British Airways executive Neil Chernoff discusses network strategy and planning, Heathrow’s third runway, product investments and more.
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Transcript
Karen Walker:
Hello, everyone. Thank you for joining us for Window Seat, our Aviation Week and ATW air transport podcast. I'm ATW and Group Air Transport editor-in-chief Karen Walker. Welcome on board.
Now this week, we're doing something a little different on Window Seat because I want to share with you an on-stage interview I did just earlier in February with Neil Chernoff, who is the chief planning and strategy officer at British Airways. We did this on-stage at our Routes Americas 2025 event in the Bahamas. Please, enjoy this conversation with Neil.
Hello, everyone, and welcome. My name's Karen, Karen Walker. ATW Air Transport World and Aviation Week Network air transport editor-in-chief. I am absolutely delighted today to be joined by Neil Chernoff, who is the chief planning and strategy officer at British Airways. I'm going to let Neil tell you a little bit more about himself, a fascinating past, to that position.
I'm just going to also briefly thank our hosts in the Bahamas for the beautiful reception last night. Especially for laying on that beautiful weather as well. I hope everybody was enjoying their evening and enjoying their day today.
With that, Neil, like I say, I'm absolutely delighted you could join us today. Nobody in this audience needs to be told what British Airways is. Obviously a very important global player and important to this market, oneworld airline, a part of the International Airlines Group, IAG, of course. But from here, just tell me a little bit about how you got to your role and the key things about that role at BA.
Neil Chernoff:
Okay. Yeah, thank you. It's a pleasure to be here. I'm delighted to talk about British Airways. I had a bit of a circuitous career to get where I was. I tell people I'm very lucky because I probably ended up in what was my dream job.
I always interested in airlines and network planning. If there's any network planners in the room, those people that read airline schedules. But when I came out of undergrad, I went into investment banking and private equity. Eventually, spent three of those years in Argentina where I learned Spanish, and that comes back to my story. I went to business school. After working for five years I said, "Okay, I'm going to get an MBA and go work for an airline." My first day of business school was September 11, 2001. When I came out of business school, all the airlines were in bankruptcy. That seemed like a risky bet. I went and joined Bain & Company doing aviation and airline consulting.
After about four years, I then moved back to Chicago where I'm from originally. I ended up taking a strategy position for a company called AAR. They're a maintenance provider to the industry in the US. I was there for almost six years, it was a great role. But I realized I'd become the maintenance and engineering expert, not the network planning expert. I happened to get very lucky that, through Bain alumni website, IAG had just recently been formed through the merger of British Airways and Iberia. They were looking for someone to join their strategy team. Someone who’s worked in corporate strategy, had worked in general airline strategy. Actually, knowing about engineering was quite helpful, speaking Spanish was helpful. And because they were looking at acquiring other airlines, having had experience in M&A was also very helpful.
So, I was really lucky. I landed that job 13 years ago. Packed my bags and moved to London. I ended up being at IAG for almost two years. One of the projects that I worked on was Iberia at the time was going through its turnaround. I did a lot of work in the network planning area, so they asked me if I wanted to go lead network planning. I moved down to Madrid to run network planning. A year-and-a-half into that, my boss retired. I ended up taking over alliances. I ended up being in Madrid for about five years. Then in 2019, I took my current role at British Airways.
Karen Walker:
A man who knows about money, about important ideas at an airline, that's a great asset. Just tell us a little bit, if you can. Can you sum up what it looks like to be a network and planning person at British Airways?
Neil Chernoff:
Yeah. If I think about my day, it certainly does involve a lot of meetings, I find. I try to break things down into pieces.
There's part of it that is more of a coordination type role. That could be, whether it's my leadership team meetings, our management committee meetings, working with engineering and operations or our partners. There's obviously the piece of it that's more managing the team and working through that. Maybe we're out hiring people, professional development. Then the other that is really driving through forward some of these decisions.
Right now, some things that are topical: We're working through our winter '25 plan, where we're going to fly. We might be looking at our route results. All airlines look at what routes are performing well versus not, and that informs our decisions going forward. It could be meetings with some of our alliance partners, like American Airlines. We do a lot of work obviously with our airport partners, so [London] Heathrow and Gatwick, trying to work on projects that might be happening across those airports. So generally what it might look like.
Karen Walker:
Yeah. I'm sure there's never a not-busy moment. As I said, you're global, you're everywhere. Where are the big focus areas right now? Where you sit right now, in terms of those planning?
Neil Chernoff:
In terms of our broader network?
Karen Walker:
Yeah.
Neil Chernoff:
To give perspective, we have approximately 285 aircraft within BA. We fly to 195 destinations across the globe. We're the largest European carrier to North America. In the United States, we serve 26 different destinations, 28 if you include our relationship with American Airlines. The US has always been a strategic market for us. But so is the Caribbean. We actually serve 14 destinations in the Caribbean, with 41 flights a week. We are the largest European carrier also to the Caribbean. This summer, we'll be the only carrier that's serving Nassau. We currently fly a daily flight to Nassau—that tags onto both Grand Cayman and Turks and Caicos.
Karen Walker:
[Boeing 777] Triple-seven?
Neil Chernoff:
Triple-seven. That also has our newest business class product.
Karen Walker:
Ah, right. Okay, yeah. Yeah. Yeah. As we are here, and it's an important relationship both ways. It's an important market to you, the Brits love the Caribbean.
Neil Chernoff:
Yeah.
Karen Walker:
You're an important player for the Caribbean market. What do you look for in this market specifically when you're either planning to maintain a route, or add frequencies, or add another city? What's the sort of things that you're really looking for from the tourism authorities, the airports, et cetera, in this region?
Neil Chernoff:
Yeah. We work very closely in the region. We've served the Caribbean for, I think, over 75 years. But what's really important and where we've been most successful across our network in the Caribbean but in other places, is really when we have a partnership with the destination. That usually involves the airport, the tourism authorities, and the local governments. Particularly because there are certain things that we might know or we can see as an airline, like supply of seats or demand in how people are traveling. But really understanding what's happening locally, we may not have a lot of local representatives in the market. It may be an airport manager or salesperson that may come here. Things that are happening, whether it's development, hotel construction, investment is always important.
One of the things that we also find, particularly in the Caribbean because it's so dependent on leisure, is really the amount of hotel rooms. That can really drive performance on a route. We will see, if a major hotel facility is, let's say, closed down for refurbishment or things like that, or you may be competing for hotel rooms from other markets across the world or US travelers, and things like that—that often ends up being a point of conversation.
But then we also work with the tourism authorities really to promote the Caribbean as a destination. One thing, obviously as you know because you've lived in London, the winters are quite long, there's not a lot of sun. The Brits do like to find a winter sun destination. But they're choosing between the Caribbean and other destinations, so we work with the tourism boards to be able to promote the Caribbean as a destination.
Karen Walker:
As you said, the Brits love this area, and especially in the winter, they want to get away from those winters. How do you manage that seasonality then when you're planning? Because you've got those peaks when the Brits are all like, "Yeah, I'm going to the Bahamas for Christmas," or whatever.
Neil Chernoff:
Yeah. Certainly, it probably might be slightly reversed. The Caribbean might have its peak more in the winter than the summer.
Karen Walker:
Yeah.
Neil Chernoff:
But we also fly other routes that are more summer than winter. We do tend to manage a stable schedule across the Caribbean. Again, certainly sometimes the winter or maybe the peak summer tends to be better for us.
We will come onto this. There's lots of complications with operating at Heathrow. It's actually very difficult for us to operate at peak schedule. So, we kind of have a steady schedule across the year.
Karen Walker:
Okay. You just mentioned the word, the H-word, Heathrow.
Neil Chernoff:
What did I open up?
Karen Walker:
Let's just pick on that, and then maybe go back obviously to the route planning thing because I think, as you say, they're interlinked really. Obviously, at Heathrow, home hub, incredibly important. The new Labour government there seems to be in favor now of going ahead with a third runway. We all know the long history of that. Various statements have been made by IAG and others about that.
From a route planning perspective, what would that third runway do for you, for British Airways?
Neil Chernoff:
I think the opportunity of a third runway for British Airways, I think it could ultimately reshape how we design our network. Most carriers around the world, particularly large airlines like British Airways, run a hub-and-spoke model. You have lots of aircraft arriving, all the passengers move around, connect, and then all the aircraft depart. You can't do that within Heathrow. It's a very constrained operation. There's only two runways. They don't run dual-operation, so there's always one runway for arrivals, one for departures. You can't land large volumes of aircraft, nor do you have the terminal infrastructure to do that.
If you look at most airlines, and look at the arrival and departures, you get these waves that build throughout the day. But if you actually look at BA in Heathrow, we just run a constant operation throughout the day. We're just constantly having arriving and departing flights. As a result of that, it makes it more difficult to build connectivity. Now it works for us, because also London is a very large point-to-point market. We're less dependent on generating that connectivity from other, let's say European, points.
And because it is a large market, I always give the example: If you have eight flights a day to JFK in New York, and you have seven flights a day to Zurich, it's going to naturally connect itself. But we have to do some work, let's say if we're looking at connections where we might fly once a day to India and we're trying to connect that to the US. We might have to work on how we incorporate that into the schedule.
Karen Walker:
I've found that fascinating. I live in [Washington] DC. I do a lot of connecting flights through Heathrow. It should have been obvious. I should have seen it. You go to somewhere like Atlanta or Dallas-Fort Worth, and you've got the banks. You see, don't you? You see one minute, the airport's full. The next minute, it's gone really quiet again. Heathrow, every time I go through, even recently—
Neil Chernoff:
It's just always, always moving.
Karen Walker:
Isn't it? That's right. Which is what you called a rolling?
Neil Chernoff:
Yeah. People in the network world, it's a rolling hub, because there's just always aircraft arriving and departing.
Karen Walker:
I can see how you're making that work, but it's also very complicated.
Neil Chernoff:
Yeah, yeah. No. 20% of our operation in Heathrow is actually in Terminal 3, so we're not housed under one roof. That is incredibly complicated. Getting that, number one, to fit in the schedule, but deciding what operates in what terminal. The other thing is the terminal infrastructure, like I said at Heathrow, is relatively constrained. We will design a schedule, we will inevitably then try to run it through a stand or a gate plan, and we'll say, "This doesn't fit, we're not going to have enough gates." And we've got to tweak things in order to make that work.
I know there was talk yesterday about off-pier operation that tends to happen a lot in Europe. I think about 15% of our operation in Heathrow is off-pier, which then means getting on a bus to the aircraft. Yeah, it can be very, very complicated planning routes.
Karen Walker:
Yeah. Been there, done that. Especially if it's raining.
Neil Chernoff:
Yeah, yeah, yeah.
Karen Walker:
How far ahead are you planning your schedules? What are the sorts of things that can change that? Given how complicated Heathrow is for you to operate from, how much flexibility can you build in, how difficult is it once you've got a schedule in place to switch?
Neil Chernoff:
Yeah. Look, I mentioned that I worked at Iberia before and they did run a hub-and-spoke model. It is just incredibly different, the way that we have to plan in London.
We typically start about 18 months out. There, we're just doing the initial phases of a plan. For winter '25, which starts in November, the end of October, we would have started approximately 18 months in advance, where we're thinking a little bit more about what fleet are we going to have available, because we're obviously dependent on fleet deliveries. But then, we may have 285 aircraft; they don't all operate. They need to get maintenance, engineering, some are in retrofit. How many aircraft do we have available to fly?
Then we've been doing a lot of work, more so than we did pre-COVID, with our operations colleagues around how are we going to build the schedule. What do block times need to look like? What are turn times? These are all parameters that go into the schedule. What are our resources across pilots, cabin crew, or our colleagues that operate the terminal? We try to get a general sense of what are the building blocks, if you will, of the schedule.
Then about 12 months out, we really start making decisions around the network. It does feel a little bit early, because you would like to know what worked really well this winter, but we start making decisions before we know that. Now we have a forward view of how things are performing. But about 12 months out, we'll start building the schedule. Then we try to generally lock it down about nine months out, because there's a whole slot process, the IATA slot coordination. But what does happen in Heathrow is you're very restricted in terms of slots. There are no additional slots available at Heathrow, so you have to make that full schedule fit into the slot portfolio that we have.
Karen Walker:
Yeah. Nine months, a lot can still happen in nine months, can't it? Are you having issues in terms of there's the planes, maintenance-wise, and things that we're seeing across the industry that are affecting that and coming in late in the program?
Neil Chernoff:
Yeah. There's a couple things around aircraft. Certainly, generally the suppliers are behind. Aircraft deliveries have been late. There's also been issues in the supply chain, which can affect our ability to maintain and fix aircraft because you need to have the parts available.
That played out for us last year, and this was in the news. We have a fleet of 42 [Boeing] 787 aircraft. Our 787s have a Rolls Royce Trent engine, which has some complicated issues. Hard to explain. But as a result of that, we currently have four 787s that are on the ground, so they don't have engines available to them. That played out in July of last year. It wasn't in a year, we're not going to have four aircraft—it's in a month, we're not going to have four aircraft. That was really difficult for us, having to take that flying out. If you think about those four aircraft, it's four daily long-haul flights. Having to take that out of a live schedule. And then, again, the nuance of slots. Just because I stop flying to a certain destination, I still need to cover the slot. I now need to add a short haul flight in order to cover the slot.
We had to do that through that live schedule, the winter schedule last year and into the summer schedule. We had to make some tough network decisions and did end up having to exit a couple markets.
Karen Walker:
Right. That's really what you've had to—
Neil Chernoff:
Yes.
Karen Walker:
That's how you've been addressing it, coming out of certain markets for certain—
Neil Chernoff:
Yeah. They were certainly delayed. Some restarts. We exited a couple markets in the Middle East and Asia. But we also leaned on our partners. Over that time, sometimes whether it's Vueling, whose part of the group, [or] Iberia might help a bit. But this summer, we actually worked with American Airlines and they're flying two daily flights for us. We get to maintain that capacity through the joint business we have with American. We've leaned to partners' support.
Karen Walker:
We'll talk a little bit more about those partners. On the aircraft and engines and parts, and all the rest of it, supply chain, do you see that looking a bit more stable this year or better this year? Nobody can really forecast, but what's your feeling?
Neil Chernoff:
Yeah. I think it'll take time, I think, for that to work its way through the system. Rolls Royce is working on a fix to the engine. That'll take a while to come through. I think people will think some of the supply chain challenges that are happening more broadly across the industry will take more time.
For British Airways during COVID, we decided to retire our 747 fleet.
Karen Walker:
Yeah.
Neil Chernoff:
At the time, that was on the basis that we were going to get the [Boeing] 777X, the 777-9X in 2022 or 2023. We still haven't received those. I think it's going to take a few years for the industry to come out from that.
Karen Walker:
Right. Yeah. All of a sudden, it seems like there was so much optimism, doesn't it? Yeah. You mentioned partners. As I said, you were a founding member of oneworld.
Neil Chernoff:
Yeah.
Karen Walker:
I mentioned yesterday, I went to Hong Kong and got to see one of your oneworld Partners Café close up. Fantastic to see what they're doing right now. But again, American Airlines, very important joint venture partner on the transatlantic.
Talk a little bit more broadly, if you like, about again, what are you looking for from partners and codeshares? You did mention Brazil in an earlier conversation.
Neil Chernoff:
Yeah, yeah. Look, One is just generally either the oneworld relationship or a co-chair partner. Oftentimes, that's about expanding our network. There's 195 destinations that we serve directly. But through codeshares, we might serve probably 350 or 400 destinations.
That can be important in a flight. I use the example to you that we have a codeshare relation with LATAM, because we fly to Rio and Sao Paulo, but there's other places in Brazil that have demand to London. They might be smaller markets, we're maybe not planning to serve those direct but we're able to offer customers a connection in Sao Paulo with LATAM to Florianopolis or another destination.
Then we have other partners, like American Airlines. We're in a transatlantic joint business with American. But in that joint business, there's also Iberia, Finnair, and Aer Lingus.
Karen Walker:
Yeah.
Neil Chernoff:
What a joint business is, is as opposed to a merger which is very difficult in airlines particularly if you're in different jurisdictions, is essentially you have antitrust immunization so you're allowed to coordinate your schedules, and coordinate capacity and pricing. What that does is allow us to offer a much broader network. American flies into core Europe where we may not be flying or have bases. For customers in the US, they cannot just get to London, Madrid, or Dublin, but they can get around to most of Europe.
The way generally a joint business works is you share the benefits. What that means is technically, I'm indifferent whether a passenger chooses to fly on American or on British Airways.
Karen Walker:
“Metal neutral,” I think is the buzz phrase. So many buzz phrases in this industry. But yeah, obviously that's an important one. Would you like more partners? IS that a–
Neil Chernoff:
We have other joint businesses. We have a joint business with Qatar [Airways], and that covers Europe to most of Asia and Africa. That's an important joint business for us because if you look at our network, it is very weighted towards the Americas. There's a lot more competition as you're heading east.
Karen Walker:
Yes.
Neil Chernoff:
For destinations that we currently don't serve in Asia, offering the ability to fly on Qatar on a one-stop service via Doha is really valuable to our customers and toward the proposition that we offer to people based in London.
But the other is, in terms of codeshare partners, I think I'd mentioned to you, we recently this winter launched a new flight to Bangkok. We hadn't served that since pre-COVID. But we have an agreement with Bangkok Airways because we know that there's traffic from London, not everybody wants to go to Bangkok. And so that allows passengers to connect to Phuket and Ko Samui. It's a way to be able to fill the aircraft and offer more frequencies.
Karen Walker:
Those markets are really coming back now, aren't they?
Neil Chernoff:
Yeah.
Karen Walker:
Fast and furious. Yeah, absolutely. As an airline, as a company, you're making some fairly significant investments in passenger experience. The front-end, if you like, for the customer. Can you tell us a little bit about that, please?
Neil Chernoff:
Yeah. I think a little over a year ago, we talked about our $9 billion transformation plan. We're investing over the next three to five years $9 billion across the business. Now some of that will include bringing in new aircraft, it's bringing in the new product. I mentioned a new business class seat, we call it the Club Suite. It's all-aisle access with a door.
The other product improvements, we announced recently a new first class seat. We operate a first class cabin and a new generation of that seat is going to appear on our [Airbus] 380s, which we're going to start retrofitting later this year. Those will be flying in 2026.
But there's also investment across the business. We phrase it quite simply A Better BA. It's about building a better BA for not just our customers, also our colleagues and our investors. But there's $750 million going into IT.
Yesterday, I was listening to a panel about why it feels that legacy airlines aren't very innovative. One of the biggest challenges is our IT systems. They're stuff that's been developed in the '70s or '80s. As those have developed over time, we call it a bit of a spaghetti. It's really hard to unpick at all that.
We're recently, soon, in the next month or two, we'll actually be out of data centers, actually moving everything to the cloud, which sounds like that would have happened quite a while ago. But we're also rebuilding ba.com, our website, and also our app. That will fully launch later this year. We've done a bit of a soft launch. Sometimes if you go onto BA and choose a certain origin and destination, you might be taken through the new booking flow. But it's really about being able to do modern retailing. If you go to book today on BA or other airlines, it can be a bit clunky. Almost what we're trying to create is something like an Amazon, where you have a basket, and you can choose the things and products and services that you want.
Karen Walker:
That's interesting because the obvious thing when you think customer experience is things like the seat, the door, the lounges, all those things. I would argue equally as important is that behind-the-scenes stuff, the IT systems and things.
Neil Chernoff:
Yeah.
Karen Walker:
Because at the end of the day, that's what can keep your airline running and operational, even when some things are not going right.
Neil Chernoff:
Then what we're trying to build into that too is that customers, and I think customers want this today too, the way that we interact with other types of retailing, is the ability to self-service. We'll always offer people the opportunity, let's say to call one of our contact centers. But again, because of that technology, it's sometimes very difficult to be able to self-service.
You mentioned, we do have significant investment going into our lounges, refurbishing them. We're opening new lounges in Miami, if people travel there in the high E gates. And also, in Dubai.
We've also invested in another thing that can be a pain point. We often times think about disruption and when things don't go well. That might be a weather event, or whatever that is. We try to, number one, manage disruption out of the business. But we also just need to get better at managing disruption. We recently implemented an automated re-booking system. If there is weather and we have passengers who have misconnected, we're able to automatically rebook them not just on BA, but on any airline that we have a relationship with. It could be a competitor airline, but if we're trying to get someone to a destination, maybe that is the best option.
Karen Walker:
Right. Yeah, that's important.
Neil Chernoff:
Yeah.
Karen Walker:
We're running out of time here. Can I just see, if you put your hand up if you'd like to put a question to Neil, because I'd like to leave a bit of time for that? Yeah, we do have a gentleman here. Bring a mic over. Thank you. Could you just give your name and company, please, your organization?
Kenneth Bryan: Good morning, good afternoon. I'm Kenneth Bryan, deputy premier for the Cayman Islands. Just wanted to know when do you think you'll get those new planes on? What is the timeline? I know COVID messed that up. When do you think you'll be able to transition and retire the [747]?
Neil Chernoff:
We have new aircraft that are being delivered in '26/'27 timeframe. I did mention that we're also refurbishing our existing aircraft, so putting that new business class product on, and 60% of our aircraft are already retrofitted with that new product. We're currently now working on our 787s. We operate the Dash 9, the Dash 8, and the Dash 10. The Dash 10 came with the new product, and we're currently retrofitting the Dash 8 and Dash 9. Then also, the [Airbus] A380.
All of our 777s have been refurbished. I think I'd mentioned that our flight to Nassau and the one that connects on to Grand Cayman does have the new product operating.
Karen Walker: With that, I knew the time would go fast.
Neil Chernoff: That went really fast.
Karen Walker: Thank you so much for your time.
Neil Chernoff: Yeah.
Karen Walker: Thank you, British Airways.
Neil Chernoff: Thank you.
Karen Walker: Thank you. I hope you enjoyed those insights from Neil. I certainly enjoyed having the conversation, and I thank Neil again, and also British Airways. Our next Routes events are in Perth, Australia, in late March, and in Seville, Spain, in early April. We'll bring you podcasts and coverage from those events, of course. Meanwhile, my thanks to our producers Cory Hitt and Guy Ferneyhough for this week's edition. And a huge thank you to our listeners. Remember to follow us on Apple Podcasts, or wherever you like to listen. Until next time, this is Karen Walker disembarking from Window Seat.
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