Walsh: Rules limiting foreign ownership of European airlines are “ridiculous”

Aviation rules limiting foreign ownership of European airlines are “ridiculous” and a fresh bout of consolidation is needed in the sector to boost revenue, according to Willie Walsh, the chief executive of British Airways and Iberia owner IAG.

Airline alliances such as Oneworld, of which IAG is a leader, exist only because of restrictions on mergers for which the three main global groupings and are a “poor substitute”, Mr Walsh said at an international aviation conference being held at by CAPA in Co Wicklow, which was also attended by Aer Lingus boss Christoph Mueller, Dublin Airport Authority CEO Kevin Toland and the head of US carrier Jetblue, Dave Barger.

“The alliance gives you good revenue synergies, but consolidation gives you cost and revenue synergies,” Mr Walsh said.

IAG was formed through a combination of BA and Iberia in 2011 and has since bought BMI from Lufthansa, folding the carrier into its UK business to add operating slots at London’s Heathrow airport while paring the overall headcount.

On Wednesday, Spanish airline Vueling agreed to accept an offer from IAG to acquire the 54pc of the company it doesn’t already own.

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Mr Walsh – a former Aer Lingus chief executive – said that in addition to limits on ownership for IAG beyond the European Union, the bloc’s own rules that assess airline agreements and mergers based on the competitive positions of carriers at specific hubs are also a frustration.

“The big concern I would have with competition policy in the EU is it is looking at the European market, rather than at a global basis,” he said.

“That is a huge mistake.”

In February, the European Commission blocked Ryanair’s latest effort to acquire Aer Lingus, citing competition and other grounds. Ryanair will appeal that decision.

BA acted as sponsor for the recent recruitment of Qatar Air to the Oneworld alliance. That’s the first instance of a major Gulf carrier joining a global alliance.

Mr Walsh said his European rivals are catching on, citing Air France-KLM Group’s code-share deal with Etihad of Abu Dhabi and their talks about a deeper accord.

“That for them is like talking to the devil,” said Mr Walsh. “It’s a true reflection of the change our industry is going through.”

Mr Walsh said he’s supportive of the Gulf-carrier boom and the role played by governments there in fostering growth, something carriers including Air France-KLM and Germany’s Lufthansa had attacked in the past as amounting to state support.

“Rather than inhibit their development they have facilitated their development,” the BA chief said.

“To me, that is how our industry needs to develop.”

Etihad owns nearly 3pc of Aer Lingus.