BA announces £4.5bn investment to restore past glory
It’s been a year to forget for British Airways. The beleaguered airline has suffered a series of embarrassing setbacks in 2017, including a costly computer meltdown, cabin crew strikes and – most bizarrely – delays caused by a shortage of loo roll.
Add to that the backlash over its decision to axe free meals on all short-haul flights and squeeze more passengers onto planes and you can see why the carrier might be keen to wave goodbye to 2017.
But is 2018 likely to be any better?
Alex Cruz, BA’s bullish CEO, certainly thinks so. In his first major appearance since taking the top job 18 months ago, he announced a new £4.5 billion investment that would make British Airways “the airline of choice for everyone”.
“The glory days are coming back,” he gushed during a speech at World Travel Market in London yesterday. “I firmly believe that our best days lie ahead.”
Cruz said the £4.5 billion investment would go towards procuring 72 new aircraft, upgrading 128 existing planes, training staff and rolling out “the best Wi-Fi in the sky”. He also committed BA to installing at-seat power points in all cabins and improving long-haul catering in economy, with the return of a proper second meal instead of a snack.
What else can passengers expect? Lower fares, better service and new destinations, he said.
BA had “learned some hard lessons this year”, Cruz admitted, referring to the computer meltdown that cost the airline an estimated £80 million, and the botched roll out of “buy on board” refreshments from M&S, which replaced free meals on short-haul flights in January. Stocking issues meant the airline repeatedly ran out of food before all passengers had been served.
More challenges lie ahead. Legacy airlines like BA are facing fierce competition from low-cost carriers at one end of the market and premium Gulf carriers at the other end.
“The low-cost model is now spreading to long haul,” said Cruz, who claimed BA would have to become more efficient going forward. “If you don’t change habits formed in cosier eras you will shrink and ultimately risk irrelevance.”
But while his speech was big on sound bites, the finer details were sometimes less forthcoming. His assertion that the British flag carrier is “a premium airline” will perhaps contradict the experiences of some passengers, who have seen legroom reduced, free meals axed and planes taking off without enough supplies.
Was the message from BA not a bit confusing, Cruz was asked? “There shouldn’t be any confusion,” he replied. He was also abrupt when asked if BA’s fares had come down, which passengers may well expect given cuts to free food. “We don’t comment on fares,” he said.
Moments earlier, however, he had commented on fares, reminding everyone how much cheaper it is to fly with BA now compared to 30 years ago.
“In 1987, the cheapest BA fare to the US was the equivalent in today’s money of about £850,” he said. “At King’s Cross this morning I saw it on a billboard: British Airways to Fort Lauderdale for £189 return, including taxes, bags, and food.”
On Brexit, Cruz struck a more sanguine tone than Michael O’Leary, who has warned that flights could be grounded if Britain crashes out of the EU.
“We are not worried,” said Cruz. “We don’t expect air travel will collapse between the UK and Europe. BA will shine through any type of Brexit scenario.”
In addition to Brexit, the aviation industry faces various challenges including a global pilot shortage, lack of capacity and depressed fuel prices, which have led to overcapacity and will eventually rebound.
“It really has been a case of turbulent skies over the last year,” said John Strickland, director of JLS Consulting, which advises the aviation industry.
Expect more turbulence ahead.