Ryanair is the best airline in Europe.

Yup, that’s right. The most hated and ridiculed carrier on the entire continent is the best. The uber-loathed, toilet-charging, seat-removing Michael O’Leary leads an airline that carries more passengers, makes more money and is worth more than any other airline in Europe.

The business side of the argument is easy. After a week of trading updates from Europe’s main airlines, Ryanair emerged by far the strongest. The Irish no-frills carrier put out a profit warning, but compared to rivals it was like the Queen complaining of a shortage of horses.

It said it would make profit ‘only’ at the lower end of a 200-300 million euro range, but 200 million euros? BA lost 110 million euros in the first quarter alone, and the shares rose. Even Lufthansa, the strongest of the main European airlines, is forecast to make a measly 8 million euros this year.

EasyJet is doing well, and will make a profit this year - just. Ryanair is streets ahead.

Now for the service argument.

Ryanair -bashing is a popular past-time among the very tedious, but the company’s mission is very simple - fill planes at all cost regardless of ticket prices. People complain about the so-called ‘hidden costs’ of flying Ryanair, but many of them are avoidable and the total fare is not exactly hard to obtain — just tick the boxes and press submit.

As for the service, Ryanair spends as little as possible on luxuries and staff and is totally up front about it. What is wrong with this? Air travel is not a public service. If you want so-called luxury (although frankly I have never felt comfortable on an aeroplane) fly Virgin first class.

If you want a cheap flight fly Ryanair.

The one worry is that Ryanair could become too powerful. In the past year BA has ditched its model of keeping prices high and sacrificing passengers to the other way around — the Ryanair way.

This week it said it would ditch ‘free’ meals on some short haul flights. Again, like Ryanair. If the current downturn continues, it stands to reason that airlines will become more and more like your favourite Irish airline.

And wouldn’t the Ryanair bashers love that.

British Airways has become a real chatterbox of late.

Chief Executive Willie Walsh is attempting to stage a recovery from a year of record losses and a business-class focus that has proven rather ill-suited to a recession. He has been scaring staff and shareholders rigid with his ‘fight for survival’ rhetoric, but how does he plan to wage this battle?

By talking.

He talks to pilots, he talks to engineers, he talks to ground staff and cabin crew. He talks to trade unions, he talks to shareholders - and apparently he talks to his allies over at Spanish rival Iberia. Today’s annual general meeting was dominated by news of these talks - they are making progress, apparently — all of them are making progress.

But are they really? It is true the pilots have been amenable to Walsh’s silver tongue. On Monday they agreed to pay and productivity changes in order to help save the airline cash, in return for some future equity. But that’s about the limit of the carrier’s achievement to date.

Trade union members representing cabin crew loitered outside the London meeting, handing out leaflets to attendees. These detailed proposals — rejected by BA – for a 2.6 percent pay-cut, plus 4,000 job losses so long as they are voluntary. We don’t know what BA has offered in return — Walsh uncharacteristically  keeps saying he doesn’t want to talk about it — but as the deadline for these negotiations was the end of June it’s safe to say things are not going well. “We don’t know what else we can do,” said one 20 year cabin crew veteran. Strike action is a distinct possibility.

Then there are the talks with shareholders. These ones centre on plans to raise more cash. BA is hoping to have 1 billion pounds in the bank by next March, but this would involve burning money at a slower rate than some analysts predict. It wants to raise money in the bond market — something that will no doubt involve plenty of late night discussions in the City.

Then there are the merger talks with Iberia. These chit-chats have been going on so long they are about to celebrate their first anniversary. And the way things are going we could be blowing out two candles before anything gets decided.  Last week Iberia CEO Fernando Conte resigned, meaning Walsh will have a new friend to talk to — something he is very excited about. ‘Splendid chaps’ - ‘known them for years’ - went the tone of his comments after the meeting. We’ll see about that.

British Airways has long been full of fine talk. It’s time for some action.

Richard Branson was made for days like this.

He’s not just flying to New York to host his airline Virgin Atlantic’s 25th birthday party. It’s champagne at breakfast, girls on stilts, and a stroll out onto the wing of a plane carrying supermodel Kate Moss.

‘Och, it’s just a pretty girl,” scoffs one observer. The rest of the Heathrow Terminal 3 throng look distinctly more impressed.

Branson’s ability to manage publicity is legendary. Whereas other airlines would barely see a 25th anniversary as an event, he sees it as the time to launch a multi-million pound marketing campaign and rub his rivals’ noses in the dirt.

And by rivals we of course really mean rival: British Airways.

Across in swanky Terminal 5 things are not looking so good. BA Chief Executive Willie Walsh would sooner launch a new service to the moon than host a glamorous birthday party, such is his grim predicament.
BA has already racked up record losses and while Walsh has forsaken his July pay, he’s now asking staff to do the same.

‘Work for free to save our airline’ — it’s desperate stuff.

Branson clearly finds this terribly amusing. Helped by his private company status, he was able to publish a detail-free press release announcing that Virgin had made a profit just after BA’s losses were revealed.
What kind of profit is not clear, but from billionaire Branson’s point of view - who cares? Now he has said that if BA goes bust the government must not step in to save it. This is exceptionally cheeky, seeing as BA is clearly a long way from such worst case scenarios.

These trans-Atlantic terriers have been doing battle for years now, but on appearance anyway Virgin currently has the upper hand. Whether it can weather the storm facing the airline industry for much longer is another matter. But for now Branson is enjoying his time in where he feels most at home: the spotlight.

Willie Walsh likes to tell it as it is.

Recent weeks have seen smatterings of good economic news. Sectors that took the full weight of the recession last year said they were staggering to their feet now spring is here.

Retail: John Lewis had its best week of the year so far from 2nd-9th May.

Leisure: Pubs group Greene King said things have ‘generally improved’ since the start of the year.

Then along comes the British Airways CEO to spoil everyone’s fun.

“I see no signs of recovery anywhere,” Willie Walsh told BBC radio’s Today programme following publication of the airline’s full year results. “Globally we see economic conditions continuing to be very weak. We have a global network so we are operating in pretty much every country around the world, and what we see is pretty much the same everywhere.” Cheers Willie.

British Airways’ numbers are an absolute horror show. Having made a record profit in the year to March 2008, it managed to set another record last year – this time for losses. Its fuel bill nearly doubled to three billion pounds. It is losing passengers hand over fist, grounding planes, slashing thousands of jobs – Walsh himself has even waived a year end bonus.

And now he warns of more of the same. So should we listen?

Walsh describes his company as an “excellent barometer of what is happening in the world today” and it is hard not to agree. Air travel is a luxury for the confident consumer, and there are clearly few of those. It is also a sign of a thriving business – sending staff off to New York (usually on BA) to thrash out the latest deal.

BA’s premium (first and business class) traffic is falling by double digit percentages every month. That tells its own story. Shops and pubs may have started to welcome back the punters, but air travel is a far more revealing indicator of what is really happening.

Don’t talk to Walsh about ‘green shoots’.

When the government established the British Airports Authority in 1965, its aim was to make airports more flexible and profitable. Profitable they may have been but flexibility is not something that Britain’s larger airports are renowned for.

The list of complaints about BAA is a long one, both from airlines and passengers. Airlines says the charges levied are excessive. Travellers say airport terminals are overcrowded, delays are all too frequent and increased bureaucracy has prevailed since the tightening of baggage restrictions in August 2006.

Some commentators say competition will do wonders for airports which might get run for the benefit of airlines and passengers rather than the operating company, which sometimes has been criticised as being more interested in making money from its airport shops than in giving travellers a speedy journey through its terminals.

“BAA is one of Britain’s most arrogant, complacent and customer-unfriendly businesses. It’s a showcase for the disbenefits of immunity from competition,” Jeff Randall writes in the Daily Telegraph. “BAA handles more than 90 percent of all airport traffic in the South East, yet treats those who pay its wages - airline passengers - as a nuisance. As long as it enjoys such monopoly power, we can look forward only to more of the same.”

But others argue that with BAA’s more than 40 years of experience and the company’s investment in the UK’s airports, a break-up could cause even more problems, and crucially, might not help sort out one of the key issues for transport policy - airport capacity. Heathrow, for example, is so close to bursting point that even small disruptions can lead to big delays.

Even British Airways, which has experienced its fair share of problems at BAA-owned airports, pointed out after the release of the Competition Comission’s report that the “ownership structure is secondary and that the focus should be on tougher regulation to help create more capacity.

Five years ago, the government published a 30-year air transport policy document. It was born following an exhaustive consultation process, which was open to every person in the country. An impressive 500,000 people from all over Britain participated, a reflection on what a crucial part airports play in people’s journeys.

The policy document recognised that new capacity remains the key issue facing Britain’s airports. It recommended that two new runways should be built in the south-east - one at Stansted and one at Heathrow, provided robust environmental conditions could be met.

Do you think the breakup of BAA’s airport empire will help improve things for passengers? Or is a complete rethink needed on how airports are run?

Passengers delayed at British Airways’ new Terminal 5 at Heathrow tell Reuters reporter Golnar Motevalli how their travel arrangements were disrupted.

The airline cancelled 140 flights on Thursday and Friday after problems with the baggage handling system at the state-of-the-art terminal.

The high profile launch of the Richard Rogers-designed terminal building has proved a public relations disaster for the carrier that once styled itself the “world’s favourite airline”.

Interviews recorded on Friday. Click on the video below.

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