MR. LYNCH: Well, we’re delighted to have you with us.
Earlier this month, you unveiled a $9 billion transformation of your airline. What was the impetus for this? Was this a response to customer satisfaction concerns, and where should customers expect to see the biggest impact?
MR. DOYLE: David, I think it’s underpinned by our vision of where we want to take the airline in the next three years, and I think it’s a very important vision because British Airways has had a purpose for the last 105 years of connecting Britain with the world and the world with Britain. But we want to kind of make sure that we fulfill that purpose in a number of ways.
One, we want to build out the best network for travelers to and from the UK. So a chunk of our investment program is about getting new planes in so we can continue to expand the destinations that we serve directly. Examples include Cincinnati here in the U.S. that we opened up last year, which is our 26th city here in the U.S.
I think, secondly, we want to do it in a style which resonates with–. So we at British Airways–I think the brand has very strong equity, but investing in onboard products and experiences is very important. So things like new Club World Suite, World Traveller Plus, in-flight entertainment systems–
MR. LYNCH: Sean, I apologize. I apologize for interrupting. We’re having some technical trouble, no doubt, on the American side of things here. Could you just repeat a bit of your last answer there about what you were hoping to do?
MR. DOYLE: Oh, sorry, David. Is that working? Can you hear me?
MR. LYNCH: You’re coming through loud and clear now.
MR. DOYLE: Okay, apologies.
Well, I think we have a very clear vision for the airline, and our purpose has always been to connect Britain with the world and the world with Britain. So of the $9 billion that we’re spending, a significant portion of it is taking delivery of new aircraft, and those aircraft are equipped with the latest product, but they’re also a lot more sustainable in terms of emissions.
We’re also transforming the customer experience onboard by investing in things like a New Club World Suite, new in-flight entertainment, better catering and improved lounges.
But what’s very exciting is the investment in technology. So about $900 million of our program is equipping all of our IT infrastructure. We’re embracing artificial intelligence but also making sure that we are enabling a digital experience which is future-proofed.
MR. LYNCH: Great. Well, the AI part of this is interesting. Artificial intelligence, in general, has become the hot topic across business and consumer conversations lately. Tell me a little bit about the challenge of adopting that, how you manage through this, where you think artificial intelligence can have the biggest impact on your operations, and how quickly.
MR. DOYLE: I think there’s a number of kind of foundational areas that you have to put in. First of all, we are moving all of our applications, about 700 of them, to the cloud environment, and I think that gives us access to much better computing power and resilience.
I think, secondly, you do have to structure all of your data in a way that it can be exploited by artificial intelligence. So making sure that you have all of the data coming out of those applications in a way that is accessible and exploitable is very important, and I think that is something that we’re investing heavily in.
But the kind of areas we can see artificial intelligence really make an impact on are, one, speeding up operational decisions. So when we have, you know, the propensity to incur delays or we have disruption or weather events, the speed at which we can use machine learning to rejig our network, to reschedule all of our resources and planes, is light years ahead of what we can do today.
I think, secondly, it can have a very positive impact on both the airport and the engagement center experience. So being able to serve up all of the right answers in relation to policies, rebooking, rescheduling in front of a customer, again, I think we can improve the tools our colleagues have to look after our customers in a way which is transformational.
And I think, thirdly, we’re looking at the ability to look forward and have much more predictive capability. You know, one example would be the way we now have all of our maintenance records in an electronic format. We’re able to look at performance trends in terms of the performance of an aircraft and probably predict an event that might lead to an aircraft being grounded before it happens and make an intervention. So the applications in an airline of technology and artificial intelligence are very exciting, and I feel like we’re just hitting the iceberg.
MR. LYNCH: And how about the risks involved in adopting AI? Are you worried about the tendency for some of these systems to, quote/unquote, “hallucinate,” to provide answers, to make up answers when they don’t necessarily have them in hand? How is that something you address in a safety-conscious industry like airlines?
MR. DOYLE: I think it’s very critical, but what I would say is you need to run in parallel, and I think you need to cross-reference statistically significant outcomes that assimilation from technology will use versus the way you would have made that decision as a human being. So I think that parallel running is very important.
I think also making sure that you’re very, very, you know, sure of kind of the resilience of the estate before you put it into a live operation is critical. But I do think airlines are very good at this. You know, we use technology in a realm of different areas. We’ve been early adopters of network technology for decades, and I do think that we have a very safety compliance-focused culture at the heart of the way we run our businesses.
MR. LYNCH: And finally, on this topic, how about the net effect on your workforce? Five or ten years from now, is AI likely to have a net negative effect on the number of people you need, or no?
MR. DOYLE: I think if you look at traveling and aviation, we’re still a very physical infrastructure business. You need people to load planes, you need people to fly planes, you will need cabin crew.
I also think the ability to repurpose our workforce is very exciting because there are many things that we don’t necessarily do today maybe that we could. So I think AI is going to be an enabler of much more value-add from our workforce. I wouldn’t necessarily conclude that it’s going to be a lever of a significant reduction. It may be that we’re able to expand our airline more efficiently as well using technology and AI.
MR. LYNCH: And now, how about the customer side of this transformation? I used to be a frequent customer of your airline back in the day when I lived in London. This was almost pre-website and certainly pre-app days. That’s how long ago it was. But my understanding is the customer is going to get more control of his or her experience in this regard. Walk me through a little bit what differences I would see as a passenger.
MR. DOYLE: I think we have an ambition to become a leading, I suppose–how would I call it?–travel technology company. I want British Airways to be the leading provider of digital enablement to customers.
Now, first of all, I think what we want to have is all of your history of what you’ve searched for, your loyalty status, the kind of things that we have insight into that you need when you’re traveling and make sure that we serve, I think, those solutions up to you in a very simple and efficient way.
I think, secondly, what we want to do is integrate all forms of payment, including loyalty currency, into every step of the journey, also allow you to kind of customize your experience. So whether you want to hold baggage or a checked bag, whether you want to upgrade, whether you want seating, whether you want lounge access, even things like being able to pre-order your catering or the type of in-flight entertainment content that you would like to consume, I think all of that will be possible in the future, whereby every single airline customer is almost treated as an individual rather than treated as a sort of segment. So that’s very, very exciting is the ability to customize a unique experience to a customer.
MR. LYNCH: Right. And four years ago this month, almost no one was flying because of the pandemic. Demand for air travel really fell off a cliff, just an unprecedented crisis for the industry. How does–things have obviously come back since then quite well. How does the overall level of your travel now compare with what was the pre-pandemic level? And break that down for me between your business and leisure markets.
MR. DOYLE: I think it’s broadly played out the way we thought it would. First up, we saw a lot of pent-up demand for people who were visiting friends and relatives, and it’s fair to say that that segment has continued to be very robust. Certainly, out of the U.S. and the UK and Europe, we saw that as being one of the earlier accelerants of the recovery.
I think leisure has been incredibly strong, leisure in all cabins, but particularly in premium cabins. So we saw a huge increase in the number of people traveling for leisure in things like our business class cabins and our premium economy cabin.
And also we have a holidays business, and that’s been booming as well, because I think the ability to offer a ground experience like a hotel and car hire alongside an airfare has been a very, very important part of what we’ve been offering.
Business travel has lagged a little bit. You know, that’s back to between 75 and 80 percent of 2019 levels. But smaller businesses who are outgrowing businesses which aren’t big corporates, they have been traveling above 2019 levels. So it depends on what part of the business travel segment that you look at. The big corporates are traveling a bit less. Smaller businesses are traveling a bit more.
MR. LYNCH: And do you think some of that business travel is effectively gone for good just because of the technology involved in what you and I are doing right now?
MR. DOYLE: I think technology is playing a role, and I think we do see certain types of trips. Like, day trips are falling in terms of propensity to take them.
What we do see, which is interesting, though, is I think people are beginning to still travel, because I think the workforce is very global now. The number of people living in one location who have family in another is growing exponentially year-on-year, and people are combining travel purpose. We see some people might go on a holiday and extend a day or two and work remotely, and we see that in terms of travel patterns. And other people might go for work and extend a day or two to do some sightseeing. So there is this combination of leisure, business, and visiting friends and family, which we do see as being an emerging and a growing trend.
MR. LYNCH: The other major economic challenge certainly coming out of the pandemic in all the developed economies has been inflation. How has that played out for British Airways? What have you seen in your costs, in your ability to pass on those costs to customers, and in your profit margins?
MR. DOYLE: Well, I think we’ve had a strong recovery in British Airways. We reported our profit last week, and it was about $1.4 billion, a 10 percent operating margin, not as high as 2019 levels.
MR. LYNCH: Well, folks, it appears we’ve had another bout of technical problems on this end, but we’re working to restore it. I see Sean on my screen, so I’m hoping he can hear me.
MR. DOYLE: Can you–I’m back on the screen, David, so hopefully we’re reconnected.
MR. LYNCH: Yes, I think we are.
MR. LYNCH: I apologize for the troubles. I’m sure they’re on this side of the water.
MR. DOYLE: No worries. I think maybe it reinforces the need that we should travel to see each other more often. [Laughs]
MR. LYNCH: Well, I would be happy to do this–happy to do this in person. I have a long list of London pubs–
MR. LYNCH: –that we could do this in. But you were talking about inflation.
MR. DOYLE: I was talking about inflation. I think the industries always have to grapple with inflationary pressures, you know, whether it’s the oil price or things in the supply chain we grapple with. I think our challenge is to make sure that we keep on becoming efficient so we can continue to offer value for money. You know, some of the inflation has passed on through airfares, but I don’t think it is over the last 30 years the case that it’s all passed through. And airlines then have to work on using technology, buying more efficient planes to make sure that we still offer competitive fares, and I think that’s something you will see across our group of airlines, in that we try to keep unit costs below inflation.
We also try and then make sure that we’re very competitive against all of the airlines that we have to compete with globally. So I think within that sort of ecosystem, we’ve done very well, both as IAG and British Airways, to recover––invest in the business.
MR. LYNCH: Right. Now, last week, I believe it was, one of your old supersonic Concorde aircraft was spotted in New York, not flying sadly, but moving along the East River, the Hudson River, in a barge headed back to a museum after refurbishment. We have a question from a member of our audience, Melissa Ellis in Kansas, who asks, “Do you envision the use of supersonic jets being adopted as the standard for air travel in the next decade?” And I would just add, if not the standard, do you think supersonic travel has a prospect, any prospect of a comeback at all in the near future?
MR. DOYLE: I think, you know––watching some in-flight entertainment, historic reels on the way out in British Airways, and we were talking about the evolution of the jet age, where we went into World War II with propellers and came out with jets. So, in about six years, we had transformation.
We’re watching, you know, the evolution of the technology closely. I think supersonic travel would have a couple of hurdles to overcome. One will be sustainability and the carbon footprint that it leaves, and I think if you’re using current technology, the carbon footprint is a massive hurdle to really overcome if you’re to invest in this technology.
I think second will be infrastructure and the size of aircraft and whether they match the economics of meeting what continues to be growing global demand.
So I think, you know, if you can sort of overcome both of those hurdles and the technology, you know, gets to a place where it addresses those issues, it’s something that I think airlines would be very interested in.
MR. LYNCH: Sean, I have to apologize again. We’re having such trouble on this end. I think we’re going to have to take a pause to try and get some technical issues sorted out here.
I would just ask members of the audience to bear with us. Our crack team here at Washington Post headquarters is down in the basement, no doubt, unplugging and re-plugging things in, and in a matter of a moment or two, I’m sure we’ll have this straightened out.
MR. DOYLE: Thank you, David.
MR. LYNCH: Please stand by. Sorry.
MR. LYNCH: Good morning again, and we’re back with fingers firmly crossed and technical problems sorted out. We’re going to be joined again by British Airways CEO Sean Doyle.
Sean, let me ask you about something that’s on everyone’s mind, I think, particularly here in the United States, which is the situation with Boeing. There have been a number of safety issues, panels falling off aircraft in mid-flight, tires exploding on takeoff. It has not been a good few weeks for the United States, the largest maker of commercial aircraft.
Transportation Secretary Pete Buttigieg just yesterday said he had, quote, “real concerns about quality control at Boeing.” The FAA administrator likewise, returned from a visit to Boeing, saying that there seemed to be some genuine issues about the safety culture there. You’ve got some Boeing aircraft in your fleet. How have you responded to the incidents in recent weeks? Have you ordered any extra checks, and are you worried that the frequency of these unusual episodes is denting customer confidence?
MR. DOYLE: I think, David, first of all, it’s worth kind of stepping back and maybe looking at the industry performance, and if we look at 2023, it was a record year, I think, in terms of safety across a number of parameters. So I think the number of accidents per million trips was about 0.8, and that was down from 1.23 accidents per million trips in 2022. So I think when you look at a macro level–and these are IATA stats–I think the industry continues to improve its safety performance.
Now, at the heart of improving safety performance, I think, are a number of cultural norms. One is always striving to get better and not being complacent.
Two, I think is a culture of, you know, a just culture of disclosure and sharing learnings and making sure that everybody in the ecosystem, whether it’s the manufacturers, the airlines, or people are very engaged in having conversations about ways to improve safety.
And I think three is learning from mistakes in the past. Now, everything we see Boeing strive to do is to really get back on track quickly, and we think it’s very important for the industry that they succeed in that endeavor. But we’re working closely with both Airbus and Boeing on every learning that we can learn from things that they’re focusing on, and we adopt them into our processes and routine.
MR. LYNCH: But as things stand at the moment, you’re a customer of these companies. Are you, you know, fully confident that the products that you’re buying from Boeing are being produced in an appropriately focused culture on aircraft safety?
MR. DOYLE: Well, I think we’ve got Boeing and Airbus aircraft, and we’re happy with the performance of those aircraft. I think we’re always engaged in developments, obviously, and we engage closely with Boeing and Airbus along those lines.
But I would say that I think the industry is very good at adopting and learning quickly from things that don’t go according to plan, and I think that gives me confidence that we will navigate through where we currently are.
But I think, you know, what I would say is all this reminds us that there is no room for complacency, and we should always, you know, make sure that the culture that’s got us to this place, where aviation is a very–is the safest mode of travel in the world, that we sustain that.
MR. LYNCH: Right. Now, one of the other big trends that we saw coming out of the pandemic was concern over global supply chains. How different, if at all, does British Airways supply chain look today compared to the pre-pandemic world? Have you reshored or taken steps to make your supply chains more resilient, more redundant, perhaps, or is it are things pretty much status quo ante?
MR. DOYLE: They’re not quite status quo, because, you know, last year, there was a lot of disruption to the supply chain. This year, it’s a lot better, but we still have work to do to get it back to the historic levels. So I think we will make progress in moving back to pre-pandemic levels of performance.
But things you mentioned there, like making sure we have more inventory, that we have more of the supply chain components that we do need at source, we certainly invested in that, and also making sure that we have more technical and engineering resources to deal with remediation of aircraft and tech issues, we’re well advanced along those lines as well.
So, you know, the way I would describe it is a lot of progress being made but more to do this year to get us back to the historic level of supply chain performances.
MR. LYNCH: Okay. Now let’s talk a little bit about sustainability. You mentioned that concern in the context of supersonic travel, but the airline industry has been promoting or trying to move forward on development of more sustainable aviation fuel. Last fall, you warned the British government that the UK seemed to be falling behind some other countries in this regard. Tell me a little bit about your concerns and what you think needs to be done.
MR. DOYLE: Yes. But I think, you know, British Airways and International Airlines Group, we have secured about 30 percent of our 10 percent commitment to have SAF on all of our flights by 2030. But most of that supply has been secured outside of the UK. In fact, 90 percent of it has been secured here in the U.S. So we see the United States making great progress in building up supplies of sustainable aviation fuel. We see Europe begin to make progress of building plants, but we haven’t built a dedicated sustainable aviation fuel plant in the UK yet.
Now, we’re in the middle of a consultation with government as to what policy can do to enable that, but we think we need to move quickly. The UK has a very big aviation sector. It’s important for certainty of supply, and I think it’s also important for the efficiency which we can supply SAF to a critical economic enabler.
So I think the UK should look to what’s happening here in terms of the development of existing technologies to feed aviation SAF but also the development of new technologies, which we’re very excited about.
MR. LYNCH: And so is this an issue of financial support or subsidies needed from the government to make it cost effective, or what accounts for the fact that the UK does not have what it needs?
MR. DOYLE: Yeah, I think we’ve got the demand side because the airlines are very committed to this, and we’ve been very clear on our commitments to take supply. I think we have the technologies that are emerging, whether it’s existing, what we call biomass conversion technologies or new technologies, which are converting products like carbon into SAF.
But what we do need is some degree of financial underpin for the infrastructure investors. We need a price guarantee mechanism to give them some confidence on the revenue streams coming out of their investment, and we’ve seen, I think, the U.S. move in that direction in terms of policy, and we’ve also seen Europe move in that direction. And that’s been very effective in enabling the construction of SAF plants.
MR. LYNCH: And now in late February, your corporate parent signed a deal with an outfit in California called “Twelve” that was billed as the largest sustainable aviation fuel partnership to date. What’s the significance of that for your operations? What does it do for your goals in terms of sustainability?
MR. DOYLE: Well, I think it advances us significantly towards our 10 percent mandate. But also, the technology is a second-generation technology, and that is converting carbon dioxide, water, and renewable energy into sustainable aviation fuel. So it’s not using a biomass conversion, and we think the future will be on SAF production, which doesn’t involve biomass conversion. So I think the technology is very advanced, and it’s very exciting. And the scale of production is very impactful as well.
And we’re the first European airline to sign up to a next-generation SAF deal. So again, we feel that this partnership is pioneering in a European aviation context.
MR. LYNCH: And realistically, though, given–just given the inherent nature of air travel, what’s doable in, say, the short term, five years, ten years? What percentage of the industries or what percentage of British Airways’ fuel needs ultimately could be met by greener technology?
MR. DOYLE: I think if we look at three components to this, one is what we can do right now. So, you know, ordering new planes, which are a lot more efficient than older planes, is very exciting. And British Airways retired thirty-four 747s in the pandemic. We’re replacing those aircraft with 787s and A350s, which are anywhere from 30 to 40 percent more fuel efficient and, hence, 30 to 40 percent more carbon efficient.
Secondly, sustainable aviation fuel, we think 10 percent by 2030 is realizable. We also think that could make up maybe 40 to 50 percent of all the fuel we put in planes by 2050.
Now, I think if we look longer term, we are also investing in the development of new forms of propulsion, and British Airways has taken a stake in a company called ZeroAvia. ZeroAvia is trialing hydrogen propulsion, and we think the development of both hydrogen and battery technology, certainly for short-haul aircraft, will become very feasible when we look into the mid 2030s and beyond.
I think the challenge is it’s not going to happen overnight. Aviation will need until 2050 to get to net zero, and it will need to advance across all of those three dimensions: existing technologies, sustainable aviation fuel, as well as investing in game-changing new forms of net-zero propulsion.
MR. LYNCH: Right. Just a final question, Sean. You run a global business, countries all over the world, at a time when globalization is under some threat or pushback. Geopolitical risk has flared its head for the last two-plus years, hot wars in Europe and the Middle East. What problems keep you up at night? What’s your big worry over the rest of this year from a business perspective?
MR. DOYLE: ell, I think what I would say, in aviation, you’ve got to be prepared for a bumpy road. It’s not for the faint-hearted. So not much keeps me up at night. We fly to 200 cities in about 85 countries. So we’re used to, I suppose, you know, the things that hit you from a geopolitical perspective.
What I think we need to make sure, as we move into a new phase of sustainable aviation, is that globally we have a competitive playing field. So I think policy which works for the international system is very important, whether that’s SAF supply, the way we regulate, you know, emissions trading credits, all of the kind of incentives we need to create to build a sustainable future for aviation. It’s very important that they are, I suppose, equitable on a global basis. And that would be one of the big macro challenges I think the industry faces as we look into the next 10 or 15 years.
Well, unfortunately, we are now just about out of time. I want to thank Sean Doyle for joining us today for an interesting conversation.
Thanks to all of you at home for bearing with us and our technical problems, and I hope you enjoyed today’s show.
I want to encourage anyone who did enjoy the program and enjoys the kind of conversations we bring you here on Washington Post Live to sign up for a subscription to The Washington Post. To get a free trial, you can go to the following URL. It’s WAPO.st/live. I’m going to read that again because it’s a bit of a mouthful. WAPO.st/live for your free trial of The Washington Post, where you can read stories by myself and my talented colleagues here at the newspaper.
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