UK: The Davidson Interview - Sir Michael Bishop.

UK: The Davidson Interview - Sir Michael Bishop. - The planned flotation of British Regional Airlines has forced the British Midland boss to raise his profile. But that doesn't mean, says Andrew Davidson, that this quiet operator will be giving much away

by
Last Updated: 31 Aug 2010

The planned flotation of British Regional Airlines has forced the British Midland boss to raise his profile. But that doesn't mean, says Andrew Davidson, that this quiet operator will be giving much away about himself.

Ah yes, Sir Michael Bishop is running late, says the charming woman behind reception at the Savoy. I'll put a call through to the restaurant, or maybe he's downstairs. Has anyone seen Sir Michael?

Not yet, but one thought occurs: there are certainly perks to heading Britain's largest privately owned airline. One is that, if the idea of running a London office seems rather dull, you can simply use the Savoy for a base, with no quibbles from those legions of penny-pinching shareholders.

Bishop, chairman of British Midland, is a dedicated Savoy fan. He doesn't take a suite permanently, he explains when he arrives, but he is such a good customer - two or three days every week - that generally the management always gives him the same rooms on the sixth floor facing off street.

Nothing pretentious, of course. The rooms are small, the view is grim, all steaming pipes and grimy roofs, but the nights are quiet and it is, he says, unlocking the door, a fine place to do business from.

Sorry for the delay, he adds, he was busy buying some planes. You never quite know with Bishop whether he is joking or not. His dark eyes twinkle behind wide, plastic-rimmed glasses, rarely giving much away. He is a neat, courteous, plump man, aged 55, with a round face, a balding pate, cropped silver hair and a broad, white moustache clipped to within a centimetre of his top lip. Sartorial elegance aside, he is, by reputation, not an easy man to pin down in interview. There is an edge of wariness to him. You can see it in the press photos, as if he is frightened of the world looking in at him. He keeps his private life very much to himself, and when discussing anything, he is so remorselessly polite and even-tempered that it is often hard to gauge his true opinions. Above all, according to colleagues, he is a careful man, who doesn't like making enemies, but is not averse to taking a few risks occasionally, if the business benefits are great enough.

It is the freedom to take those risks which has so far dissuaded him from bringing his main business to the stock market. And up until now you would have to say that he has got the risk-benefit ratio about right.

Business has made him a very wealthy man. As well as being chairman of the £529 million-turnover British Midland (BM), which is Britain's second-biggest scheduled airline after British Airways (BA), he is also the company's largest individual shareholder. The last set of annual accounts filed at Companies House show him speaking for 36 million shares (over half the stock) with a personal stake worth anything upwards of £90 million. He will be even wealthier soon, for his famed aversion to the stock market is about to change. When we met, he was about to announce a plan to float British Regional Airlines, a BM spin-off that runs franchise routes for rival BA. As chairman and principal shareholder there, he could make up to £15 million from the float.

It will all bring him another burst of publicity - he seems, very uncharacteristically, to be giving three interviews a week when we meet. But then he should be used to a bit of public profile. He has, in his time, been chairman of Channel 4, and is well known as chief cheerleader for the D'Oyly Carte theatre group, the Gilbert & Sullivan specialists who have recently been fighting hard for Arts Council funding. To others, of course, he is still best remembered as the man clearly devastated when a BM plane went down at Kegworth in one of Britain's worst air disasters nine years ago. It is not too much of an exaggeration to say that the Kegworth crash, and the dignified, sensitive way in which he and his company handled the catastrophe, catapulted Bishop into public life. Bishop admits as much privately, though obviously it is awkward for him to acknowledge that he personally benefited from it.

He strips off his jacket and plonks himself down on a floral sofa under a print of Wallingford Castle in his rather bland sitting room. What do I want to know? he asks, speaking softly, in an accent-less, gruff tone so quiet that sometimes I can barely hear him. Well, I reply, the usual things: what makes him tick, why he is good at what he does, what has enabled him to build up such a successful business against the might of a rival like BA? His eyes give nothing away.

There's not even a raised eyebrow. He could be lost in thought about his jet deals, or the bowl of fruit on the side table. Let's start with his childhood and family, I suggest.

'My grandfather was born in Wellington, New Zealand, my father was born in Melbourne, Australia. He fought in the first world war, serving in the Dardanelles and in Belgium. He was deafened by shelling and went to a military hospital in Wiltshire. He married here in the 1920s, then married again in the 1930s to my mother.' Is he like his father? Bishop mulls this over. He shares his father's love of Australia, he says - he goes there every year - and if he has inherited any characteristics, it is probably his father's single-mindedness and determination. Despite his disability, his father built up a successful small business in Cheshire customising commercial vehicles. His mother also worked, as a mannequin, modelling clothes for shoppers at major department stores.

It was, says Bishop, a close family. His father's deafness made him a very private man, with little social life. Bishop himself was sent away to school at nine. 'I think my parents anticipated rather wisely that it would be good for me as an only child.' He never performed well at school, excelling only in his ability to get 'could-do-better' reports. But he had one advantage over his peers: he knew exactly what he wanted to do. He had been obsessed with aviation since he was a boy. Holiday jobs working for an aerial photography business at Manchester airport, near where he was brought up, confirmed the passion. 'I never had any periods of doubt where I just drifted around. I never thought of university. I always knew what I wanted.'

Does he regret it now, missing university? Bishop looks thoughtful for a moment. 'I think I might have known more if I had read economics or law at university.' Then he breaks into a grin. 'Certainly I could avoid spending lots of money now on people who know about those things.' Like many very rich, self-made men, Bishop has the kind of business brain that watches the pennies closely. He may run a Rolls Royce and a plane, keep two large homes (in Edgbaston and Leicestershire), and command his own set of rooms at one of the world's most famous hotels, but he doesn't like to be thought of as extravagant.

He rolls his eyes when I mention the recent change of ownership at the Savoy, and moans that he is convinced the new owners will swiftly put the room rates up. So how much does he pay now, then? Oh, he couldn't possibly tell me that, he says, with a little smile. Tens of thousands of pounds a year? He just looks at me. Does he get a discount? Ha, he guffaws, then changes the subject.

There are lots of reasons, he says, why he has been successful where others haven't. Luck has played a part. At the tender age of 21, working at Manchester Airport in the early 1960s, he had set up his own aircraft handling business for a locally based airline. When that was taken over by British Midland Airways, a small company operating out of East Midlands Airport, he joined the new outfit. Right company, right time. By 1969 he was general manager; by 1972, at the age of 30, he was managing director. BM was running charter services to Barcelona and Basle and developing scheduled routes too. He had a good team around him, in particular two partners who eventually joined him in buying the company out: Stuart Balmforth, who handled the finance side, and John Wolfe, who headed engineering. Bishop plotted the company strategy - which routes, what services, where to get the planes - with quiet shrewdness.

It was that nous for sourcing planes that led to Bishop's smartest deal, the management buy-out he led in 1978. He borrowed the money to do the deal off an enormously rich dentist in California who had invested his wealth in two Boeing 707s. Bishop, sniffing for cheap planes, agreed to lease the 707s in return for a £2.5 million loan to buy out BM. The dentist got 25% of the company, and later sold out. Bishop and his managers got 75%, and are now very rich men indeed.

They have worked hard for it. Bishop's second shrewdest move was to sense the change in political mood in the early 1980s, when he lobbied hard for the right to fly from Heathrow on domestic routes head to head with BA. Not surprisingly, BA lobbied just as hard against him getting the slots, but Bishop persevered and won. BM had in fact been flying from Heathrow since 1969, another smart Bishop decision, but the licence for the Heathrow to Glasgow route in 1982 was followed by services to Edinburgh and Belfast.

The Heathrow slots have, in some rivals' opinions, been BM's greatest bit of good fortune, protecting Bishop from anything BA could throw at him, but it took real determination to make a go of them. 'The London-Belfast service was a financial disaster for the first couple of years. Anyone else would have chucked it in,' remembers Terry Liddiard, chief executive of the BM offshoot, British Regional Airlines. 'But Michael is very courageous, he takes the right risks.' And the risks pay off. Since 1984, passenger loads on the London-Belfast route have doubled from 500,000 to over a million last year.

After Britain, Bishop took the fight for liberalisation overseas. By the 1990s he had established BM as Heathrow's second largest operator, offering 'value for money' business travel. It was also the only privately run airline to challenge national flag-carriers on the main European routes. 'This business is unique and special,' says BM's chief executive Austin Reid. 'I think even the regulators appreciate that.' Bishop, meanwhile, now lets his managers run the shop, while he concentrates on the bigger issues: politics, regulation, competition.

But the key to the company's success, he adds, is that BM's growth has been slow but sure. Others have described Bishop's progress as like the tortoise in the tortoise and hare story. While some - Freddie Laker, Harry Goodman, for example - have shot off and burnt out, Bishop has hung on in there through the bad times, never over-stretching the company, moving forward step by step. For more than a decade now, he has notched up a passenger growth of about 7%-10% each year. Lord King, former chairman of BA, recently described Bishop as 'a quiet little operator'. Some might take that as dismissive, but to Bishop, it's an accolade. 'You have to remember this business is a cyclical beast, always famine or feast,' he explains. 'I have never wanted to get into the position where you get caught by a downturn.'

That, too, is why he resolutely kept the main business private - because shareholders' demands for short-term profit can only undermine long-term strategy in a strongly cyclical business. So why float British Regional Airlines? That's different, he says, because British Regional depends for much of its income on BA and there is a 'need to disengage' it from BM, and for it to raise the resources to pay back debts and acquire new jets. There is only a need for BM to float if he and his partners wish to dilute their stakes.

And they don't.

But he did let SAS, the Scandinavian operator, take a 40% stake in BM (25% in 1988, a further 15% in 1994). Why SAS? 'They paid the most,' says Bishop. And? He just smiles. He has an unnerving habit of looking straight through you when he thinks he has said enough.

Likewise when I ask him if he has ever wanted to get married. 'No.' Silence.

The stare. Best to move on, then.

Some rivals think Bishop must be planning to float BM soon, but most who know him well cannot imagine him diluting his stake significantly.

It's his life, says one friend. He has no family, plenty of money, he lives for cutting the deals. Even if he stayed, what would he gain? Just someone querying his Savoy expenses. His own staff joke that, as BM seems to do something different every decade - 707 charters in the 1970s, taking on BA in the 1980s, competing with the rest of Europe in the 1990s - it might be useful to find out, if he is not going to float the company, what Bishop plans to do with it after 2000. Will he go head-to-head with the new low-cost European operators like Go and easyJet? No, he says, they don't threaten BM. They will just expand the market as BM itself did in the 1980s. His focus is more likely to fall on competing with BA and Virgin across the Atlantic. BM has already showed its intent by applying for licences to operate services to America and if BA has to give up a number of slots at Heathrow following its alliance with American Airlines, as seems likely, Bishop will take up a share. Rivals, however, wonder whether he has left it too late. Bishop's greatest regret, according to one industry source, must be that he didn't take on BA across the Atlantic in the 1980s. Look at the size of Virgin Atlantic now.

But direct, head-to-head competition with BA has never been Bishop's style. Even tortoises can get stomped on. Instead he prides himself on building slowly, eschewing ambitious schemes in favour of sensible investment: enhancing revenue growth by putting bigger aircraft on existing routes, for instance. One of the reasons why BM's profits tripled so dramatically last year to £17.3 million was that the investment which had dented profits in previous years was finally beginning to pay off. That's one of the advantages of being a private company, he says, you can ride with low profits for a bit. On the other hand, you could probably raise a lot more money for the investment if you were listed. It's six of one and half a dozen of the other, he concedes.

It would be hard, I guess, to have any kind of row with Bishop. He prides himself on his diplomacy. Apparently, he has an icy temper which he reserves for employees who displease him, but colleagues marvel at his ability to keep on good terms with rivals, even those who are at each other's throats, like BA and Virgin. Throughout all the publicity over the 'dirty tricks' allegations thrown at BA in the early 1990s, for instance, Bishop managed to duck and weave brilliantly to avoid giving offence to either side.

It is this ability to pour oil on troubled waters, and his political instincts, that makes Bishop a popular figure on company boards. As well as being deputy chairman of Airtours he has also been a non-executive director of Williams, the Derby-based FTSE-100 company that specialises in fire protection and security, for five years. Sir Nigel Rudd, Williams' chairman, says Bishop may not be a man who gives much away but he is a very shrewd political operator. 'When Michael talks - and remember, he speaks so quietly - everyone leans forward to listen.' And he is an intriguing figure, adds Rudd: a private man who is nevertheless a prominent figure in the Midlands, and a wealthy man with a strong streak of sensible parsimony. Not, by any standards, your average, self-made Flash Harry.

Bishop, when asked, sums himself up as 'conventional outside, unconventional inside'. These contradictions came to the fore when he was asked to chair Channel 4, a job which friends say he was passionate about. He oversaw a sticky patch in the TV channel's development as it came under fire from the press for the type of programmes it was making, while the Conservative government mulled over the possibility of privatising it. Blocking that, he says, was his one major contribution to the channel. But hang on, how does he square that with his campaigning for liberalised markets in air travel, and his attacks on the state funding of national carriers? 'Privatisation and liberalisation have worked very well in the airline and telecoms industries,' he says, 'and I suspect they will work well with gas and electricity. They all provided consumers with better product at lower cost. Television is different. Channel 4's response to privatisation would have been to go down-market which would not have given better product to consumers. You can see that the commercial pressures on ITV have been detrimental to the product.

My argument was that if they felt a restructuring was needed, they should start with the BBC.' And that, apparently, was all he needed to say.

Yet his chairmanship was not renewed under the Blair administration, a move which, according to one of Bishop's colleagues, really hurt. There has been speculation that Bishop is not in favour with the Government's current transport chief, John Prescott, a legacy of his closeness to John Major. Certainly, there is evidence that Major listened closely to Bishop's advice on cultural and commercial affairs. More tangibly, BM was reported to have lent Major a plane for the 1997 election campaign. That's not quite true, Bishop points out. The Conservative party hired a plane. Labour could have too. It was just good business.

Yet it is hard to believe that such a deft political operator as Bishop would allow himself to fall out of favour for very long. The very art of being a successful airline boss - antennae twitching, sifting the air for signal changes from governments and regulators - necessitates a degree of subtle schmoozing that would stretch most managers. As soon as you become controversial, no matter how successful you are, life in the airline industry becomes immeasurably more difficult than it would if you were just banging out widgets (ask Lord King).

Anyway, he has to go. More planes to buy, I presume. Bishop courteously escorts me down to the lobby at the Savoy to say goodbye. He hasn't, I realise, told me much at all, cutting short the interview time with trips to the bathroom and a visit to reception halfway through 'just to sort out some details' for the next appointment. Zip, time's up. If he wasn't so damned pleasant, I might think he was quite a slippery fish. But Bishop is not like that, say those who know him. His wariness is understandable.

He is not that used to dealing with the media - as was shown by his uneasy performance in a recent television documentary about the D'Oyly Carte's fundraising problems - but he has to raise his profile now because of the British Regional Airlines flotation. And maybe he is dipping his toe in the water.

Will a full BM float follow? Who knows? For as he has proved over the years, he is pretty adroit at quietly getting what he wants while never really revealing all of himself. Quiet, everyone says, is the key word with Bishop. Clever man.

Biographical

Notes

1942: Born 10 February in Bowdon, Cheshire

Educated Mill Hill School

1960: Entered family business building specialist commercial vehicles

1963: Set up aircraft handling business for locally based airline at Manchester Airport

1964: Joined British Midland Airways

1969: General manager, British Midland Airways

1970: Director, British Midland Airways

1972: Managing director, British Midland Airways

1978: Chairman, British Midland Airways

1986: Receives CBE

1991: Deputy chairman, Channel 4; knighted

1993: Chairman, Channel 4

What People Say

'Michael is very courageous, he takes the right risks. He always sees the wider picture, but it's fair to say he often leaves the detailed implementation to others.'

Terry Liddiard, chief executive, British Regional Airlines

'Michael's key strength is his tremendous overall feel for the industry. It's like being at school with a teacher who could always spot the weak point in your work. He has this gut feeling from 30 years in the business of what will work and what won't.'

Austin Reid, chief executive, British Midland

'Michael has been phenomenally successful in a very difficult business ... yet I have never met anyone who begrudges him what he has achieved.'

Sir Nigel Rudd, chairman, Williams Holdings

'Michael is the tortoise in the tortoise and hare story. Freddie Laker went into a high-profile battle with BA and went too quickly. Bishop has always moved slowly. He's incredibly politically aware.'

An adviser to British Midland

'Michael is a quiet little operator and very straightforward to deal with. We fought our corner, he fought his, and I have a good opinion of him.'

Lord King, former chairman, British Airways.

Find this article useful?

Get more great articles like this in your inbox every lunchtime