The head of British Airways’ parent company IAG and president of Emirates have questioned the value of airline alliances and are ‘doubtful’ they will exist in the next 10 years.
IAG boss Willie Walsh (pictured) said alliances such as Oneworld and Star Alliance did add value to the business in the past but no longer sees the commercial benefit of belonging to one.
Speaking at The World Travel Market in London, Walsh said: “I think relationships have changed and you are seeing more deals such as joint ventures. If you go back to my time at Aer Lingus, I didn’t actually take them out of Oneworld but I prepared the groundwork for it.
“What you’ve got to recognise is there’s a cost of being a member and for a small airline that cost can be greater than the revenue and commercial benefit you gain from being in an alliance.”
He added: “Alliances add value today but I would question whether they will continue that in the future. There was a need and there still is a role for them to play but I would be surprised and question whether they will exist in 10 years from now.”
Emirates’ Tim Clark agreed with Walsh and said the “bedrock” of an alliance has been challenged in the past few years. “You’ve seen the migration since the alliances came through on the low cost budget phenomenon from the US into Europe and Asia and that has transformed everything,” said Clarke. “They are a tad anachronistic and we are moving into a B2C age now where technology runs nearly everything and how that figures in the alliance structure is questionable. Will they survive? I think they may do but take a different format.”
‘Inefficient infrastructure’
Walsh also used the session at WTM to warn against the cost of expanding Heathrow being passed onto the airlines.
"The days of airports just building expensive, inefficient infrastructure and passing the cost on to airlines and our customers, those days are over.
"We're not going to tolerate it anymore, we have been absolutely clear in relation to that.
"I think the economic case for the expansion of Heathrow is very strong but there's no way anyone on this world justifies spending the £17.6 billion that was being identified in the manner in which it was going to be spent. Absolutely no way.”
He added: “We're not going to pay for inefficient expansion of the airport", saying the £4.3 billion Terminal 5, which opened in 2008, is "fantastic, but boy was it expensive".