BRITISH AIRWAYS (BA) is to suspend its service from Dublin to London's Gatwick Airport from March 30th as a direct result of the Government's decision to impose from that date a €10 exit tax on flights of more than 300km.
At a breakfast briefing in Dublin yesterday, organised by Irish Times monthly Innovation magazine, BA chief executive Willie Walsh said Ireland was "not immune" from a shake-up to its schedule.
"I'm sorry to say that this is especially true given the Irish Government's decision to impose a €10 exit tax from March 30th," he said. "Therefore, we have taken the decision to suspend our services from Dublin to Gatwick at that time, although we will code share with Aer Lingus to Gatwick." Mr Walsh said the route had been under review prior to the exit tax being announced. "It just sealed the deal for us."
In all, Mr Walsh said BA's schedules would shrink by about 3 per cent this year and he did not rule out it being trimmed further.
"I don't know how deep this [the downturn] is going to go, but I believe it is going to go deeper than it has already. I don't know how long it is going to be, but at BA we are certainly looking at a planning scenario where we have a difficult economic scenario for at least the next two years."
Mr Walsh also said that BA was happy with its recently launched thrice daily Dublin-London City Airport service.
Ireland generates about €88 million a year in revenues for BA, but Mr Walsh said this figure was likely to be flat for 2008, due to the economic downturn.
"Ireland is the fifth-biggest market for BA in Europe. We have achieved double-digit growth in demand for our premium service from Ireland over the past four years."
Mr Walsh criticised the exit tax. "This is going to be damaging for Shannon," he said. "An additional €10 charge in the current environment is going to have a negative impact. Targeting areas of the economy that I believe are drivers of growth is the wrong thing to do.
"I'm not saying the Government should supply incentives or support the industry but this is wrong. The net effect will be negative, particularly in places like Shannon."
Mr Walsh predicted that up to 30 airlines could go bust in the next few months. "About 40 airlines have gone out of business already in 2008, and I expect at least another 20 or 30 will go out of business in the winter period."
Global airline umbrella body IATA has forecast that its members could lose $5.2 billion in 2009, but Mr Walsh believes the outcome could be worse.
He said BA would ride out the storm. It recently laid off one-third of its managers and closed its Glasgow cabin crew base.
"In three years, there will be fewer airlines, there will more bigger airlines and the ones who take steps now to strengthen their businesses will survive."
An edited video of the address by British Airways chief executive Willie Walsh is available at www.irish-times. com/business
