New BA boss to start fare review
Edward RobertsonAlex Cruz, British Airways’ new chairman and chief executive, tells Edward Robertson the airline must now adapt to compete effectively.
British Airways could be facing a serious shake-up of its operations and practices following the appointment of its new chairman and chief executive.
Alex Cruz took both roles in April 2016, replacing Keith Williams who had worked at the airline for 18 years having joined from PricewaterhouseCoopers.
Although he has been a staff member of BA owner International Airlines Group since 2013, his recent background is from the low-cost carrier (LCC) sector, having founded Clickair in 2006, which merged with Vueling in 2009 in a deal that saw him become chief executive of the airline.
He believes it is this experience he will draw on as he seeks to ensure the airline is fit to compete in the 21st century.
Cruz said: “What Willie [Walsh, IAG chief executive] is expecting me to do is bring in some of the ways of working that a company like Vueling has had to adopt to survive in an incredibly competitive environment.
“We’re looking at many different things as to how we can make BA more competitive.
“My emphasis is not on making BA a low-cost carrier; that would be a mistake.”
Instead, Cruz said the airline would focus on the customer and is looking to use technology to improve the experience at all stages of the journey.
He also denied recent reports that a decision to replace a free-food service on short-haul flights with a paid offering was a done deal.
However, he added: “If we do move to a buy onboard set-up for European short-haul flights, it will be by far the best proposition of any airline that has done it.”
Short-haul sector
Meanwhile, Cruz argued that if the airline was to effectively compete with easyJet, Ryanair and Norwegian in the short-haul arena then fare pricing would certainly be under review.
He said: “The number one criteria for selecting an airline when you’re travelling for two hours or less is price.
“To compete in short-haul effectively we must be able to provide fares that are competitive. Are we going to £99 fares for BA?
I'm not sure.”
While fares might not go as low as the LCC market, Cruz added the cost of short-haul flights from Gatwick “could come down in price soon” as the airline competes against the airport's other main airline, easyJet.
Although he views using price as a way of stimulating demand, Cruz added: “This is strictly not a cost reduction exercise. I’ve been hired to make BA a more competitive company. Some will be cost reduction but some will be how we trade.”
Feeding frenzy
Cruz also said the airline had no intention currently to follow fellow IAG airline Aer Lingus in negotiations with Ryanair to provide feeder flights for its long-haul offering, in a deal that could be concluded and implemented within a year.
He added: “There are a number of other things we’d want to do before getting there, so I don’t really think it is really for BA at this stage.”
He also warned both airlines that a number of issues, from ticketing to which one takes responsibility for lost luggage, will need to be ironed out, adding: “These are big issues and I’m sure Aer Lingus will be looking at it very carefully to ensure the passengers will be well looked after.”
But Cruz said the negotiations represented another step forward for the LCC, which is predicting it will carry 113 million passengers in 2016 alone.
He added: “Ryanair is just beginning to understand what it needs to do [in doing] more than going from point to point, and that has many implications for the industry.”
Cruz also said a return to Sharm el Sheikh in the wake of last year's bomb attack was not on the cards until summer 2017 at the earliest, and added he was focusing on the airline's direct-sale tour operator arm British Airways Holidays.
A new service allows customers to tailor-make their own multi-destination holiday using the 12,000 hotels currently available.
He believes this will become more popular as the airline looks to “increase significantly” the number of properties on offer with several new partnerships.
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