British Mediterranean Airways, the carrier offering daily service between Beirut and London Heathrow, has added two new destinations to their schedule this year and just resumed flying to Georgia’s capital Tbilisi. Although attracting less media attention than its larger partner, British Airways, commands BMED has interesting stories to tell and things to celebrate. On reaching the corporate milestone of accomplishing 10 years of operations, BMED CEO Des Hetherington came to Beirut. Executive talked to him about the airline’s experience with the Lebanese market and its performance in a time that brings many challenges to the air transport business.
Why did you choose Beirut to stage a birthday bash on your 10th anniversary?
The 10th anniversary is a significant anniversary in any industry and particularly the airline industry, and of course Beirut is our spiritual home because that’s where it all started.
How was BMED performing over the last 18 months in Beirut and the Levant?
Business hasn’t been as good out of Beirut as we had hoped it to be. But overall, our business here has been approximately the same this year as it was last year.
If performance here was less than perfect, was that related to the fact that Beirut has open skies while the hinterland airports do not, meaning you cannot offer flights between Beirut and nearby destinations such as Amman or Damascus?
No, that’s never been the most important. The most important thing in terms of getting the economics right is the number of customers we bring from the Lebanon to the UK but also from the Lebanon to the rest of the world. As you know, BMED is a franchise partner of British Air and 40% of the customers that we transport between London and Beirut actually go from the Lebanon to other parts of the world, or from other parts of the world to the Lebanon.
Isn’t it correct that BMED was going up and acquiring planes at a time when your partner airline BA was forced to downsize in 2002/2003?
The start to answer that question is that people have to understand that BMED is a completely different sized animal from BA. British Airways operates about 350 aircraft; we operate six. We therefore have the ability almost to go against the trend where every airline in the world has had a very difficult three years after the tragic events of 9/11. As you rightly said, we have expanded our operations. We have increased our number of customers, number of aircraft, the number of destinations. So for example, in the last two years we started new routes to Tashkent in Uzbekistan, to Khartoum in Sudan, to Yekaterinburg in Russia.
How many destinations do you have now in total, and how is the situation in Georgia where service had been halted over a year ago?
We have 15 destinations in 14 countries, and I am delighted to say that on this Sunday [October 31] we resumed service to Tbilisi where we had had very artificial differences with the old government. After the new government came in as part of the rose revolution at the end of October 2003, we were immediately contacted and the differences have been resolved.
And your basic business split is between the Middle East – North Africa region and central Asia?
We like to think of it as three businesses within our business. One is the heartland, that is Lebanon, Syria and Jordan. The second area is Egypt, Ethiopia and Sudan. The third area, which is growing faster than the first two, is central Asia, that great sway of countries from the Caucasus to the western borders of China.
Can you disclose any turnover figures and passenger numbers?
Yes, last year was the best year in the company’s history, following the previous year, which was also the best year in the company’s history, and which we hope will be followed by this year. This year, we will look after about 370,000 customers. We have a turnover of about $180 million and provided fuel – that is the one difficulty we will all have to come to terms with in the industry – we will have record numbers compared to previous years.
How much of that turnover comes out of Beirut or the heartland business?
Specifically out of the Lebanon, approximately 13% of all the revenue in our business.
Apart from the volatility of oil prices, how important is the potential volatility of political circumstances on your particular business model, as you fly to some destinations that are slightly more volatile than the big markets?
It has an impact and it would be a lie to say otherwise. However, it is extreme political circumstances that have an impact on our business. The events in Iraq were the most extreme version of that, and during the April-May 2003 period, our business to Syria, Jordan, and Lebanon, was significantly lower. The interesting fact is, however, that immediately after the formal end of the war, our business has recovered very quickly.
In terms of your corporate culture, are you more “B,” as in British or more “Med,” as in Mediterranean?
I think we are more B – that’s the proper B as opposed to the unmentionable B. One of the things that we have done recently is that we changed our branding, from British Mediterranean Airways to BMED. The reason we made that change that the name was a bit of a mouthful, particularly when you using it in advertising or PR. So BMED actually no longer means Mediterranean, it doesn’t actually mean a great deal, just BMED.
What core values do you espouse in your corporate culture?
When we opened the business we were just 40 people and we had a great esprit de corps, everybody knew everybody. We have grown to a business with 650 people with different cultures and different languages but we wanted to maintain our esprit de corps, and I think so far, we have been able to do that. Our three priorities are safety, service, and having fun. That’s what its all about. And if you want to test the corporate culture of BMED, the best place to test it overseas is here in Beirut. We got a fantastic team here.
The hot topic in Lebanon over past six months was increase in inbound tourism. Did that show in your business?
I am a very, very pleased to say that we started to see an increase in European business and in particular British customers coming back to Lebanon. The other interesting development in terms of tourism is that Beirut is starting to be seen as a short break destination. Certain British customers can come here and spend three nights over a long weekend, enjoy the sights of Beirut or go up to the Bekaa. That market is growing.
What are your plans for developing the service to Beirut in the near or mid term?
We now have 16 services per week, so just slightly more than two services per day to cover four destinations, two in Syria, one in Jordan, one in Lebanon. I would like to get back to a level as in the year before the intifada was declared, in October/November 2000. In that year, we had a daily terminating service to Beirut, eight flights per week and we had our services to Jordan, which essentially were stand-alone services.
So one year from now, how many BMED flights would you like to see coming into Beirut?
I’d like to see a straightforward daily service that comes to Beirut and goes back from Beirut. I’d like to see us get back up to about 20, 22 services a week to the region but I think it is going to take a couple of years to do that.
How about the diplomatic interference and possible repercussions on Lebanon and Syria from UN resolution 1559? Could that affect you?
You are now taking me to areas of politics and I find business difficult enough…. No, because my understanding of the political scene is that the British government would need to place those sanctions on my business. I don’t see any of that. I see a great willingness particularly from the European Union to engage in not only with the four countries in the region but I see great willingness from the EU and very much from our own government in the United Kingdom to assist in the process of regional stability and I applaud that.
