An ugly scrap at Heathrow for the 'best-looking kid on the block'

The chief executive of BMI talks to Christena Appleyard about his airline's new route to Tel Aviv, the rumours of a sale and the unholy alliance fighting BAA on landing charges
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The Independent Online

The pilot's voice is polite but strained when he announces that the BMI inaugural flight from Heathrow to Tel Aviv will not be taking off on time.

We can only imagine the look on the face of chief executive Nigel Turner because, we, the invited witnesses to the opening of the company's newest route, are in business class and Turner is in economy. But we all feel sorry for the pilot.

The launch of a new airline route can be as spectacular as that of a ship. The slick marketing operation starts with the plane being hosed down by fire trucks immediately after touchdown at Tel Aviv's sparkling Ben Gurion airport. It's an inaugural flight tradition.

This is followed by a VIP reception inside the terminal attended by the British ambassador, who, we are told, played a crucial role in the opening up of this route for BMI.

But the razzmatazz does little to conceal the fact that the two years of negotiations involved in the breakthrough were very tough, and the chat at the party is about how tricky it was to break up the British Airways-El Al duopoly.

The next morning we discover the reason for our delay at Heathrow: a set of British Airways steps had been left out inadvertently and blocked our plane's progress. But strong tailwinds meant we actually arrived in Tel Aviv an hour early (four instead of five), so preserving BMI's status as the most punctual airline operating out of Heath- row, the reputation of our pilot and the good mood of the chief executive.

Sitting on the balcony of his Hilton hotel suite, overlooking the beaches of Tel Aviv, Turner admits that he's not keen on interviews and that, until recently, he had considered those who did them to be "a bit up themselves".

His style is cautiously outspoken – friendly but not matey, old school rather than Branson. At 49, he has 20 years' experience of the aviation business, including three and a half years at the helm of British Midland, as the company used to be called, and enjoys a reputation in the industry for getting the best out of people.

But the spotlight in which he now finds himself, along with other players in the air-transport sector, is more glaring than soft focus. It would have to be when it concerns the conflict and controversy stalking British civil aviation.

The fierce fight over landing charges and regulation between the airlines and BAA – the owner of Heathrow, Gatwick and Stansted among other British airports – has now gone public. EasyJet, Ryan- air and BMI, previously ferocious competitors, are now considering a joint legal action against the decision of the Civil Aviation Authority (CAA) to give a green light to BAA's 83 per cent hike in landing charges over the next five years at Heathrow and Gatwick.

It is a show of astonishing unity from a group of businessmen who, Turner admits, never even talk to each other.

He was going straight from Heathrow on his return from Tel Aviv to a meeting with the other airline chiefs and Transport Secretary Ruth Kelly.

"We don't have an easy relationship," Turner says of his fellow bosses. "We don't actually talk. This is a fiercely competitive business. It's a testament to how serious things are that we are taking joint action on this.

"We'll be asking Ruth Kelly for a review of the BAA charging mechanism and a freeze on the charges until that is completed. It's a big issue for any politician to take on. She has been briefed on what we want to talk about but we don't know when she'll decide on our request.

"What BAA is doing is bad for customers, bad for airlines and bad for UK plc. It is pricing Heathrow out of the market and the beneficiaries are Paris, Amsterdam and Frankfurt airports. To get itself out of a financial hole, BAA is out to squeeze as much money as possible from the airlines – which in the end means the customers. And if that ruins Heathrow in a few years' time ... well, it will worry about that then.

"That's its attitude," he continues. "It has treated the regulators and the airlines with contempt."

The airlines claim that the CAA's decision to allow the huge rises in landing charges amounts to a bailout for the consortium led by Spain's Grupo Ferrovial, which owns BAA and is struggling with a £10bn refinancing.

The airlines may make their claim to the High Court as early as the next few weeks. Virgin could join the other three but British Airways is not expected to wade in too.

"The CAA is composed of public servants who don't have a lot of resources," explains Turner, not unkindly. "They are bright guys but they don't have a lot of business acumen, whereas over the years BAA, and now Ferrovial, have thrown the biggest brains and huge resources at these reviews. So it becomes a bit of a one-sided contest – a bit like Manchester United versus Nottingham Forest."

He is equally forthright on the speculation surrounding a possible sale of BMI. It is well known that the founder and chairman of the company, Sir Michael Bishop, has an open option to sell his shares to Luft- hansa, which currently owns 30 per cent of BMI, Scandinavian Airlines owns 20 per cent and Sir Michael has just over 50 per cent.

BMI is currently the UK's second-largest airline and its 83 daily slots at Heathrow could be worth as much as £2bn. It is a full service airline, with BMI Baby as the no-frills division.

In the most recent figures in 2006, the company's operating profit was £10m.

"There is more speculation about [the sale] than Kate Moss's relationships," laughs Turner. "My chairman is a very sprightly 66. He is an entrepreneur. Entrepreneurs are born, not made. They don't retire. He speaks to me every day about the business. He is very involved and one of the outstanding businessmen in the country. He built BMI into a billion-pound company by putting his own money on the line and having a great vision.

"Yes, I can see why there is all this talk around," he adds. "We're the best-looking kid on the block."

The warmth of Turner's praise for Sir Michael seems genuine as he is clearly a bit embarrassed about going on the record. But he is forced to because I have just asked him which three people in the industry he admires most.

He says how kind Sir Michael has been to him during the recent breakdown of his marriage. This massive change in Turner's life has left him having to learn how to run a home for himself and his older teen- age son. We know how seriously he takes this responsibility because wherever he is in the world, Turner sets his phone alarm for 7am UK time so that he can call his son and get him up – and that's an impressive sign of being grounded in any chief executive.

He doesn't advertise the fact but the alarm had gone off just before one of our meetings and he'd been asked about it.

"He's a great lad. He has many strengths. It's just that he's not great at getting up in the morning."

(The other two business leaders he admires are Danny Bernstein, non-executive chairman of Mon- arch Airlines, and Montie Brewer, president and chief executive of Air Canada.)

The environment is probably Turner's least favourite subject but it is one that he doesn't duck. His main frustration, he says, is the lack of a sophisticated debate.

"Is there an environmental issue? Yes there is. Is it as simple as people make out? No it isn't. Sadly, the way our culture is these days, we always have to find a bogeyman – and we are that bogeyman."

He has some compelling counter-arguments and a facility with figures that demonstrates he is taking the subject extremely seriously – although he's quite sharp with people (like me) who complain that the hordes of tattooed louts who go to the Estonian capital of Tallinn for stag nights are a big part of the problem. "I'm not saying it's snobbery but there's a bit of a nanny state about that attitude."

So, moving swiftly on to to the safer subject of Tel Aviv, Turner sees enormous business potential in terms of cargo demand – everything from diamonds (Tel Aviv has a flourishing diamond-polishing industry) to biotech equipment. And as a weekend destination, with its clubs and stunning beach, it is easy to see how this could be the new Barcelona.

Israel's battle-strewn history will put off some tourists but there's little or no evidence of the conflict on Tel Aviv's streets, which are safer than those of many European cities. There are already 22,000 bookings for the summer, which makes it BMI's most successful launch ever.

Finally, the timing of this trip meant Turner missed the big party for the opening of British Airways' Terminal 5 at Heathrow – "a party I am proud not to have been at," he says, without elaborating.

Maybe he's still mad about those stairs British Airways left out, but you get the feeling it goes deeper than that.

What he will say is this: "Look, as far as I'm concerned, the new terminal will take 20 million people out of the terminal I operate in and that will make it more of a sanctuary for our customers.

"Eventually, Terminal 1 will morph into a fantastic new terminal called Heathrow East, which will make Terminal 5 look like something out of the ark."

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