to strip out costs. And that’s the challenge that Norwegian has experienced. Level long-haul is profitable;
Norwegian long haul is not.
UK LCC easyJet has 130 aircraft registered in Austria, which it did to secure operations depending on
what happens with Brexit. Is your Austrian air operator’s certificate (AOC) also a Brexit safeguard?
We already have three Spanish AOCs, two British, one
French, an Irish and now an Austrian AOC within
IAG. Level in Austria was not done with any regard
to Brexit. We wanted to establish an airline based in
Austria, and we believed the most e;cient way of doing that was to establish an Austrian AOC subsidiary
and to run it with local talent. Again, it has absolutely
nothing to do with Brexit.
For easyJet, they believe this gives them security in
a post-Brexit environment, which is still uncertain. We
have had a structure in place within IAG since 2011
and that structure remains in place today. What we
see is airlines copying this structure. In e;ect, what
easyJet has done is copy what we established in 2011.
Is it necessary today for a legacy carrier to own an
LCC subsidiary? Level and Vueling are not British
Airways LCC subsidiaries. ;ey are part of the IAG
Group, and that’s why a traditional airline like British Airways can be successful, as we already are with
Vueling. I think having IAG enables us to do that.
Historically, what you have seen with a legacy airline
that owns an LCC subsidiary is that the traditional
airline kills it because it ends up competing with itself,
which is never e;cient. But industry consolidation
in Europe is speeding up now and I think that if the
high oil-price situation continues through this winter,
there are going to be more casualties.
Do you think Lufthansa can make its Eurowings
LCC work? I don’t think it works. To give [Lufthansa
Group CEO] Carsten Spohr credit, I think he recognizes that he probably has to modify that structure
so that it can work longer term. Within IAG, we
have access to the resources of other carriers, helping
each other and sharing expertise within the group.
Level’s low-cost base enables us to guarantee e;cient
operations. British Airways can learn from Level; Aer
Lingus from Iberia. We are learning from one another.
How important are alliances and joint ventures for
IAG? In IAG, we have 550 aircraft and five principle air-
line brands; British Airways, Aer Lingus, Iberia, Vueling
and Level. We have joint ventures with Japan Air Lines
and American Airlines; we are in the process with LA-
TAM on the South Atlantic. In terms of joint ventures,
we are talking all the time. We have had some recent
discussions with China Southern, which is interested in a
closer relationship. We have developed a very good rela-
tionship with them in the short term, with codesharing,
that gives us more access to China. And I think there
are more opportunities, especially with the new Beijing
airport, where China Southern has a strong position.
I think that alliances are less important than joint
ventures, and joint ventures are less important than consolidation. We are looking at both. ;e oneworld global
alliance is flexible; not as strict as the ;tar Alliance. Level
could become part of the oneworld alliance—oneworld
has designed a new structure that facilitates airlines like
Level to join on a di;erent basis, and our partners are
very interested in what we are doing. It’s possible that we
could look at oneworld as a Level opportunity.
How are the Airbus A320neo delivery delays affecting your growth plans?
;e delays are manageable because we have quite a lot
of flexibility within the existing fleet and we have extended operations of the A320ceo. ;e first A320neos
have already been delivered to Iberia and Vueling. So
we are getting the aircraft, but it is frustrating because
the neo is a more e;cient aircraft. But we have the
flexibility in the group and it is having no impact on
our growth and network plans.
We are also in discussions with Boeing and Airbus.
Our Boeing 747 fleet needs to be replaced by 2022.
We will take the A350-1000 into British Airways next
year; we ordered 18 of those to replace some of the
747s. We have 36 747s in service, making us the largest
747 operator in the world. We need to replace more, so
we’ve been in active discussions with Airbus and Boeing for several months.
The biggest challenge for 2018?
2018 will be a good year for IAG. We are well placed
in terms of our strategy, but we have operational
challenges. Delays related to air tra;c control (ATC)
are getting worse this summer in Europe and are
having a impact. We have seen ATC strikes in
Marseille and sta; shortages in Germany’s airspace
have also created delays. ;e operational challenge has
been bigger than anticipated. We are paying compensation to passengers and on many occasions we have
extended routings, meaning longer flying times. ;is is
costing us. In Barcelona, where Vueling has around 60
aircraft, there are eight dedicated stand-by aircraft and
crew, which is very high proportion. But even with
that, we are seeing a lot of operational delays. It is
di;cult to recover, but if we did not have stand-by
aircraft, it would be much more dramatic. I’m
confident some issues are being addressed by European
air tra;c management organization Eurocontrol, but
it will not rescue this summer.