Willie Walsh: ‘Let weak airlines fail’

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