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Yesterday, British Airways’ new CEO Alex Cruz took an hour our of his busy schedule to sit down with TPG in our NYC office. Much of the discussion focused on the future of British Airways — including whether British Airways will switch to a revenue-based Avios program, 10-across economy seating, BA’s need to develop a competitive business-class hard product, the roll-out of Wi-Fi on BA planes and whether British Airways’ luxurious first-class product will be phased out.
The discussion also dove deeper into industry trends, new routes and how long British Airways will stick with the Queen of the Skies. Here are some highlights of the discussion:
Transatlantic fares are the cheapest we’ve seen in a while. Are these fares sustainable?
Cruz discussed how there are a record number of seats available for flights between North America and Europe. This isn’t just from low-cost carriers like Norwegian and WOW opening more and more routes, but also from legacy carriers increasing flight frequencies.
While low fares are driving more transatlantic travel, there are still plenty of empty seats, requiring airlines to continue keeping their fares low. Cruz points out that the key is to look at capacity. If airlines start losing money, they’re going to drop capacity and fares will naturally increase. That’s not happening. He concludes, “It appears that we are going to have cheap fares for a while.”
How do you want to differentiate British Airways from low cost carriers like Norwegian and WOW?
These airlines are simultaneously a threat and a new opportunity for British Airways, as more potential travelers now consider flights to Europe: “Once people begin to think ‘well, I should go because it’s $250,’ they are going to look around anyways and [British Airways] needs to be there. We need to be there at the price point and we also need to be there at the service point.”
This means British Airways needs to have a dual focus: commoditizing the economy experience while also developing superior premium products for the travelers willing to pay. But, in economy, BA needs be able to deliver the lowest price in order to compete. The challenge is then doing so without “degrading a lot of the attributes of the BA product.”
What is the future of the “Queen of the Skies” Boeing 747?
With many airlines retiring their old 747s and only a few carriers opting to purchase the new 747-8, it looks like the 747 is disappearing from the skies. Cruz confirmed that the British Airways 747s are still going to be flying “for a while.” BA has refreshed the cabins on some of the 747s that it’ll continue to keep in the fleet — and BA is considering refreshing even more aircraft to extend their lives for a few more years.
No, but British Airways is “ok for now.” BA is going to focus the next six to nine months ensuring that all of the newly announced routes are promoted and priced correctly. So, BA is not going to be in the position to think about developing additional new routes during that time.
“But, the US is the most important market for [British Airways].” Cruz has been looking at the top 60 US airports and is seeing that there are plenty of opportunities for the airline to expand in the future. But, no more new routes will be added this year.
TPG and Cruz discussed touched on many more subjects— including an incredible giveaway planned for Black Friday. BA will be offering 1,000 travelers departing from the US on overnight flights on two dates (January 10 or January 14, 2017) three free hotel room nights per person in London.
At 10am EST on Black Friday, you’ll be able to select the offer as part of a British Airways vacation package, or when you book an eligible flight you can choose from a variety of available free hotels. In addition to the free nights, the lucky passengers will get Visitor Oyster cards with 15 GBP (~$19) of credit pre-loaded. Given that this generous promotion is limited to 1,000 travelers, you’ll want to act quickly on November 26 if you’re interested!
To watch the whole interview, check it out on Facebook, or in the YouTube video embedded up top.
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