Alex Cruz said fixing British Airways would take several years. After three years on the job, he appears to be making progress. But there's more work ahead.
Hundreds of the travel industry’s most-forward-thinking executives will gather for our third annual Skift Forum Europe in London on April 30. In just a few years, Skift's Forums — the largest creative business gatherings in the global travel industry — have become what media, speakers, and attendees have called the “TED Talks of travel.”
Focusing on responsible travel practices and other key issues, Skift Forum Europe 2019 will take place at Tobacco Dock in London. The Forum will feature speakers, including CEOs and top executives from British Airways, IHG, Thomas Cook, Booking.com, TripAdvisor, Silversea, Uber, and many more.
The following is part of a series of posts highlighting some of the speakers and touching on issues of concern in Europe and beyond.
For much of Alex Cruz’s first two years as British Airways CEO, he was among the more criticized public figures in the United Kingdom.
Cruz joined in 2016 from Vueling, a Spanish low-cost-carrier, with a mandate to bring more discipline and innovation to British Airways, which struggled to compete against discount carriers in Europe and across the Atlantic.
British Airways has more loyal customers than most airlines, and some feared he would gut what made the 100-year-old carrier special. When he began making changes, such as reducing legroom in coach on narrow-body aircraft and removing free food on short-haul flights, the airline’s customers complained. “They obliterated their reputation very quickly,” blogger Gary Leff wrote in 2017.
Making it worse, British Airways suffered through technological issues, including a massive 2017 system outage the airline blamed on a contractor.
Cruz told travelers he had a plan. He not only wanted to make British Airways more competitive in Europe, but also sought to make it more of a premium airline for longer flights. In September, the airline said it would invest 6.5 billion pounds ($8.62 billion U.S.) adding new aircraft and improving business class, first class, lounges, WiFi, and adding other amenities.
Public sentiment may be turning. In 2018, British Airways said its customer satisfaction scores, measured by net promoter scores, increased 10 percent, year-over-year. Profits are up, too. According to its parent company, International Airlines Group, or IAG, British Airways produced 1.95 billion euros in operating profit last year ($2.2 billion U.S), up roughly 200 million euros ($226 million), year-over-year.
Still, Cruz said he knows he has more work ahead. More often than he may like, he hears from travelers who tell him what British Airways used to be. As the airline plans plans to celebrate its 100th birthday in August, Cruz probably would prefer consumers spend more time looking ahead.
Cruz will speak April 30 at Skift Forum Europe in London. Here’s a preview of the conversation.
Skift: You joined British Airways three years ago. You wanted to change the direction and culture of the company. What was most important to fix?
Alex Cruz: The No. 1 challenge that we have as a business is about our ability to work better and to bring to light the magic and the hard work and the tenacity and the dedication and the passion that British Airways staff have had over the last 100 years. And to put it to work to excel not just financially, which we are, but also in the delivery of the best customer service, as well as creating the best workplace.
All of this is work in progress, because we are a very large airline, we’re a global airline. And I would say that this is a project that is going to last five to 10 years, and we are just three years into it. But we’re very excited about what is happening.
Yes, you saw the financial results, and they were very good. But behind that, there are many things which we discussed briefly with our shareholders and analysts, which is a steady increase in customer satisfaction throughout this whole period. It’s a slow progress, but very sturdy, and it’s moving forward.
There’s a sense that we’re getting into a virtuous circle, where we have performed better financially and we’ve gotten the money to spend on our customer experience, hard product, soft product, technology, et cetera. That is also creating an environment in which we’re beginning to engage with our staff and create, again, a work environment which is increasingly satisfying.
Skift: There’s such a focus on the past at British Airways. Customers and employees are probably always telling you about the good old days. Has it been challenging to bring this brand into a new era because people are so nostalgic?
Cruz: Absolutely. And here we are, releasing new liveries of old airplanes, right? We know that that resonates, not just across many of our customers, but also across our staff.
But you’re exactly right. When you buy a 40-pound ticket to go to Rome with British Airways, there are many embedded expectations in terms of what you’re going to get versus if you were buying a 40-pound ticket from any of our low-cost competitors, where the expectations are significantly lower.
Yet what you will find in BA, increasingly, is a great deal of commitment to deliver on that expectation. For us, it’s about creating an experience, even in short-haul — the most aggressive market —which is better than others, and hence why our airplanes will soon have Wi-Fi on our whole fleet, and they will have power ports across the whole fleet. That’s something that our competitors in short-haul and in Europe are unable to deliver.
Beyond that, there are many other things, on the ground and in the air. And options, lots of options. You may want to go more comfortable. You may want to go business class. You may want to have access to this or the other. We are very much on our way to not just being able to sell some tickets at 40 pounds to Rome, but actually deliver according to those expectations that people have from British Airways.
Skift: Before British Airways, you led Vueling, the Spanish low-cost carrier. You would speak often about digital disruption and how airlines need to learn how to give customers what they wanted on the platforms they liked. At Vueling, this was easier, because it was a newer, more nimble airline. Has British Airways been slower to embrace the digital revolution?
Cruz: Digital revolutions comes through many, many different fronts, right? We can loosely talk about a digital revolution or technology revolution. I spend a lot of time talking talking about this with my staff, with my team, because we do want to be at the forefront. There are a few angles in this discussion.
We’re leading a digital revolution in a number of areas. For example, biometric boarding, and biometric passport checking. We’re one of the extremely few airlines around the world that consistently, in domestic and international points, allow you to approach the boarding gate with your face, and we recognize it, and off you go, with no passport, no boarding pass. Now that’s really innovative and it’s making a huge difference in the time required to board an aircraft. You could call that a small thing. It’s a big thing. It requires a lot of hardware integration, et cetera.
There’s many other points that are less visible from a customer perspective that are making a huge difference to punctuality. For example, look at these Molotok vehicles that we have on the ramp in Heathrow, which are pushing the aircraft more efficiently, more safely, giving us more control of the overall operation. That’s having a positive impact on customer service from a punctuality perspective. [Editor’s note: Molotoks are autonomous electric vehicles that push back airplanes from gates. They are typically more precise than tugs driven by humans.]
But you’re right, the whole airline industry is probably not developing at the same speed that you would expect for an Uber app or an Amazon app. There’s probably one reason behind that. And it matters not if you are a new wave, low-cost carrier, or a very well established carrier that is 100-years-old. We still depend on and are built on top of many traditional platforms. Not just for reservations but for distribution and for communications.
It’s changing slowly, because there are really billions of dollars invested into that infrastructure, which is working at-large to provide a minimum service. But you are right in challenging that those traditional platforms probably are not geared to deliver the type of experience that we as consumers are expecting to get once we use Amazon and Uber.
Skift: Can this be fixed?
Cruz: We’ve been spending a lot of time trying to understand where those pinch points are, not only from a customer perspective, but also from a backend system perspective. You will find the Hangar 51 Initiative led by IAG, which has given us exposure to a bunch of startups who are beginning to make a difference in the way that we interact with clients.
I would say that they’re actually helping with the internal culture, in terms of understanding that you have to be really pragmatic in the digital world. There is no time for long, heavy processes. That’s been extremely helpful.
From a BA perspective, we’re doing lots of stuff. But most of the stuff is done in the background around re-platforming so that we can take off afterward and begin to deliver interfaces such as the one that you mentioned. There are many features that we have in our list to develop which are really, really innovative. And I think for us it’s more of a technology challenge.
But your starting point, is the airline a little bit more behind that we would expect? As a general statement, probably yes. You will find that airlines like BA are leading across some of the fronts. But as an industry altogether, we are evolving. It’s just going a little bit slow.
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Photo credit: British Airways CEO Alex Cruz will speak at the Skift Forum Europe in London on April 30. British Airways