before eventually failing,” said Walsh during a session at the CAPA Airlines in Transition 2013 conference in County Wicklow, Ireland.

Walsh used the examples of the failures last year of Hungarian carrier Malev and Spain’s Spanair to make his case against state aid.

“The weak do not have the right to stay,” he added. “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.”

Walsh also warned struggling airlines that joining one of the major alliances would not solve their financial problems.

“Alliances will not guarantee your success,” he added. “You have to have a robust business yourself and be profitable in your own right. Joining an alliance will only complement or supplement that business.

“Anybody who thinks the answer to their financial problems is to enter an alliance, they are fooling themselves.”

Jet Blue’s CEO David Barger added that airlines’ main priority had to be making sure they were profitable.

“You have to be profitable first and foremost,” he said.

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This report was originally published on our sister website buyingbusinesstravel.com.

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COMMENTS » 

FirstTraveller - 11/04/2013 12:32

Nice words of wisdom by WW. Lets see how his airline will survive or not in the face of the stiff competition from the Gulf carriers who are biting his share of the cake day by day.

Prakton - 11/04/2013 13:43

Willy Walsh has been speaking during his visit to UAE in the interest of the airlines concerned in UAE and Qatar and he claims that these airlines are not in any way subsidised. What proof does he have? Has he followed everything in details how their accountings are done? If any manupulations have been done regarding fuel cost or landing fees to take an example of the few, Walsh cannot prove anything, and we readers are kep in doubt and mystery. With such ultimate authority and power of the UAE it can be a highly sceptical for us to know the real truth and honesty. Walsh is only supporting and looking at the financial gains the UK will benefit.

BeckyBoop - 11/04/2013 14:19

Prakton, read the following PDF file which was created by Emirates it may help answer your question.

http://f.chtah.com/s/3/2087210970/Airlines_and_subsidy_Our_position_tcm233-845771.pdf

http://www.businesstraveller.com/discussion/topic/Emirates-and-Airline-Subsidies

You may find another more recent version on the EK website

Schaible - 11/04/2013 14:34

Walsh is right. But the real life shows us that many governments support their "ambassadors in the air", their national carriers. Letting them disappear would be losing face. This is the fact anywhere in the world. On the other side it is obvious that especially Middle Eastern countries (without mentioning names) assist their own airlines indirectly by charging foreign airlines higher fees and kerosin prices. But the freedom which airline to choose is still with the customer...

goalie11 - 11/04/2013 15:35

I also agree that WW is right. I also think that if he thought the ME carriers were receiving subsidies that were detrimental to his business he would be the first to shout from the rooftops. Profits announced recently by Etihad would suggest their strategy is working to their advantage and they don't need any subsidy but then accounting is a strange business.

On another point I take my hat off to WW as I was in First on the BA flight from LHR to AUH on Monday 9th and he was sitting next to me ( I eventually got a flight on this route in new 1st and was completely underwhelmed). He was attending a travel and tourism event the day after and then appears in Wicklow on the 11th. That's putting the hours in to spead the gospel.

BeckyBoop - 11/04/2013 16:21

goalie11 did you tell WW that you were underwhelmed by New First if so what was his response?

Henkel.Trocken - 11/04/2013 17:27

So how much longer will Iberia be in business or does this apply to everyone else except him?

Prakton - 12/04/2013 03:03

I do not dispute the claims but what I think is that UAE airlines are not transparent and they always are practising and implementing things in their benefits and at the expenses of the western countries and airlines.
Using all know hows and technology and then striking back at these western airlines.These UAE airlines have not revealed how they support financially their airlines rather they want to buy the customers good will by financing in countries for their own needs as they are a small country and have limited expansion possibilities.

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