On this week’s Airlines Confidential, Scott McCartney had former American Airlines CIO Maya Leibman back as his co-host and ex-British Airways boss Alex Cruz as their guest. Cruz talked about bringing the low cost model from his time running Vueling over to British Airways. And I think he’s actually proud of that?
Cruz believes in premium when it costs nothing to offer (where you can get someone else to pay for it, in exchange for exposure to your customers):
When I started Click Air and eventually we moved into Vueling, we realized that there were many instances we just couldn’t compete well with Ryanair. I mean, we were about just a little bit under twice their cost base. And we had a pretty low cost base, but Ryanair’s was wildly low cost base. So we made it a mission to not just look for ways to lower cost base, but to try to premiumize with only one condition. And that condition is that it wouldn’t raise costs.
So if you have flown a Vueling in those early years, you would have had some interesting experiences like morning newspapers on some business routes. We had hot towels for a while, free food for the first row. We put up some special soft head rests. We were the first ones to put on board Wi-Fi in Europe at the beginning of all the locus carriers, all kinds of things.
But of course, the main premise was they couldn’t cost us money. So we did it via partnerships that paid for all the services from media groups to Pepsi. We innovated a great deal. I do have to say some of those partnerships ended and we removed the service because for us, cost came first.
So he moved over to become CEO of British Airways and brought with him the same mindset. And he thought it was crazy that they were offering a better, bundled product on European flights.
Now, BA was complete opposite. It was all about unlocking what customers wanted to pay for. And we did find out that we were competing on price on many routes with locus carriers from Ryanair, probably a little bit less, but really very much with EasyJet, which was head on. and then with a bunch of others.
In those competitive, really competitive pricing environments, we were still offering two pieces of onboard baggage, one checked-in bag, sandwich and chips, nearly unlimited alcoholic drinks, and of course, miles, upgrades, access to lunches for more expensive fares. It just didn’t make sense.
So their solution was unbundling and basic economy (like ‘hand baggage only’ fares). Cruz became CEO of BA in 2016, and these fares actually started on intra-Europe routes before that (but not transatlantic until 2018). Emphasis mine:
All the data that we had, not just from my own experience, but over and over again from many data sources, was that the majority of leisure customers, their biggest consideration was price. So we followed a little bit of the basic fare logic, mastered by the legacy airlines in the US. We did create a very basic fare.
We changed the onboard model to buy on board, and later on we added free water and a snack. But in reality, we still kept many of the amenities, like two pieces of baggage on board, and of course, all the premium features, of course.
He offers that he didn’t come in relating to the premium long haul business that British Airways had.
I guess the other big difference is also, for me, from Vueling to BA was the long-haul product. There was so much of it. And the long haul dynamics operationally and commercially were totally different.
Premium, super premium, very large numbers of very high tier frequent flyers, launches, deep commercial partnerships with other airlines, alliances, et cetera. It was really a new world to me from a responsibility perspective. I mean, there’s nothing new, but managing it very closely was a steep learning curve for me, for sure.
It was a very strange interview in many ways. Cruz complained about the lack of subsidies to British Airways from the U.K. government during the pandemic, notwithstanding that the grant of the largest portfolio of slots at London Heathrow airport (the right to operate in the lucrative market, to the exclusion of others) is a huge subsidy with tremendous market value and while BA got less than the billions handed to Lufthansa and Air France the broader claim about no pandemic subsidies really isn’t true.
- Bank of England Covid Corporate Financing Facility): BA issued £300m of commercial paper under the state-backed program in April 2020.
- Coronavirus Job Retention Scheme: government wage subsidy to furlough staff (up to 80% of wages, capped per employee).
- UK Export Finance guaranteed loans: £2.0bn guaranteed five-year facility, plus an additional £1.0bn UKEF Export Development Guarantee facility that was committed and undrawn. These were government-subsidized loans, not direct injections of taxpayer cash.
He also claimed that BA IT issues totally took them by surprise in 2017, they learned a lot from them, and “BA hasn’t had any self-managed outages since then.” And I don’t think he knows what he’s talking about here?
- May 27–29, 2017: This is the outage Cruz acknowledges. Power was cut and then an “uncontrolled return of power” at a BA data center caused a surge that took down BA’s IT worldwide, stranding 75,000 passengers over a holiday weekend.
- July 18, 2018: I guess this is where he can blame Amadeus problems that caused BA to cancel short-haul flights.
- Aug 7–8, 2019: BA check-in and operations meltdown in London with 500 flights cancelled and delayed on the 7th and over 100 the next day, I think maybe he wants to blame airports for this one?
- Feb 25–27, 2022: The British AIrways website and app went down, airport operations affected, and flights were cancelled as disruptions lasted several days. I don’t know what third party he’d point the finger to here.
- Jan 17, 2025: BA website and app again failed, check-in was blocked for many customers. Again, this one was on BA unless he’d argue it was BA’s own IT services that had been outsourced to third party vendors in India that failed, but that’s still BA’s IT management decisions.
Ultimately former British Airways chief Alex Cruz seems proud of bringing the low-cost mindset from Vueling to BA — unbundling meals, baggage, and perks while calling it innovation. You might wonder why he’s confessing to destroying the storied brand. I think he’s bragging.
Alex Cruz is an idiot! If I had to name the worst experience I have ever had flying an airline, it would be Vueling. Being proud of what he did to BA is like being proud of gutting a fish. You may have done a good job of it, but regardless of whether you did a good or a poor job, the fish is still dead.
And @Gary, BTW, in the past two weeks, I have been on BA’s website looking at award tickets — or at least, trying to. At least three times a day, and often more if my patience doesn’t run out, I’ve gotten error messages such as — and I am paraphrasing here — “Oooops! Something went wrong. You may want to try again later or refresh your screen”; or, “Sorry, we’re experiencing a high volume of traffic. Please try your inquiry later”; or “We’re working hard to get back online…”
Maybe BA should hire away the IT people from Ryanair or EasyJet…
Oof. Turning BA into Vueling is not to be celebrated. Yikes. “destroying the storied brand” is right.
Europe can start looking down on America when they get air conditioning and stop pretending that hard plastic seats with 30″ pitch is “business class.”
@Doug — Yeah, 3-3 middle-blocked is not ‘Business’ class. Recliners, lie-flat, or just call it Economy+
The coach class changes were essential to stay in business (remember, they were competing head-to-head with the most popular carrier in Europe — Ryanair). A big mistake was trying to do exactly the same thing to business/first class long-haul. For example, not allowing long-haul business customers using miles to choose their seat until X hours before takeoff. That really did conflict with the “high level of service” image the carrier was trying to convey. Basically, Cruz should have been a line manager in charge of coach. He was out of his depth as CEO.
BA Club Europe flights are simply awful. Extremely tight legroom. It’s just plain uncomfortable unless you are less than 4′ tall. BA employees are generally great but there is very little they can be proud of.
The best thing to happen to BA from Covid was removing this clown, Cruz. Clueless at adding value, a one trick pony in just cutting costs. He completely ruined my experience as a Gold card holder.
The most damage was actually done by his recruited sidekick, Jason Mahoney. An evil aggressive man, who was out of his depth – with his effects still felt through the airline now. Why did SAS hire him.
@jason whilst I, literally at times, feel your pain re the still clunky, disjointed, woefully out of data and embarrassingly disconnected regarding business units when it comes to end user purchasing/ administering, frankly still a POS excuse for a website (( I’d imagine most here have picked up on the graphical improved ‘the club’ landing page being nothing more than a polished turd sitting there simply to add another, wholly unnecessary, layer for us to get past)). I’ll have to guess you’re an iPhone user as you made no reference to the fact that for the last several months actually being able to login to the damn app is a total fluke and highly unlikely.
Still it’s nice to see that made up figure with a B associated to it being used effectively and overhauling the experience like they’ve been trying to convince themselves more than anyone else.
Definitely mirror others comments about Cruz. I think the most telling part about his unsuitability for the role and the damage he caused were his own words. Its commendable of him to admit he was, for all intents and purposes, clueless about efficient management of long haul operations. It’s just a shame he ploughed on trying to make the airlines global operations be more Vueling like instead of realising the patently obvious. That Vueling more likely aspired to be more like BA ( insert other comparable carrier here).
I think it’s fair to say that BA had begun it’s downward slide before Cruz appeared on the scene but by the same note I’d suggest his actions accelerated that slide whilst making BA tumble so far down that it’s hard to see any financial outlook that will ever see it climb just high enough to escape it’s constant comparison to LCCs
It’s depressing to watch British Airways continuously decline since Cruz came to the reins in 2016. Cost cutting in the onboard product (removing complementary food and beverages in World Traveller, brunch in Club World, and more), IT outages, miserable experiences with staff, less comfortable seats, and so on.
What’s even sadder is that I saw a British Airways that set the standards continuously in the 80s, 90s, and 2000s as the “Worlds Favorite Airline”. Even in the early 2010s just before the Cruz era, it was at least a typical middling European full service carrier. Now, we have a slightly upgraded LCC with sky high prices.