Special Report: Travel Weekly Business Lunch with Dame Carolyn McCall

Special Report: Travel Weekly Business Lunch with Dame Carolyn McCall

Gallery: Carolyn McCall Business Lunch

The  boss of budget airline easyJet spoke about Brexit, rivals, ecommerce, lobbying, data rules and hacking at the recent event. Lee Hayhurst reports

EasyJet boss Dame Carolyn McCall is “calm” about Brexit and remains positive that the UK leaving the EU will not prevent people flying to Europe.

Speaking before her departure to become chief executive of ITV was confirmed, McCall said to expect plenty of headlines about Brexit talks breaking down over the next 18 months. But she added: “If by 2018 we do not have an agreement, do you think people are not going to allow British airlines to fly to Europe?

“We need an agreement. It probably needs to be transitional, but that’s what they [politicians] are deciding.”

McCall said part of her job was to make sure aviation remained a priority for the UK government and the other 27 EU member states as they negotiate Brexit.

However, she told delegates that easyJet could not wait for an agreement to be reached, and that plans to establish an operating base in Europe were on track.

Since the Business Lunch (June 29), easyJet has secured an Austrian European air operating licence, a move McCall said puts it on a par with every other airline in Europe.

“I feel very calm about [Brexit],” she said. “We decided we had to control our own destiny as far as we possibly could, in an industry where shocks are much more common than in other industries.

“We are the only airline at any scale denominated in pounds sterling. What can we control? We can hedge, so we have been hedging.

“And over the years we’ve made sure to have strong contacts with governments and regulators right across Europe. We believe in working with them to get what we need.

“I can be calm because we have planned for not staying in the EU. It’s a no-brainer if you are in the aviation market to be in Europe because freedom to fly has been the most liberating thing. That liberated market has ensured passengers have hugely benefited in terms of what they can do, as well as fares.

“But once it went the other way we had to focus on the future and not moan about what could have been. We started to implement a contingency plan.”

McCall said it would take time to register the 100 aircraft easyJet flies on routes within Europe, so it could not wait for politicians to thrash out a deal. However, she said that “if we can get an aviation agreement that looks like what we have today, that’s fantastic”.

McCall said the airline has recovered from the shock of last year’s referendum result and is in a strong position during a period of low oil prices.

“Airlines under pressure are those that do not have good balance sheets,” she said. “We do not feel that pressure because we are here forever, we have a long game to play and will continue to make the right decisions. We are in expansion mode and next year we will grow by 6%-9%.

“Legacy airlines still have a huge amount to do – they still don’t have a low-cost operating model. They are not agile. They have years of catching up to do.”

McCall: We don’t compare ourselves with Ryanair

EasyJet measures its success by how it stacks up against legacy carriers such as BA rather than arch-rival budget airline Ryanair, said McCall.

She said that when she joined the airline, “lots of people kept talking about Ryanair”.

“I reassured them that we would be orange, and not Ryanair,” she added.

“We need to be easyJet and be very orange and do things differently. The strategy all amounted to being ourselves.

“We have a low-cost mentality that our passengers do not see. We are unique in our culture. It’s about going the extra mile and smiling in adversity.

“We like consumers, genuinely like consumers. When I said that people used to laugh because that was not the culture at low-cost airlines.”

Asked if Ryanair was making strides in this area with its Always Getting Better strategy, McCall said: “We are proud that we have led the way on consumer service because it was long overdue.

“What easyJet does is humanise the travel experience. I do not think Ryanair is anywhere near doing that.

“We do not always get it right. We always make mistakes but we will be the first to say we have screwed up.

“We are trying really hard to make travel as easy as possible. Airports can be difficult places for many people. What we are trying to do is make our ground staff as good as our crew.”

McCall added: “The best thing people say to me today is you are so much better than BA, KLM, Air France or Lufthansa.

“EasyJet today is competing not just with low-cost carriers but with all airlines. We must keep doing that. In short-haul we want to be the best and preferred carrier. That’s what we are all about.”

EasyJet website signals emphasis on e-commerce

EasyJet will roll out a new retail-focused website next year that it claims will put the budget airline at the forefront of e-commerce in the sector.

The carrier is working with software company SAP Hybris, which claims to offer “a consistent and relevant experience to customers across every channel and on every device”.

McCall described the technology as a “big change coming” that will allow the budget carrier to evolve into an e-commerce player rather than a pure-play airline.

“It’s something I do not think any other airline would be able to do. It’s a retail-oriented way of selling. That’s very exciting,” she said.

McCall added that the new technology will mean customers can be offered bundles of products and special offers tailored for them.

Asked whether easyJet was considering selling other airlines on its website, as Ryanair has started doing with Air Europa, McCall said this was not on the radar.

“It’s something we have looked at but it’s not a priority for us. It isn’t something we want to be diverted to do because it’s not a dial shifter,” she said.

“Other airlines would love to be on easyjet.com because we have 350 million visitors a year.”

McCall said continuing to hone the functionality and customer experience on its mobile app is the kind of area it prioritises over selling other airlines.

EasyJet’s app, which has been downloaded by 20 million people and has three million active monthly users, offers mobile check-in and payments as well as a flight tracker.

McCall added: “You are better off changing when you are strong than when you are not. If you have to do it out of necessity you can end up making the wrong calls. If you do it when you are stronger, your strategic position is better.”

She said “complexity” is her enemy. “Scale is fantastic in many ways, but it’s very complex. We are trying to keep things as simple as we can.”

A4E lobby group united over major issues

Carriers in the Airlines 4 Europe (A4E) lobby group are united in pressing for changes on airport charges and air traffic control (ATC) strikes, said McCall.

A4E currently has 28 members, with the ‘big five’ – BA parent IAG, easyJet, Ryanair, Air France-KLM and Lufthansa – finding agreement on a number of common causes.

McCall said interest in A4E among airlines was “very healthy”. “We are really, really focused on what we all have in common in terms of what we want to change.”

She described airport charges among the major 20 hubs in Europe as “disproportionate” and said the cost “just gets passed on to passengers”.

And she said recurring French ATC strikes are “unbelievably difficult” for easyJet and its passengers to cope with.

“Eighty per cent of our flights overfly France,” she said. “The [European] Commission is looking at some kind of fix on airspace where we do not have national airspace boundaries.”

McCall added A4E airlines also all agree that Air Passenger Duty suppresses demand. “It’s a tax on passengers, not on airlines. If government wants to get airlines to be more carbon-efficient, there are different ways of doing that.”

EasyJet already well prepared for new EU data rules

EasyJet is primed to comply with new European data protection rules due to come into force in May next year.

Under the new General Data Protection Regulation (GDPR), firms face fines of up to €20 million or 4% of global revenue if they are found not to be compliant when there is a breech. However, McCall said that having dedicated an entire team to look at the implications, easyJet did not now expect GDPR to affect how it operates.

“Having done a lot of work with the legal team we do not think GDPR is going to have a huge impact because we are already doing what it requires.

“It’s not going to be the massive concern we thought it was three or four months ago. We are taking it really seriously.”

McCall flags up awareness to prevent hacking

EasyJet is in the second year of a three-year cyber security programme to tighten its defences against hackers.

“Most companies have had to look at their cyber risk,” McCall said. “They get hacked every week.

“I do not think you can ever prevent it. If someone wants to hack you they will hack you.”

McCall said the biggest risks are internal and not malicious, but due to a member of staff not being judicious enough and following protocols in areas such as secure passwords.

“You have to be vigilant. We have to keep the pressure on internally. We have a big campaign.

“Quite a lot of our focus is on awareness internally. However, it is quite difficult to keep the issue alive and noisy inside a big organisation.”

McCall said she would be keen to hear from BA about what it learned from its recent IT meltdown – caused, according to the airline, by a power outage.

“I still don’t think anyone really knows what went on. It was horrendous,” McCall said.

Gallery: Carolyn McCall Business Lunch

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