A New Vision for British Airways Takes Flight
CEO Álex Cruz talks to IESE alumni in London about future of airline
July 14, 2017
Back in May, British Airways made headlines around the world for all the wrong reasons, when an IT systems failure grounded hundreds of flights, affecting some 75,000 passengers.
For CEO Alex Cruz, who spoke alongside IESE Dean Franz Heukamp at a gathering of IESE alumni in London this week, the May disruptions served as confirmation that the company needs to step up investments in customer service, and halt what he describes as a “trend in brand depression”.
“May confirmed what I knew. That we had not invested enough in customer service. That said, we still had a remarkable company: one with a global footprint, a culture of innovation and at its heart, 45,000 employees who shared our desire to turn our fortunes around,” Cruz said.
To make that turn-around, Cruz is implementing a plan for the airline based on a number of core pillars. “Our pillars span customers and regaining confidence and trust; operations with a focus on safety and reliability; efficiency which does not mean cost or job-cutting; implementing changes and improvements in technology. And finally, people. The absolute priority is people. Both from a customer-centric and a staff perspective.”
Planning Investments Across Classes, Especially Economy
Cruz took the helm of BA in November 2015, coming from low-cost airline Vueling. But the cost-cutting route, he says, is not an option in executing his plan to re-focus on customer service. Cruz aims to invest some $ 400 million in the coming years to “win passengers across all of our cabins”.
A priority will be investing more in economy class. “We are looking at how to deliver more in terms of customer experience and a key piece of this will be differentiating how we deliver in economy. We’ll be looking at key differentiators like food, Wi-Fi and so on.”
Other classes will be improved as part of Cruz’s raft of changes, with a “new seat” Club class, which the airline will unveil in the coming months.
“We Ran Out of Credit With the Media and With Our Customers”
Between 2010 and 2015, British Airways experienced solid commercial success with significant growth in flights, destinations and staff. Despite this, says Cruz, the competitive environment in which the airline operated changed radically.
“The world changed. A significant number of U.S. airlines disappeared as new players entered the market. We entered an era of new products and services, with significant mergers and acquisitions changing the competitive space.”
BA’s response was to prioritize investment in products over brand perception – a miscalculation, says Cruz, that came to a head between 2015 and this year, with the May Bank Holiday meltdown.
“Our brand metrics started trending downwards. Last summer with outages, staff conflicts and delays we saw further brand depression – culminating in May’s events. Basically we ran out of credit with the media and with our customers.”
A Very British Airways
But Cruz insists that BA remains a robust competitor in the changing competitive space. Part of the strength of the company is, he believes, its “unique Britishness”.
“BA stands for something. We have great people here and a great network to tap into. The company has a strong heart.”
A “staff-first” approach is, he says, key to delivering his plans. “We will be looking to modernize our internal culture to drive our strategy. But this really means prioritizing staff. There is a high proportion of people here that have been with the company for 30 or more years. These are the Elders. Communicating with them – robust internal communications – for me is a kind of Holy Grail.