‘Meeting Of The Minds’ With IAG, CEO, Willie Walsh & Qatar Airways, Group CEO, H.E. Akbar Al Baker

Transcript

Peter Harbison:Now we have a lot of issues to discuss. I think it's— and particularly it's interesting because IAG and Qatar are quite closely linked in terms of vision, but also in terms of shareholding from IAG in— from Qatar in IAG. But first, I want to start with something that raised some dust yesterday and just sort of try and clear the air and find out where we need to be going. Akbar, if I could just address you first of all. Yesterday, you were variously quoted, and the context isn't entirely clear, but you were variously quoted, and this one I think I took from BBC World. You said, when asked about whether your airline could be led by a woman, of course it has to be led by a man because it's a very challenging position. Now, I'm not sure that was verbatim. We haven't seen the transcripts. What did you mean? What did you say and what did you mean?

H.E. Akbar Al Baker:Quite frankly, I think the press took it out of context. They exaggerated, they blew it out of proportion. It was just a joke. I didn't mean it in the way it was meant to be. I apologized for it and, you know, as a leader, you should always when you do something that is taken in a wrong way, it is not a problem to apologize. As a matter of fact, quite the contrary. I was the first individual in our region to encourage women to come and take positions in Qatar Airways. We were the first to have women pilots. We were the first to have women engineers, including to the top of the echelons of our engineering. 44% of my staff, not 33% like I said yesterday, are women. I was corrected by our HR department. We have even senior vice presidents that are women that report directly to me in the airline. And we have more than 150 women pilots given scholarships including foreigners in my airline to become pilots. So you can see that it is really— we have gender equality and it is by law in my country that women have to be treated the same as men. So, you know, always media would like to sell their publications and blow out of proportion. And in the same context, when I said that word, I also said, as a matter of fact, A, B, C, D. So they only took one word and, you know, just made a big issue about it.

Peter Harbison:But you did say it has to be led by a man now.

Willie Walsh:You know—

Peter Harbison:That's quite unambiguous. Do you believe that?

H.E. Akbar Al Baker:No, I don't believe that. As a matter of fact, Air Italy, where the majority shareholder has shortlisted women to be the CEO, And Qatar Airways, as a minority shareholder, we are actively encouraging that. So whatever I said was, you know, as a joke, and what I meant is that, you know, this is a job that has a lot of pressures, especially in our region. But I didn't mean that I would discourage any woman to come and take my position. You know, it was just a joke, everybody laughed, and I thought that was the end of the story. So, and unfortunately, I'm very I'm very open with the press and very transparent. In future, I will have to make sure that the individual that exaggerated was not necessary, so I will be very careful next time what I say. I will try to control myself.

Willie Walsh:Starting now?

H.E. Akbar Al Baker:From now, yes.

Peter Harbison:Oh no, don't start now. But look, this was said in the context, of course, of a media conference where you were the incoming chairman of the Board of Governors of IATA. IATA, for a number of years now, this pressure has been building up to have more women. Lots of pictures of the Board of Governors with no women or one woman. It's going to be very important, I think, in this coming year, given the external climate, the MeToo climate, for IATA to be putting out an image, not more than an image, a reality that women are much more important that we need to do something to encourage high-level women in the industry. Is that something that you can take leadership with in the coming year?

H.E. Akbar Al Baker:As the Chairman of IATA, I will definitely endeavor to do that, to bring more women in, hopefully on our Board of Governors. Unfortunately, there are not many women that are applying. You know that you have to apply. for being on the Board of Governors.

Willie Walsh:We elected 2 women to the Board of Governors. Exactly. So, you know, it's clearly a long way to go, but I chaired the nominations committee where, you know, we were pleased to have Christine and Maria José Hidalgo from Air Europa put forward, and the nominations committee unanimously agreed to include both of those. So it's a start. Long way to go, and I'm sure under Akbar's chairmanship we'll encourage more. I have no doubt that this whole debate should encourage more. So, you know, it's important, I think, for IALPA to reflect the industry, and it hasn't in the past reflected it. If you look at the Board of Governors in the past, actually it was predominantly, you know, middle-aged white men from Europe. We have more diversity on the board now than we've had in a long, long time, but we definitely have to strive to improve that situation.

Peter Harbison:This is an issue that CAPA's been pushing for quite a long time. We did quite an extensive report back in 2010 on it. I only raise that not to promote CAPA itself, but to say that at that time we did a survey of 2,000 women Sorry, 2,000 airlines around the world and found that there were 7 airline CEOs. Today I think there are 5 or 6 women CEOs. So it's not just an IATA issue.

Willie Walsh:No, it's an industry issue.

Peter Harbison:It's much bigger than that.

Willie Walsh:Well, we have 280 airlines in IATA. I think there are 6, from memory, female leaders in the— represented in IATA. So we have 2 of those on the Board of Governors, and I've no doubt we, you know, going forward, there will be change. There has to be change in our industry.

Peter Harbison:Yeah.

Willie Walsh:But, you know, I've said this before, I think what disturbs me when I look at the airline industry is that we're not succeeding in encouraging girls to consider aviation as a career, and we've got to do it at that level. We've got to get into the schools. You know, it's not— it's important that people look at our industry as an industry that they can aspire to join. And when I was running BA, I used to address the graduates when they would come in, and my most important point to them was that every single graduate in the room should aspire to having my job, should aspire to being the CEO, and there's no reason why they couldn't. You know, if I can be the CEO, you know, given my background, there's absolutely no reason why any and every one of those couldn't aspire to do it. And that's what we need. We need people who want to aspire to be leaders in the industry.

Peter Harbison:And create an environment when they do get further up the chain that they feel comfortable with.

H.E. Akbar Al Baker:Yeah.

Peter Harbison:So, Akbar, I guess this in a way, if we can get the right response to this, this could actually put you in a position where with your leadership of IATA during the coming year, you can actually lead IATA into this new era perhaps. I mean, maybe they're always looking for a silver lining.

H.E. Akbar Al Baker:Well, like Willie said, that we need people in the top echelons of airlines that will put their name forward to join on the Board of Governors. But at the same time, IATA itself, I will endeavor to push IATA to recruit more and more people, especially now that we and the Board of Governors and on the chair committee are directing IATA to have succession plans for senior management, and we will include that ladies be included in this process. It's important for us to see more and more ladies involved in senior management positions in IATA, which is not the case today.

Willie Walsh:Hmm.

Peter Harbison:Good. And we have had a lot of discussions recently about this topic, so I won't labour at the point anymore. But thank you for the clarification. I hope that sort of lays some of these issues to rest. I'm sure it will reverberate around the industry for a long time because it's good news.

H.E. Akbar Al Baker:It's news. We have made just a release only a couple of hours ago, me apologising if I have offended anybody. At the same time, I put it in context what exactly Qatar Airways is and what women mean in Qatar Airways. We have both gone on the social media and we have issued a press statement. So I hope that this issue will be laid to rest where people will get the entire picture of what exactly I said and what we stand for.

Peter Harbison:Thank you. And finally, there is just across the water from you a woman CEO of Iran Air. Do you see there being a woman CEO of Qatar Airways in the next decade?

H.E. Akbar Al Baker:No, as a matter of fact, I greatly appreciated her. She was the first— actually, her first visit as the CEO of Iran Air was to Qatar Airways. to see how they could cooperate with us in codeshare and doing joint flights. She also put her name to be in the Board of Governors of IATA. Unfortunately, she didn't get enough votes. And I will be delighted— as a matter of fact, I said exactly the same thing yesterday, that I will be delighted if a woman comes forward that would like to take the reins of Chief Executive of Qatar Airways, I will do my best to bring her up to speed to replace me. Why not? And this is— I said it yesterday, but, you know, like, press got too excited and they just took the tail end of what I said.

Peter Harbison:Right. Thank you for that. Now let's talk about some of the other issues that confront the industry. I was mentioning to Willie before, one of his Irish colleagues when we were in Dublin a couple of weeks ago said to me that being an airline CEO is like being constantly at war. You're always fighting a battle on some front. At the moment we're talking about fuel and about strikes, this sort of issue, and underlying the whole basis of aviation is the Is this the ownership and control rules, the fact that mergers aren't possible, all sorts of economic regulatory things that make life very, very difficult for airlines. You, Akbar, have been one of the leaders in acquiring equity shares in other airlines.

H.E. Akbar Al Baker:In successful airlines. Don't forget.

Peter Harbison:I thought you might say that. I won't ask you the other ones. But you have a 20% share in IAG, which I think has probably proved to be quite a good investment if I'm—

Willie Walsh:It's an excellent investment.

H.E. Akbar Al Baker:Well, I agree, it's an excellent investment. As a matter of fact, we are not 20%, but we are just shy of 21%. Unfortunately, you know, we are at the limit of foreign ownership of a European carrier. So I would be delighted because I have so much confidence Not because Willie is sitting next to me, but we have full confidence in his leadership and management of IAG, and you can see from the results our opinion was correct.

Peter Harbison:Do you see, I mean, this is an— there are 2 issues here. One is the equity investment, the other is partnerships of one form or another, and you can have partnerships without equity investments. Does it make a big difference to have the equity investment from your side, Willie, for example?

Willie Walsh:You know, it's an interesting one. I've talked about this many times and there's a good example. British Airways invested in Qantas and held a 25% stake for a number of years. And just before I joined BA, BA sold their stake. And quite honestly, you know, when I looked at the history of that, what I saw was the— there was confusion. The equity created confusion in the relationship.

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:So we're very clear, you know, Qatar has a an equity stake in IAG, but the work we do together is purely commercially driven. It's driven by the fact that we see opportunities to work together. It's not in any way influenced by the stake that he holds, and that's important. And that was a lesson that I think we learned from what happened between BA and Qantas, where—

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:There was always suspicion about the relationship. You know, was BA interested because they a shareholder, or was BA interested because there was commercial opportunity? And quite frankly, I think in that particular relationship, because if you— those of you who can remember, and I've got a picture of it in my office in London, but when it was announced that BA took a stake, big billboards outside of Sydney Airport, these are full-size billboards, said, piss off, Poms. So the reaction in Australia to BA taking a stake in Qantas at the time was very negative.

Peter Harbison:Yeah.

Willie Walsh:When BA sold the stake, the relationship actually improved. And it's not because, you know, it was the right thing to do. It's because the history of that investment was clouded in suspicion. That's completely different to Qatar having the stake in IAG. So, you know, we worked together and looked for opportunities to work together before Akbar had the investment and we continue to look at opportunities and we have, we've addressed a number of opportunities where we work jointly. But that's something we would do because it's, you know, a commercially based decision and it's not influenced by the fact that he's a shareholder.

H.E. Akbar Al Baker:And as a matter of fact, you know, we don't sit on the board of IAG, we don't intend to sit on the board of IAG, we don't interfere in the way they do business, we don't interfere in the decisions they make. Because we feel that this is a strategic investment. It is not an investment to benefit from the dividends and then get out. This is a long-term commitment from the State of Qatar to IAG, and we will continue to do so in that manner.

Peter Harbison:So, well, let's dissect this then. Ignoring the equity investment, you do have partnership in various forms, obviously the Oneworld membership as well, but what are the key ingredients that do make a partnership on this level work? I mean, I'm sure you've heard Richard talking about the bromance here. I mean, obviously a relationship between the key players is critical to it.

Willie Walsh:I would agree. I think it's important that, you know, where you have a joint venture strategic strategic partnership. There has to be an ability to talk to one another. Clearly, that has to be done on the basis of competition rules, but having an understanding, a joint vision of where it's going, is absolutely critical. And, you know, we have a very successful joint venture with American and Finnair on the transatlantic, BA and Iberia. Works very well. That was tested with the change of leadership in American, where we had a longstanding relationship with Gerard Harroppe and then Tom Horton. And then the US Airways team came in. I knew Doug for many years. But you had a change in approach. It's no secret that we then had to work to develop a relationship again.

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:I think the US Airways guys needed to appreciate the fact that there was value in that relationship. relationship. And once you get there, then, you know, working together does become easy, but you've got to be able to talk to one another. And I think a good example of that actually was Qantas and Emirates. You know, Alan and Tim clearly got on well together, and that makes the teams work well together as well.

Peter Harbison:What are the secret ingredients from your point of view, Akbar, in a good partnership?

H.E. Akbar Al Baker:Well, it is understanding each other. Being cooperative, taking our businesses forward together as a win-win for both sides, which is extremely important when— and most importantly, to have confidence in the organization of the other side.

Peter Harbison:I guess, I mean, obviously, I mean, it's sort of implicit in this, we have a mutual interest in doing it. And I think in your case too, there's this complementary role now with with a shortage of aircraft in BA, for example, in picking up some of the slack. I mean, that's an ad hoc example.

Willie Walsh:But that's a great example of where you can work together. So, you know, BA is facing a shortage of 787s because of the Rolls-Royce Trent 1000 problem, and it's great to, you know, be able to contact your partner and say, you know, can you help us? And Akbar is a great partner. So having that relationship actually has a lot of value. And it's done on a commercial basis. So we're wet leasing in Qatar's aircraft on a commercial basis. But I know he's making a special effort to make the aircraft available for me. And that is the value of having relationships like that.

Peter Harbison:You also have the investment in LATAM. Do you feel the same sort of chemistry?

H.E. Akbar Al Baker:Absolutely. In LATAM, we are conducting our business the same way as we are doing with IAG. Unfortunately, the regulations of Chile requires that the shareholder of X number of percentage should have a board representation, so we have a representative on the board, but we are working very constructively, and like IAG, LATAM also had required a narrow-body capacity and we are talking to them. Whilst they had excessive wide-body capacity, which we have leased aeroplanes from them, of course on dry lease because we have— we like to conduct our own business with our own crew. We have just shy of 10% of Cathay Pacific.

Peter Harbison:And IAG?

H.E. Akbar Al Baker:And my friend Rupert has not seen my face except at IATA since the time we have taken the shareholding.

Willie Walsh:Right.

H.E. Akbar Al Baker:So it also shows that we take strategic decisions and we don't interfere because we have confidence in the management and we are only taking equity in winning airlines. We took a minority holding in Air Italy for the very simple reason We see that it's a huge market, doesn't have a strong national carrier, and Italy is not connected to the world. So we see another opportunity where we will be able to grow our business. And I don't know, maybe in future one of our equity partners may want to take a stake in Air Italy.

Peter Harbison:Now there's an offer. Well, I'll ask Rupert about it later.

Willie Walsh:Exactly.

Peter Harbison:So you also, of course, did make a minor play for American Airlines and moving on to that continent. We've just seen after a period, I think, which is probably one of the less attractive periods in my life in aviation history of the attack against the Gulf carriers without looking at the rights or wrongs of the issues themselves, but just the way it's been done. Are you satisfied now that the Do you think the resolution of the last couple of weeks is going to lay this to rest, or is it still something that's an issue?

H.E. Akbar Al Baker:Actually, our resolution is not a couple of weeks ago, it is nearly 10 weeks ago. We were the first to sit down across the table with the Americans and talk to them and let them understand the way we do business. Qatar Airways was already releasing its accounts in the past. It was on our website. We had no intention to go 5th freedom from Europe. We used to do it nearly 10 years ago and we stopped doing it once we received our ultra-long-haul aircraft. So what was achieved after all these millions that was spent by the 3 carriers? We were doing what they wanted us to do anyway, so there was no need. If they have issue with some other airline, then they should sit across the table and speak about that airline, but not put everybody in a basket, which was not necessary. Actually, the whole thing was that they were getting worried about the competition, and the competition is good for the traveling public. You know, we are— imagine if we or they succeeded, all the 3 Gulf carriers, stopped from operating into United States, where will this huge diaspora from the subcontinent be able to travel? This is just a way to jack up the fares so that they will take the traveling public to the cleaners. We are operating on a level that we have to make profit. You know, we don't get handouts from our governments as people think. I as a CEO don't want to have handouts from my government. We are a very robust airline. And yes, in this aggressive growth period, this is an investment. So our bottom line will be affected because we are continuously investing. And once we stop our growth— That's a good point. Then of course you will see the kind of profits we will make. Unfortunately, my results, as I said, will not be good due to the blockade. And we are doing our best even in this difficult time to keep our chin up, keep on growing, and keep on serving our partners in which we have a stake. And, you know, giving wet-lease aircraft to to British Airways didn't mean that we have aircraft parked. As a matter of fact, because it is— we have an ownership, we have a stake in the airline, we want to help the airline, we as a matter of fact reduced frequencies in our network to release capacity to help British Airways.

Peter Harbison:So do you see this being an end to this This whole affair or is it just a pause as opposed to a freeze?

H.E. Akbar Al Baker:Unfortunately, you are talking about the blockade?

Peter Harbison:No, no, I'm talking about the Big 3.

H.E. Akbar Al Baker:Well, I don't think they have any other issue to talk about. It should be the end. It should be the end because we have now accepted or we have clarified our position. And the American administration have accepted it. So I think now I don't know what other excuse they will make because they didn't win.

Willie Walsh:One of the examples that has been given, and I've corrected it, but when people use the example of what's happened with our business to say there's a problem without understanding what has happened. So they demonstrated that traffic flows from India to the U.S. over our hub had significantly reduced with the arrival of the Middle East carriers. The reality of it is we didn't want that business. When you look at it, this was, you know, overcapacity that British Airways was putting into the Indian market to serve the direct market. We were using 747s. We were filling it with transfer traffic and transferring low-yield traffic over the most expensive hub airport in Europe. It was unprofitable.

Peter Harbison:Mm-hmm.

Willie Walsh:So we resolved that by getting the right aircraft to serve India. And we now serve India with the 787 and the 777. And it's a sensible approach to us. And the idea that somehow you own traffic is complete nonsense. Nobody owns the customer. You have to work to make sure the customer wants to fly with you. And that means you've got to offer products that the customer wants at prices that the customer is willing to pay. But it was a strategic decision by British Airways taken many years ago, just after I joined BA, that we needed to realign our network into India because sending— we served 5 cities using 747s, which were too big to serve the O&D market, and transferring traffic at Heathrow, which is inefficient from a transfer point of view in terms of large volumes. It was designed— G5 was designed for transfer traffic levels of about 35%. But it's the most expensive transfer hub you could find. So, you know, this was a formal decision that we took to reduce the amount of transfer traffic that we were flying from India into the US. It's made our Indian operation more profitable and it's made our transatlantic operation more profitable. It was commercially driven. It wasn't driven because we were worried about the Middle East carriers. And as I pointed out to people, you know, the first place that the Middle East carriers have flown to is London. Emirates has been in London since 1987. And we fly direct to Dubai, we fly to Doha, we fly to Abu Dhabi, we fly to Oman, we fly to all of the major cities in the Middle East, and they're profitable. You know, Heathrow-Dubai, going head-to-head with Emirates, we make very good money. They make good money, we make good money. So, you know, I've always had respect for the Middle East carriers because face-to-face, going directly in competition with them, we've been able to do it in a successful way. And that to me says these are commercially driven entities.

H.E. Akbar Al Baker:Sorry to interrupt you, Peter. Let's see now the 3 American carriers stated that they were not able to serve the subcontinent and and the Middle East because of the 3 Gulf carriers being subsidized by their state. Now that they have got the agreement what they wanted, let's see how many flights now they will put into the subcontinent. I will be very interested to see.

Peter Harbison:I think we all will. And what I was going to say, I mean, in response to Willie's point, I think it's probably not unfair to say that most of Delta's push and most of, to the extent that United is pushing as well, has been to support their joint venture with effectively the German and French hubs. So that it's Lufthansa and Air France they're fighting for as much as anything. And they're the hubs that are taking, have always taken quite a lot of, particularly Lufthansa's hub, a lot of traffic from India. Is that a fair assessment, do you think? I think that's a fair assessment.

Willie Walsh:It probably is, because, you know, to argue that the American carriers can't serve the region profitably, they never really had a presence there. You know, like Akbar, I hope that they will now that they've achieved what they set out to achieve. I hope we will see them serve the market there. But it's a very competitive market, and, you know, everybody's willing to try. Everybody's open to try. We're very pleased with the way our business is operating. But I've never bought into this idea that this was unfair competition. We know that Emirates have been publishing their accounts for years. Akbar's been publishing his. I think the arrival of Etihad sort of did change the landscape a little bit because, as everybody knows, Etihad was playing catch-up.

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:And was They were doing things that people questioned. And I'm not going to have a go at Hogan. He's retired from the business and I wish him the best. But everybody looking at the strategy that they were pursuing did question whether this was a sustainable strategy. And we can see from what's happened recently that it wasn't. So it's played out pretty much the way everybody thought. I was interviewed probably at a CAPA event a number of years ago where I said that I can see a sustainable case for 2 major hubs in the Middle East. I struggle to see how 3 can operate in a sustainable manner. I still believe that. And with both Dubai and Doha established as the number 1, number 2 hubs, it's always going to be difficult to create a 3rd hub. And I think that's what happened. Etihad struggled to do that.

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:And we've seen what's happened.

H.E. Akbar Al Baker:You know, to buy airlines and take equity in airlines to feed into your hub to increase your passenger numbers doesn't work. Well, the proof has already been in the carrier in our region.

Peter Harbison:The Director General yesterday was talking about the whole issue of freedom. I mean, I think we tend to talk about the airline business and forget that we're human beings as well. I'm living in a remote country, well actually it's the centre of the world, Australia. I mean, it's really hard to grasp the impact that having the Gulf carriers in this market have made over the last 15 years. I mean, it's massive. The number of flights, number of seats into and out of Sydney per day, you've now got 2 widebodies in Sydney. Emirates, I think, 3.

Willie Walsh:4.

Peter Harbison:4. Sorry, you need some more, I know. I mean, it's transformational, and the impact it's had on every one of us in this country has been quite phenomenal. It's— that's the freedom bit that Aleksandr Zuniak was talking about, and we tend to forget that when we talk about all the technicalities of what's right and what's wrong. So thanks.

H.E. Akbar Al Baker:Your Deputy Prime Minister stated yesterday the growth in arrivals, and this is, this is fed by us, the increase in frequencies.

Peter Harbison:Going back to— I was thinking yesterday, Willie, when we were talking about infrastructure shortages in Europe, I mean, obviously every major hub in Europe is constrained to a greater or lesser extent. I really wonder if we, if we hadn't had The capacity being, if you want to call it, diverted through the Middle East over the last 20 years, whether even a small portion of that traffic could have come over Europe in any case.

Willie Walsh:I don't think it could. You know, I think the Gulf has been the relief valve. You know, Heathrow, all the major hubs, as you've said, in Europe are full and have been full for many years. We've had no new capacity, no real new capacity in Europe for a long, long time. So, you know, something had to give. And I think it coincided with the, you know, Akbar taking over Qatar in '97, the creation of Emirates in '85. What was Etihad, 2004?

H.E. Akbar Al Baker:2005.

Willie Walsh:2005. You know, so it did, it did provide a significant relief valve and provide people with an alternative way of, particularly as you say, getting to Australia, the centre of the world. I didn't realise that until I came here.

Peter Harbison:No, well, these are the things you learn when you come. You should come here more often, Willie.

Willie Walsh:Yeah.

Peter Harbison:Let's jump— I'm not sure how much— how we're going for time because I don't have a timer on here. If you could just let me know.

Willie Walsh:You've got one at the back there. You've got 2 minutes and 36 seconds for some controversy. Let's say something controversial.

Peter Harbison:Thanks for lighting my eyes on that. Good. 2 minutes to talk about another market that's quite important, China. It's a really hard market to serve. Willie, you've found that.

Willie Walsh:Yeah.

Peter Harbison:Low yielding, potentially quite fragmented because there are lots of different points to serve.

H.E. Akbar Al Baker:Yeah.

Peter Harbison:And from your point of view, I guess, fairly restrictive in terms of access to the market. Where do we go?

Willie Walsh:China will be a fantastic opportunity. It has been a challenge. So we fly very successfully to Beijing, Shanghai, Hong Kong. We tried Chengdu with the 787, which we thought was the right aircraft. What we discovered was that there wasn't good two-way traffic. We weren't getting the levels of business demand that we had thought we were getting. We were getting good cargo. but it wasn't enough to make it financially successful. And the challenge will be, anybody looking at network planning where you've got a limited number of aircraft and a limited number of slots, you're going to try and use those aircraft and those slots in the areas that will make the most money. And the truth of it is, we can make more money flying to the United States still today than we can— but we want to have a network into China. I think the other challenge for us, as a Oneworld alliance was that we didn't have a domestic partner. And that's something we've been trying to work on. So with Air China in Star and then both China Eastern and China Southern in SkyTeam, Oneworld was left without a domestic one. Now, we had a great relationship with Cathay and Cathay Dragon over Hong Kong.

H.E. Akbar Al Baker:Mm-hmm.

Willie Walsh:But it wasn't the same as that we the other alliances had. So I think China is going to be a fantastic market. You can see the demand for tourism into and out of China is fantastic. But one of the biggest impediments that we had, leaving aside all of the issues in relation to the particular market in Chengdu, was we couldn't transfer people over Heathrow because of the UK's visa policy.

Peter Harbison:No.

Willie Walsh:So if you were in Chengdu and you wanted to go to the United States, Heathrow was the last place you were going to look at because you had to apply for a UK visa and the challenges of getting a UK visa in China were just prohibitive. The cost of it, the administration of it. So people went over the European hubs and we were losing out as a result of that.

H.E. Akbar Al Baker:I agree with Willie. Is a very good market even for us. We have very high load factors. Like him, we are also just on the borderline in Chengdu and Chongqing because we are restricted by traffic rights. We only have 3 frequencies to each of these 2 destinations, but it's a very good cargo market, so we carry a lot of cargo in the belly of our aeroplanes. We operate 7 destinations in China including Hong Kong, and we hope that China will release more slots for foreign carriers in order to really meet the demand. Already, Cathay's hub in Hong Kong is completely saturated. They now need a 3rd runway and additional terminal capacity. So, you know, there is a big Big demand, but not enough slots available. The second growth market is India, but India is also facing the same infrastructure problem. And you know, capacity management—the the ATM in India—is not what it should be in order for them to release the capacity that is available for the growth, but is not efficient. So we're looking at these 2 markets for the future growth of our airline. And of course the 3rd continent is Africa.

Peter Harbison:Yeah, for you particularly, increasingly competitive. Just staying on China though, and one last question on this, we've seen both American Airlines and Qantas partner and actually take equity in 2 of these SkyTeam carriers, separate SkyTeam carriers. carriers, as it happens. Is partnership really going to be the only way to service the Chinese market?

Willie Walsh:No, I think it is one way. And American has a very good relationship now with China Southern. British Airways is now co-sharing with China Southern. So we have started doing some work outside of the alliance structure. And I expect that to change. So I'm hopeful and optimistic that what world carriers individually will have better bilateral relationships with some of the Chinese domestic carriers. So that's why I say China will be a great success for everybody. It's just going to take a bit of time. But for us, as I said, the biggest impediment actually for a UK-based airline is the UK government's attitude to visas. And it's just creating a major obstacle to make it efficient. We know that there are millions of people in China who want to travel to the UK but are discouraged by the cost of a UK visa, and they're, they're going to places like Paris, Frankfurt, Amsterdam, and the UK is, as an economy, is losing out as a result.

H.E. Akbar Al Baker:And Qatar?

Willie Walsh:Of course.

H.E. Akbar Al Baker:Where they don't need visa to enter.

Willie Walsh:We're going to have a row now, Akbar, so—

Peter Harbison:Last, last question, Willie. Is BA going to continue serving Australia?

Willie Walsh:Yeah, and I'll be honest, if I go back to when we finished the relationship with Qantas, which was very amicable, you know, and you saw it, you know, Alan and I are great pals.

Peter Harbison:Yeah.

Willie Walsh:You know, when, when we decided that, you know, Qantas needed to go in a different direction, I thought that would probably be the end of BA serving Australia. So we decided that we would commit to the route and make it see if we could make it work, and it's been very successful. You know, we changed to a 777-300ER from a 747. That changed the economics on the destination. We're flying here over Singapore, and it's working very well for us. So I fully expect BA to continue to have a presence here in Sydney. I'd like to think we could expand back into Melbourne at some stage. We're not looking to do direct flights from Heathrow to Australia. You know, I think Alan has successfully pioneered that.

Peter Harbison:Not even codesharing?

Willie Walsh:Codesharing is an option, but, you know, in terms of using our metal, we're not considering it. And personally, you know, the idea of sitting on an aircraft for 21 hours to get from Heathrow to Sydney, I don't know, it just doesn't appeal to me.

Peter Harbison:Alan likes it.

Willie Walsh:Alan, well, you know, Alan Alan's different, he's too happy, that guy.

H.E. Akbar Al Baker:Well, if he wants more capacity, you know, we are open to co-chair. We operate to 4 destinations in Australia and, you know, we have a close relationship.

Peter Harbison:Gentlemen, thank you very much for that. Really appreciate it. I hope you found it interesting. Let's give them a big hand. Thank you very much.

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