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David Cameron’s policy guru tells Gove: fly Virgin, not fat-cat BA

Steve Hilton advises education secretary that he should choose Richard Branson’s ‘upstart’ airline

Steve Hilton, the prime minister’s director of strategy, has found himself embroiled in a corporate war after privately describing British Airways as “fat cats” and urging a cabinet minister to “fly Branson, he is the upstart”.

The diktat from Hilton, Downing Street’s “blue sky thinker” who has repeatedly startled government insiders with his views, is revealed by the education secretary Michael Gove in an interview to be published this week.

Gove said: “When I was explaining to Steve Hilton that I was going off to the States, he said: ‘What are you flying? Don’t fly British Airways, they are the fat cats. Fly Branson, he is the upstart. We are on the side of the upstarts.’”

Talking to the right-of-centre Standpoint magazine, Gove added: “So I’ll be flying Virgin.”

Last night, Downing Street was quick to insist that the views attributed to Hilton were expressed in a personal capacity and pointed out that the prime minister had recently travelled on BA to Saudi Arabia. But the comments from the prime minister’s closest aide, who retains David Cameron’s ear despite a series of recent leaks providing evidence of some unconventional thinking on major issues, drew praise yesterday from sources close to Sir Richard Branson. An aide to the boss of Virgin Atlantic, whose feud with British Airways culminated five years ago when it co-operated with a price-fixing inquiry that led to a record £270m fine for BA, told the Observer the tycoon was “delighted that we appear to be Steve Hilton’s carrier of choice and would look forward to welcoming Michael [Gove] on board”.

He added: “We have long fought the ‘fat cat’ of the skies and will do all we can to keep it counting calories.”

The public airing of Hilton’s comments will be an embarrassment in Downing Street, where officials have previously been forced to downplay the views reportedly held by the former Saatchi & Saatchi advertising executive. Hilton, 42, is a close friend of the prime minister but the free-roaming thinker has a propensity to make Cameron and other members of the government cringe. During one brainstorming session Hilton reportedly asked civil servants why the prime minister had to obey the law. The aide, who often walks around No 10 without shoes, also suggested, according to reports last year, that he thought maternity leave rights were “the biggest obstacle to women finding work”. And it was reported that Hilton, who wrote a book on corporate social responsibility in 2005, wanted to suspend all consumer rights legislation for nine months to “see what would happen”.

Yesterday, it was reported that Hilton was considering a change of role in Downing Street, which may prove to be a boon to a number of people there. He is understood to have upset a number of officials through his sometimes abrasive style, including, it is said, Paul Kirby, the official head of policy development.

Gove, however, is understood to be among a small group within the government who are close to Hilton, who is married to Rachel Whetstone, the head of communications at Google.

The education secretary’s interview with Standpoint took place this month and the flight cited in the article is understood to refer to a holiday that the minister is currently taking in America.

The pan-Atlantic rivalry between Virgin and BA has needed little stoking since Branson’s entry into the business in 1984. In 1993, the rivalry led to BA having to pay £610,000 damages for a “dirty tricks” campaign against Virgin and about £3m in legal costs. The British Airways campaign against Virgin included poaching customers and tampering with private files.

In the latest outbreak of hostility last week, Virgin Atlantic went public with claims that passengers would face higher fares and reduced services if BA was to be successful in its planned takeover of rivals BMI. The airline made the claim as it lodged a formal complaint on the proposed merger to the European Commission.

In response, Willie Walsh, the chief executive of IAG, the ultimate owner of BA, called Branson’s complaints about his company’s strength in the market nonsense. He said recently that Branson’s views “don’t make sense” adding that they were driven by the motivation to look after Virgin’s position, not the consumer’s.

The government’s relationship with Branson has been criticised in recent months. The chancellor, George Osborne, was attacked for locking the taxpayer into a loss of at least £400m on Northern Rock after he agreed the sale of the bank to Virgin for £750m.

A Downing Street spokeswoman said the prime minister “regularly travels with both airlines and that it is good to have two successful airlines competing in the market”. She added: “It is well known that Steve Hilton wants to encourage new entrants into different markets as a way to boost economic growth”. A spokesman for British Airways declined to comment. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds