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Clearer Skies Ahead for BA

British Airways Chairman Lord Marshall looks back on his 21 years at the helm of the UK's flag-carrier and highlights some of the events that have redefined the aviation industry

Following is an abridged speech by Lord Marshall of Knightsbridge,Chairman, British Airways, at a Chamber Distinguished Speakers Luncheon on March 26.

Over the 21 years since I joined British Airways, the international passenger market has grown by an annual average of more than 6 percent and freight, by 7.5 percent. This means that passenger demand has tripled over that period and the cargo market has quadrupled. A pretty steady business, you would think.

Yet, behind those benign averages lies a white-knuckle ride for even the most hard-headed of business people. In this industry, exhilaration and exasperation go hand in hand.

Outstanding -- even breathtaking -- technical, customer service and business achievement vie for attention with disappointment and disaster.

In recent years, fortunes have been lost and great companies have gone out of business as the industry came under siege from a sequence of appalling events outside its control.

Since 2000, airlines have made collective, global losses of more than US$30 billion and around 400,000 jobs have been shed.  Some famous names like Swissair, Sabena, Air Afrique and TWA have been wiped off the airport information screens.  The major U.S. airlines have clung on because of government handout and loan guarantee, not to mention the cosy cushioning effect of the Sherman Act (not that we would seek such uncompetitive remedies).

At British Airways, I am pleased to say that we have survived the onslaught, even though the situation has been extremely tough and extremely worrying at times.  In the 2001/2002 financial year, we recorded our first pre-tax loss in 20 years.

Serious concerns were raised in the U.K. media about our ability to pull through.  Some commentators felt that BA was heading for the last runway.

We have come through more or less intact and so have our partners in the Oneworld alliance, most notably for Hong Kong, Cathay Pacific and Qantas.

Security

One of the issues which has defined my time in aviation is security.  The industry was already in a state of precaution following the spate of hijackings during the 1970s.  Then came incidents such as the loss, presumed sabotage, of the Air-India 747 over the Atlantic Ocean; the hijacking of the TWA 727 in Beirut; and, of course, the Pan Am Lockerbie bombing of 1988.  Security against what we might call conventional terrorism became pretty effective, but then, shortly after the new millennium began, a quite different terror phenomenon appeared.

The appalling events of 9/11 in New York, of Bali and of 3/11 in Spain, together with a background of armed conflict in certain world hot spots, placed us in a new dimension.

Without doubt, security is now the defining issue for all of us, wherever we are and whatever we do.

I don't know what the current climate means for other business sectors, but at British Airways, we have spent an addition of 100 million on enhanced security since September 2001. The cost to the industry of new protective measures since 9/11 is some US$5 billion.

Clearer skies

The irony of all this is that the economic outlook appears better than it has done for some while.  Ever an indicator of economic conditions, air transport is -- all things being equal -- expecting 7 percent growth on global passenger traffic and 4 percent in cargo volumes this year.   On services within the Asia-Pacific region, a 14 percent increase in passenger business is forecast (albeit compared to a 9.4 percent downturn last year because of SARS).

British Airways is far from the biggest player on the global scene, but we are proud of our long record. We have, for example, now been serving Hong Kong (with one notable break) for almost 70 years. We employ directly some 162 people in Hong Kong and provide work for many more.

The airline is planning to increase its investment here, with an increase in Hong Kong-London frequency from 14 to 17 flights weekly in June.

We are also weighing up new opportunities for expansion in China, following the recent conclusion of a progressive new air services agreement with the U.K.  We will initially be stepping up frequency between Beijing and London -- going from three to four flights weekly next month, then to five flights weekly in June.

I am pleased that the further strengthening of links with Hong Kong and China will begin before I step down in July.  After then, I will follow progress with great interest and much pride in our long relationship. 


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