In-depth interview with new British Airways CEO Sean Doyle

Transcript

Voiceover:It's time to say goodbye to everything that's broken about travel retailing. Goodbye to the complexity. Goodbye to the frustration. Goodbye to the slow pace of change. And say hello to Travelport Plus. A simpler, faster, more engaging platform for everyone. It's time to take control of the retailing experience and put you in the driver's seat. With enriched content to help travellers make the right choices. Hello to a new way of retailing through dynamic pricing, personalized offers, and contactless pickup, and with more value through automation tools and modern exchange capabilities. And that's just for starters. Hello to a platform that will change and grow as our industry does. Hello to the most forward-thinking combination of content, retailing tools, and the value modern technology can bring. Say goodbye to the past and hello to the future.

Sean Doyle:Hello, British Airways.

Voiceover:Hello, Travelport Plus. Welcome to the new marketplace for travel retailing.

Peter Harbison:Well, good morning in Europe. As we continue our CAPA Live journey around the world, we're delighted to kick off today with Sean Doyle, who's CEO of British Airways. Welcome to CAPA Live, Sean.

Sean Doyle:Thanks, Peter. Delighted to join you this morning.

Peter Harbison:Good morning. Sean, let's— you've had a pretty torrid 18 months or so, both in Ireland and in the UK. I guess we see some real lights at the end of the tunnel now, hopefully. But just going back over that period and looking particularly at the cash position and the different approaches that governments in Europe have taken, Both of your major full-service carriers in Europe have been very substantially, to use a crude word, bailed out by their governments to a large extent. And I know Willie Walsh previously said none of the airlines should be bailed out. There is a— there has been some support for British Airways, but more recently particularly. What— how does that affect your competitive position with those the other 2 of the major 3 in Europe?

Sean Doyle:Well, I think the first thing I would say is that at IAG, we were very quick to act on self-help. And I think that was, you know, focused on probably 3 to 4 different streams. I think the first is to go out and raise liquidity in the commercial sector as best that you can. And we've been successful in doing that. You know, we had a rights issue. We went to the bond markets. And then we actually tapped into some government facilities in the form of UKEF for British Airways to the tune of £2 billion before Christmas. And Iberia, Vueling, and Aer Lingus have actually, you know, pursued similar paths. So I think, you know, credit being available on commercial terms was one of the sort of streams that we were looking to be enabled, and we've tapped into that. I think the second thing was to recognize the gravity of the situation and to change your business pretty quickly. And I think both British Airways, Aer Lingus, and other airlines across the group did that. And that was very tough, and it was very tough on our people. But if we didn't start to right-size the business last summer, we would be facing into a much tougher situation than we're in today. And look, we're no— by no means out of the woods yet. We still have a choppy path to recovery. But I think right-sizing your business, acknowledging that the next 3 to 4 years are going to be very different to the last 3 to 4 years, And buffering the balance sheet through every lever that you have, I think has been successfully achieved. I wouldn't really comment on what's happening in Europe. I fundamentally believe that airlines are better run when they're run as businesses, and we've demonstrated that through airlines that were historically you know state carriers. And when they've been number one privatized and number two worked in a group such as IAG, I think their fortunes. and the fortunes of the airlines in terms of growth have prospered. And I still fundamentally believe that. I think when we do see the dust settle on this crisis, the ability to run your airline like a business will be as compelling as it's ever been.

Peter Harbison:So by implication, you're saying that you, because you had to strain harder, you had to work on your own 2 feet, you're probably better off coming out of this than, say, the Air France-KLM Group or Lufthansa Group?

Sean Doyle:I think I wouldn't necessarily speculate on where they're heading to. I think we all have huge challenges. We've never seen anything like this. You know, before this we had 9/11, which was a kind of not as dramatic a demand shock. We had the global financial crisis, but we've never seen situations where over the summer airlines have operated at 5% of their capacity. So it's a unique situation, and how we come out of it and What the impact is in the industry, I think, is yet to be clear and yet to play out. I fundamentally believe that we as a group move quickly and we're all the better for it. And I think we're kind of right-sized heading into the future with a business which I think will be better when we come out the other end of the pandemic and will have to be because it's going to be pretty competitive out there.

Peter Harbison:Yeah, I think, I think the words leaner and meaner have been associated with, with the way British Airways is going to look coming out of this. You don't look particularly lean or mean at the moment, but obviously, as you say, cost and efficiency is going to be very, very important in the next couple of years at least.

Sean Doyle:Yes, and I also think that, you know, we've taken the opportunity to be more sustainable because we have retired some of our more older aircraft in the form of 31 747s, and we're now flying around 787s and A350s, which are up to 40% more fuel-efficient. So I think being sustainable is going to be a key dimension of an airline's right to operate in the future.

Peter Harbison:Just going off at a tangent on that, as you mention it, Sean, I was talking to Alan Joyce earlier today about the 380s, and I gather you're going to be bringing those back in at some stage. Alan was fairly cagey about when Qantas is likely to do it, because obviously it depends on when the big, big fat routes come back, but That is an aircraft that's in your weaponry as we go ahead still?

Sean Doyle:Yes, it is, and I think it works very well for British Airways. And because of the sheer volume of aircraft that we have retired, I think we do have a place for the A380, and it's in our plans. And I think we can fly it to many destinations. We flew it to places like Hong Kong and Johannesburg, but also worked fairly well into markets like Boston and Dulles. So even in the East Coast of the US and to places like Miami, we found that the A380 worked very well. So it's got multiple purposes in terms of mission capability for British Airways, and that's why it is retained in the fleet.

Peter Harbison:Well, that leads nicely into the North Atlantic too. I mean, this is obviously a key route for British Airways and for a lot of the other European carriers too. It's also one that's underwritten very heavily by, by corporate travel, corporate and business travel. And a second question that comes out of that, that I'd— maybe we can address these in sequence. Partly because of Brexit, but also because the UK is in a much better position than its European neighbours from a health point of view at the moment, do you see British Airways and the IAG Group being in a better position going ahead to grow in the US market contrasted with the other major carriers?

Sean Doyle:Yeah, well, I think there's probably 2 different time dimensions. One, I think there's an immediate opportunity to open up the US. If you look at the vaccine progression in both the UK and the US, they're more or less mirroring each other, and I think both countries have, you know, implemented very, very successful vaccination programmes. And then I think that should lead to, I think, you know, the ability for the UK, US to lead the way in opening up air travel. And I would hope that the US administration looks at the repeal of Section 212 sooner rather than later. I also think that, you know, the US is kind of, I think, representative of the importance of aviation. You know, there's a lot of focus on holidays, and holidays are important to give people something to look forward to. But the US is about trade. It is the UK's second biggest trading partner. The UK is the US's fifth biggest trading partner. The amount of foreign direct investment, you know, there's over a million people of British nationality living in the US, so there's a huge amount of visiting friends and relatives traffic. But the sheer amount of economic activity enabled by that relationship is significant. And you do business with people, not organizations. I think we do see fatigue with Zoom calls. We want, you know, we're hearing about people who want to invest in the UK and vice versa, saying you know they need to get back traveling again. And I think we're impressing that kind of perspective upon the UK government. You know, there's an expression in Ireland which I like. It says that you know if you want to buy the farm, you got to walk the land. And I think that's very kind of true when it comes to travel and investment and business activity as well. So I think in the near term, we should be leading the way. In terms of the UK-US opening up. And I think with the progress in Europe as well of vaccinations coming in the second quarter, that could be a template that others follow. In the medium term, yes, I do think that trade between the UK and the US will be a key focus. And I do think that presents opportunities. But, you know, British Airways was already a leader on the US market. We flew to more airports directly out of Heathrow than any other carrier in Europe. We serve 26 cities in the US and over 30 North American destinations. So the kind of breadth and depth of the network we historically have provided there has been a competitive advantage for us.

Peter Harbison:Yeah, I think there's no doubt obviously that the trade between the US and the UK and Europe is very substantial. But I think equally it's true that it's not going to be as big this year and next year as it was in 2019. So there's going to be a smaller pie, in other words. What you're saying, I think, is that if you can get there first, then you've got your, your part of the pie probably pretty well taken, whereas the others might have— I mean, Lufthansa, for example, talking about being a smaller airline. Everybody's going to have to cut back a bit. Does that, does that put you in a stronger position as a result of that, being able to move first?

Sean Doyle:Well, I think it would be a great opportunity if we could move early and I think we've got a number of sort of levers. One, I think a direct network really helps. I think if you're flying to more places directly, you just have an ubiquity of offering that tends to win. Second, I also think that the hubs are very important here. You know, both the hubs that we fly into at American, but the hub we have at Heathrow. Because if you look at the retirements across the industry, you're seeing aircraft like 75s and 76s retire. And that means a lot of secondary spoke-to-spoke operations between the US and Europe will inevitably shrink. And then I think the hub O&Ds will be the way that people will travel in the future. So I think optimizing the hub and redesigning our hub to really pursue that opportunity is something that we can pursue. And, you know, we have a very significant direct network, but we've got a fantastic behind network into both Europe, the Middle East, and places like Africa. So I think that's a big opportunity. And of course, we fly into places like Dallas and Chicago and into American hubs in the US as well, like Philadelphia. which give us the ability to attract behind traffic from spokes in the US. So I'm quite confident that we'll be, one, very relevant, and two, very competitive, and three, if we can get going earlier than the pack, even better.

Peter Harbison:Right, yeah. I know you come out of an alliance background in British Airways before you popped across the pond. You're very close partners across the Atlantic, American have been talking very keenly about using the smaller A321neos long range to connect both non-hub to non-hub, but also hub to non-hub, and even hub to hub. Is there an implication there that you've got a nice complementarity? Obviously, those aircraft are going to roll out fairly slowly, but it does sound like an explanation.

Sean Doyle:Yes. I think it's quite a nice balance. Funnily enough, I took delivery of A321neoLRs into Aer Lingus and we operated to Bradley. It was one of the first services across the Atlantic, so I'm very familiar with the technology. And Aer Lingus and Iberia have ordered the XLR as well, so I think we're committed to the potential of that narrowbody opportunity. But I think, you know, being able to fly smaller gauge aircraft with the unit cost efficiency of widebodies from places like US hubs into European spokes is certainly very exciting. And, you know, I haven't seen American's plans in detail, but, you know, that would be something that would be obvious to look at. But we were very excited about the LR in Aer Lingus, and I think the XLR is a better, you know, range version of it and probably a bit more complete in terms of design as well.

Peter Harbison:Yeah, there's been some— talking about Aer Lingus, I mean, there's been talk obviously about Aer Lingus playing a larger role on the North Atlantic than previously and using those narrow-body aircraft. It's a lower-cost operation even than British Airways. So, I mean, it does sound as if you've got the formula there together with the advanced timing to be a very powerful competitor in that market.

Sean Doyle:Yes, and I think, you know, for me, what we see is what alliances do is they just give you a lot more ways of getting people from A to B. And a lot more combinations and a lot of recognition, a lot of loyalty. And I think you can also create real synergies for travel buyers because you're offering a bigger range of solutions on the shelf. And I think, you know, those levers will be as important in the future as they are in the past. And we do see people combine itineraries. You know, they may fly out of the UK regions over Dublin and come back to Heathrow. And I think as both a group and as an alliance, we can enable that. And we've seen those type of itineraries really grow over the last decade as we've begun to enable, I think, you know, customer solutions which allow that to happen in a frictionless way. But there's a lot of opportunity we will still pursue, and we're very enthusiastic about making the most of these combinations of various partner metal.

Peter Harbison:Yeah, I mean, going back to the hub operation, okay, the US, North America is one end of that Looking the other way, Qatar is an important partner of British Airways. Is that, in terms of growing, regrowing the Heathrow hub, is that going to be an important partnership? How do you see the eastern side of your hub working?

Sean Doyle:Absolutely. I think Doha is a fantastic hub and the scale of network that Qatar have developed At some points over the pandemic, Qatar were the biggest airline in the world, and the sheer breadth of the network they provide to places that British Airways doesn't fly to, or maybe doesn't fly to with the same frequency, again gives us an opportunity to combine the networks and create real synergy. And it's a fantastic experience as well. I think anybody who flies Qatar knows about the standards they set, and they're a very important partner. We work very closely with Qatar. So I think as you look to the east and look to Asia and expanding our footprint, I think having a partner like Qatar is very important because, you know, I think our network isn't as developed into Asia as it is into the US, and that's something that we would like to rebalance over time. But I think the ability to offer connections over Doha to places that maybe we don't fly to yet or aren't significant in and combine them with direct services in the future, again, I think you win because you're just creating more ways to get people there and back.

Peter Harbison:Yeah, yeah. You, and talking of that, you made some forays into, or British Airways made some forays into China previously without a great deal of success, you'd have to say. Perhaps a bit premature, perhaps just the conditions for distribution weren't there. Do you see that, given that China is pretty much a safe haven now, Do you see that as being one of the ports you could start to open up, one of the networks?

Sean Doyle:Yeah, I think we obviously always look to China because of the sheer size of the market and the potential. But, you know, we have flown back into other points in Asia over the last 5 or 6 years, like Kuala Lumpur and like Seoul, that we had pulled out of in the early 2000s. So I think, you know, China is big, but Southeast Asia and North Asia is very big as well. And we'd launched Osaka in Japan, for instance, because we felt there was demand there. But I think what could be exciting about China this time around is the fact that the economy is maturing, obviously, and moving towards an innovation and a services-based economy. I think that plays more to what the UK has to offer because the UK, you know, is a very big services sector, a lot of financial services, a lot of insurance products. As China begins to develop, for instance, its sort of social security nets and systems, I think there will be a lot more business activity between the UK and China. And obviously, I think it's part of the economic strategy of the UK government. So I think the UK will have a lot more business to do with China in the future, and we want to be part of it. I think we also need to kind of have competitive visa arrangements as well. And I think that was one of the issues we saw flying from China into Europe. The transit visa arrangements that the UK had weren't competitive compared to Schengen areas. And I think we would be lobbying to have that changed if we were to think about areas like, you know, Chengdu we flew to, but I think that was an issue that we had to grapple with.

Peter Harbison:Yeah, yeah. So we've talked about Heathrow. What about Gatwick and London City? I mean, what are— how are your plans towards those airports now? Have they changed because of the pandemic?

Sean Doyle:Well, I think they have changed in the short term because we've consolidated our you know, A320 operation into Heathrow for short haul, and that will carry on for the foreseeable future. We do fly long haul out of Gatwick still, and we're operating out of Gatwick as we speak. And London City obviously has been hit hard with the reduction in the corporate and business segment, but I would be kind of very optimistic about London City as well because it's got 2 dimensions. One is it's a very convenient airport for business travelers, but if you look at the east of London The sheer growth in population, the demand actually for the leisure network out of London City has been something which I think people don't appreciate. So an awful lot of the traffic that we fly on our operation out of there is actually not corporate, and that's been a key growth sector. You just, you just get the train out of London City and you see the amount of residential development going on in the east. It's very exciting, and I think we've got a great footprint.

Peter Harbison:But that does have a lower yield profile as a result of that, presumably, and therefore sort of dictates the type of metal you use, for one thing?

Sean Doyle:Yeah, well, I think the type of operation we have is dictated by the airport. You know, the sort of runway limitations mean we're on an Embraer operation there, and it's got opening hour limitations that we have to work with as well. But I think, you know, London City has built itself as a reputation for convenience. It's got to be cost competitive as well, and we always emphasize that to the airport. And I think that's what we've been able to do. But I think for travelers in the east of London, they appreciate that convenience and, you know, the ease of using that airport.

Peter Harbison:Yeah, let's— so let's move to the real nitty-gritty for the future, the near-term future for international travel. Traffic lights, you name it, we've got everything. We've got We've got pre-vaccine, we've got pre-testing, we've got a whole array of different issues which, which you've got to confront, presumably largely on a bilateral basis if we're talking about the US. How optimistic are you that we'll see, for example, non-essential travel out of the UK by the middle of next month?

Sean Doyle:I suppose we had, you know, 2 communications last week, one from the Prime Minister and then a subsequent and communication from the Secretary of State. I think the first thing to say is it does represent a step in the right direction in that it's a commitment to reopen travel and it's a commitment to create a framework by which travel can reopen. And I think that's an acknowledgement that the industry is important and that the industry is a key, you know, lever in getting the economy up and running again. But I think we need to be more ambitious. I think the framework could be simpler. I think it could be more affordable. It could be more easily understood, and I think it doesn't need to be as onerous as it is to kind of manage the risks that we're dealing with. And I think the other thing the framework at the minute misses out on is the ability for vaccinated travelers to travel and be a lot less, you know, risk in terms of vaccinated travelers traveling than they would have been this time last year. And that's not really referenced in the framework. So, you know, I would hope that it gets better. as we get closer to the summer. But we won't really know exactly what that framework looks like until early May, both in terms of what countries are in what category and, you know, what it might evolve to. But our plea would be, you know, it can evolve to something a lot more straightforward that can still, I think, make sure that travel can be reinstated more safely. So things like, you know, PCR for green corridor travel, we think that should be lateral flow. And also, you know, we've done some work with Oxera here which shows that 2 tests, a pre-departure test and an arrival test, you know, is about 88% effective in reducing infectious days. And that tells you that the protocols for Amber are over-engineered compared to the risk that we're dealing with. So it could be better and it could be clearer. And, you know, we're making those points to government. And then I think you're right, we need to make sure that we have reciprocal understandable frameworks at the other end of route. What is, I think, encouraging is the advice the CDC gave a couple of weeks ago for vaccinated travelers. One, they consider travel to be low risk for people who've been vaccinated. And 2, international travel protocols for vaccinated travelers are much simpler for when they return into the US. Now that's for US citizens, but I think it is a more simpler, pragmatic solution that they've communicated and the one that we saw in the framework here.

Peter Harbison:Yeah, I mean, just in terms of the specifics, I mean, obviously Europe is a very big market for you, quite obviously, but it is going through at different levels, France particularly, some very severe third wave, and they're not getting on with the vaccinations anywhere near like the rate that you're doing in the, in Are you hopeful that we're going to get even an orange light, an amber light for any of the European countries?

Sean Doyle:I think we'll have to wait and see and look forward. My expectation is that when you get to the end of Q2, Europe is in a very different place. You would have seen Germany, I think, administered 710,000 vaccines over the weekend. They're really beginning to scale up their vaccine programme, and you do see a lot more supply come into the marketplace from various providers over the coming months. So I think Europe will get the kind of traction and see the benefits that places like the UK and Israel have been seeing in the coming months. So I think what government policy has to do is look forward to where we will be rather than anchored in where we are today. And we will be in a much better place. And I think if the policy and the framework anticipates that properly, we will see significant travel recover. But, you know, that would be my read of the situation as we're sitting here today. You know, the progress in the vaccination program here has been remarkable, and I think if you look at the data and the effect it's having, it does give us room for optimism.

Peter Harbison:Yeah, but I would assume, and obviously we don't know, as you say, that much of the travel in Europe is going to have to have some severe, some serious testing requirements on it. These are expensive tests as well, particularly when you're talking short-haul routes. I understand you've been doing something towards subsidising or helping reduce the cost of those, but it's a very substantial part of a short-haul fare, isn't it?

Sean Doyle:Well, look, I think, you know, the first thing is the lateral flow testing is very affordable, and we have a range of options there. And I think the government are looking about enabling, you know, lateral flow testing from the NHS to make travel more affordable. Because I think the Prime Minister did respond rightly to the challenge that you've got to make sure that if travel is enabled through a framework, that it's also accessible for everybody. Now, the second thing is we're working with suppliers and we're announcing a partnership today which will have PCR testing available for £60, which is a significant reduction on the cost that we would have seen over the last couple of weeks. So we think that the supply chain will become more affordable. But also, I think, you know, to deal with the risks we're dealing with, there could be a framework which has less tests involved. Now, what I would say is there's a huge amount of pent-up demand. Every time we see a travel corridor opened up or the government policy alleviate the travel restrictions, people want to travel because they haven't been traveling for 12 months. So I think we're working on the affordability supply side with our suppliers. I think the framework could be simplified to deal with the risks we're dealing with. And then I think that, yeah, there is a bit more complexity and a bit more cost to travel, but there's a huge amount of demand out there for people to get away. You know, I was looking at the VFR market alone. You know, a lot of people have not seen relatives or elderly parents for over a year, and that is one of the big emotional tolls this pandemic is taking. And I know when I get the chance to go back and see my family in Ireland, I'll be on a plane, I'll be taking a test, and I'll be going.

Peter Harbison:Got a lot of them here in Australia too, Sean.

Sean Doyle:Yeah, of course.

Peter Harbison:Irish and British. I mean, given what you were saying right at the start about how the UK government seems finally to have recognised that aviation is important to it, any likely movement on the holy cow of the APD?

Sean Doyle:I know there's a review planned, but I think, you know, we had a minor increase in APD, which was disappointing. You know, people have got to realize that aviation networks are probably the key enabler of economic activity. And if we want to grow to places like Asia, we need to be competitive. And APD makes the UK industry uncompetitive. So we'll be making the case that that needs to be part of a review if we want to have a strategic commitment to aviation and see aviation as part of Global Britain. And the government says it does, but I think it's got to follow up that commitment with real action. And APD is a punitive tax, and it's gone one way over the last 10 years, and it's about time, I think, it moved in the opposite direction.

Peter Harbison:Yeah, taxes tend to do that, don't they? Alan Joyce here in Australia, I meant to mention before, Alan Joyce, of course, has talked about, as you may well have read, that Qantas is going to have a requirement for any passengers boarding to have already been vaccinated. And also seen research that, that he says 89% of people, of Qantas passengers researched, agree with that strategy. Now it's obviously a government override on, on that sort of decision, but where do you stand on, on vaccinated passengers on BA?

Sean Doyle:I think we've been clear that it's a combination of Pre-departure testing, which I think gives people reassurance that when they're flying that it's very safe, and we know that it is very safe based on the data that we have, or also evidence of vaccination. The policy about how people can cross the border we leave to governments. What we're focusing on is the solutions to enable the verification of whatever you need to travel. So we've got 3 streams up and running. One is, as I said, we've been trialling a Verifly solution with American Airlines, which enables the digital verification of travel requirements. Secondly, we've got our own document verification portal on our app. And thirdly, we're working with IATA. And I think the IATA Travel Pass solution is exciting because I think you will get both the rules engine integrated with Tomatic, which we already use as an industry, but also you will get a verification portal up and running that the industry can tap into. So I think the solutions to meet the requirements of whatever a government will require for people to travel can be automated and made frictionless. But I think our job is to ensure compliance with the regulations, not necessarily from a British Airways perspective to dictate them. But we know that travel is very safe. We know the data from IATA shows very, very low incidence with people traveling. And I think all those incidents happened even before the ICAO reassurance framework was adopted by the industry in August. But that would be, be our position, and we've been consistent with that all along.

Peter Harbison:Yeah, I mean, there's another issue, isn't there, aside from in-flight transmission, and that is that aviation is by far the best carrier of COVID because it transmits it around the world. I mean, that's, that's a given. And the only cases we've had in Australia, for example, in the last few months have been returning Australians mostly. who've come in with something. So you do need a form of multilateral, to use a broad word, passport. There does seem to be a proliferation of them. I mean, you've mentioned a couple yourself, and then you've got the European Green Pass. How's that going to settle down? Do you think that can resolve itself quickly so that they're mutually recognisable?

Sean Doyle:Yeah, I think that the more people innovating in this space, in a way, the better, because it means that we have got a competitive dynamic going on in terms of creating this capability. And I think actually, you know, the more suppliers, the more solutions that various carriers can adopt. So I think having people who can perform verification and create apps that people can use is a healthy dynamic. I think what we will focus on is being able to integrate those APIs into our core airport processes and also being able to transmit, I think, that verification to various authorities in a way that's automated. So I think that the plumbing or the integration is actually very important. The app development in a way is the more straightforward part of it. But, you know, you mentioned about the art of travel. Like, the data I've seen from IATA on onboard transmission has been 42 cases across 1.2 billion journeys. And most of those cases happened before we implemented things like social distancing at airports. And the use of masks on board. And we do see, you know, that trend of actually, you know, minimal transmission on board an aircraft continue. I think an aircraft is a safer environment than many other places, you know, with the way the HEPA filters filtrate air and the other measures that we have taken. So we're not hearing any concerns about people traveling and the risk of transmission when people are traveling. And I think that's, you know, been more than supported by the evidence.

Peter Harbison:Oh yeah, I mean, and I don't want to get into a dispute about that, but I wasn't arguing that point. But I think actually, I mean, it's a whole lot safer being in an aeroplane than being in an airport once, once the numbers start going up.

Sean Doyle:Yeah.

Peter Harbison:I mean, you see some of the pictures out of the US, it's just, it's just ludicrous to have any talk about even spacing, and they've still got a lot of, a lot of activity on the COVID side. Yeah, so are you— I guess overall you're pretty confident that we can, from an industry point of view anyway, get some sort of cooperative approach to it. Where the problem seems to come though is when you've got to get governments at a multilateral level agreeing things. I mean, the industry has been pushing it, and I'm sure Willie will be pushing it very hard from IATA. How likely do you think that even the EU will see countries will see eye to eye at a government level?

Sean Doyle:Yeah, but I think in the EU you've seen, you know, the tourism-reliant economies, you know, move quickly. So countries like Portugal and Spain are keen to get sort of an aligned process up and running. You know, the green certificate process that the EU are looking at, I think, is representative of an understanding of the economic impact of not getting aviation back on its feet. And I think, you know, What I would say is, is the UK and the US is an opportunity to create a framework that others could adopt, because I think when there are rules of the game for opening up travel to the US, I think people will kind of converge on that because it's such an important market. And I think, you know, Britain's got leadership at the G7 this year. I think that's a great opportunity to coalesce on policies that could be adopted. And I do think we'll be much better if there's a coordinated approach than if there is an uncoordinated approach. At the same time, I think countries will adopt frameworks based on the situations they're dealing with at a point in time, and, you know, that will be something that we'll just have to navigate through. But, you know, if we could get a consensus, all the better. I think the industry is very good at reaching frameworks and adapting to various challenges. We've shown it over the last 50 years. You know, the way we responded to 9/11 is a classic example. But you're right, I think governments could enable a quicker, more coordinated return to safe air travel if they basically cross boundaries and align on an international framework.

Peter Harbison:Yeah, I mean, you can envisage a process where it's essentially based on bilateral bubbles which then hopefully expand a little bit or join up eventually. Certainly we're about to start on our little bubble with New Zealand next week.

Sean Doyle:Yes.

Peter Harbison:Which is, which is very encouraging. In very special circumstances. Sean, can I, can I turn before we, before we switch off to the elephant in the room? It hasn't gone away, it's still there, and that's, that's the environment and what the airline industry is going to do about it. I know you've been doing some, some work on, on some active work on SAFs, but I mean, what's the feel in the UK about It's the flow underneath all the sort of economic and industrial activity. What's the feel among some of the most radicals, I think globally, that you've got in the UK when it comes to aviation?

Sean Doyle:Well, I think the first thing which we've got to, you know, be clear about is that we're guided by the science. And IAG was the first airline group in the world to commit to net zero by 2050. And that's aligned to the UN Sustainability Development Goals. And I think it will take till 2050 for aviation to have, you know, things like zero carbon aviation solutions from a technical perspective. So, you know, one is this will take 30 years to fix ultimately. And I think the industry, you know, will very much align with the scientific objectives of the UN in terms of reducing the impact of carbon on on global warming. But I think there's probably within that framework then you've got near-term opportunities of which sustainable aviation fuel is very credible. You know, we've committed to a supply agreement with LanzaJet. We're committed to a joint venture to develop a SAF plant up in Humberside with Velocis. We're pushing the UK government to support that through the Jet Zero Council. We think you could build 14 SAF plants in the UK That would give jobs to many kind of remote parts of the UK and help the rebalancing agenda of the UK government. But also the great thing about SAF is you can just integrate it into the existing supply chains in a very efficient way. You know, it can substitute kerosene and airlines don't have to ship it to various airports because they can take credit for their commitment to SAF no matter who actually uses it in the ecosystem. And I think SAF is going to be very important for the next 20 to 30 years because there are some exciting developments coming. But I think for, you know, longer range missions or longer sector trips, SAF will be required. And I think that'd be kind of very expectant that it will form part of the framework. I think, you know, the second thing we're doing is obviously making the existing fleet more efficient. We're taking delivery of A320neos. 787s and A350s, and they're replacing older 747s that are retiring. And that will continue across our group over the next 10 years or so. And I think those aircraft are also, I think, far less noise polluting than the older aircraft are. So I think, you know, the capital investment we're making already in refleeting is significant. And then I think we're investing in innovators. So we've launched a joint venture with ZeroAvia We've committed to their recent round of funding. ZeroAvia have flown a hydrogen-powered turboprop operation. You know, they have ambitions to develop this technology, and we'd like to support that ambition. You know, hydrogen appears to be an exciting kind of area of development that not just ZeroAvia but other players are looking at. And now that's more radical, and I think it will take longer. But we've got to start placing bets right now to kind of find a solution that will get us to net zero in terms of, you know, in terms of kind of technology over the next 20 or 30 years. The other thing I would say is, you know, the industry has committed to Corsia and we need a carbon accounting framework for offset. And also we think that carbon capture commitments and investments will form a part of the framework as well as we get into the next decade.

Peter Harbison:Yeah, I, I guess my long-winded question was really more about, um, I mean, the things you're talking about obviously are, are necessary and they're going to come, but not much is going to come before 2030 in terms— I mean, ATAG's goal, I think, is, uh, 2% of SAFs by, by 2025. Uh, my question was really more directed towards, given that we've had a year of hiatus basically in aviation, Has that fuelled the fires of the environmentalists? Are you going to find it tougher talking to those people who'd like to climb on your aeroplanes at airports because we're going to be ramping up the volumes very quickly again?

Sean Doyle:I wouldn't find it tougher because I think we've got a great story that we've been telling for quite a long time. You know, British Airways was the first airline to invest in carbon offset back in 2002, and I think we've always kind of recognised that this is absolutely critical for the industry to take ownership of, to kind of retain its right to operate. Let's not forget, you know, people love travel. We have a challenge of a carbon footprint that we're dealing with, and I think we've got a very credible story to tell. So I'm quite confident that we will be able to communicate and articulate what we're about and also articulate the fact that travel is very important. It's very important to economic development. It's something that people love doing. And they can do it in a way that will be far more sustainable in the future than they have done in the past. And we shouldn't be shy about having this debate and taking it on.

Peter Harbison:You, of course, have got to— in the industry, you've got to have some sort of coherence. And we had the CEO of United on last month saying that, oh, carbon offsets are a total waste of space. You know, we can't plant enough trees, can't plant billions of trees that are going to have an impact in the next 10 years. Is there going to be that standardization, particularly if you get pressure points like the UK and like France and Germany, the EU generally? I mean, how do you address that?

Sean Doyle:I think we're going to need many dimensions. So, you know, Corsia and I think the EU ETS are, you know, forms of carbon offset and carbon trading which exist today. So they're up and running. We will need more. We need more fuel-efficient aircraft. I think we'll need new technologies to come along that I think if there is a marketplace for them in the form of carbon capture, replacing maybe carbon offset in the future, that becomes very exciting. So, you know, I think you've got to start the journey and I think it has multiple dimensions and I think we will push on many boundaries here. But yes, you know, I think it is going to be a key debating point. I think we come out of the pandemic, I think, you know, with certain changes in the political landscape as well, sustainability is going to be a key global priority and we're going to have to be part of it. We're going to have to be part of the solution.

Peter Harbison:Yeah, I guess particularly because President Biden is going that he's discovered climate change for the US and I think your Prime Minister has some personal contacts who feel fairly strongly about it too. So yes, we're going to have to do it.

Sean Doyle:I think, you know, The green economy is part of the economic pillar of the UK, and I think, you know, we've a good story to tell. It's got many dimensions to it. It will take a bit longer than other industries, but we will get there by 2050. But it means pushing on a number of fronts.

Peter Harbison:And meanwhile, you've got the big front to push on, which is getting your airplanes back in the air and filling them with passengers at different decent yields, I guess.

Sean Doyle:Yes, you know, That's our priority. And, you know, our people are ready. We're very excited to get back in the air. But, you know, hopefully we're in the final quarter of what's been, you know, the worst challenge, I think, for aviation, maybe this side of World War II. Well, it is. And, you know, we'll come out the other end.

Peter Harbison:Good luck with it, Sean. Thanks very much for talking with us on CAPA Live. Been great talking.

Sean Doyle:Great. Peter, thank you very much. Bye-bye.

Peter Harbison:Thank you. Bye-bye.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.