BA must be more budget and less ‘cosy’, says CEO

BRITISH Airways must become more like a budget airline in order to survive and “habits formed in cosier eras” must end, its chief executive has told an audience at the World Travel Market.

Speaking at the trade show, Alex Cruz said airlines which do not adapt now “risk irrelevance”, as budget carriers spread to cover longer routes.

“The airline market today is more competitive than it’s ever been,” he said, adding that the airline was offering hundreds of one-way tickets for as little as £30.

He said: “As a national flag carrier we are not granted some special immunity from the way the industry has changed. Incumbency does not grant any privilege. We have no divine right to flourish and we don’t ask for one.

“The current plight of airlines like Alitalia is testament to that. The lesson of recent years for flight carriers across Europe has been that if you don’t change habits formed in cosier eras you will shrink, and ultimately risk irrelevance. Profitability and returns to shareholders are not optional extras.”

The Italian airline went into administration in May, and Mr Cruz added that the collapse of the British budget airline Monarch last month showed that budget companies were not immune from financial problems.

“I don’t recognise cosy, I don’t live in cosy. I don’t think that Willie [Walsh, CEO of parent company IAG] would have hired me if he thought that at any given time I could become cosy. That just doesn’t exist,” he added.

Mr Cruz said he believed the “glory days” of British Airways would return. “BA will always be a premium airline,” he added.

Speaking to BBC Radio 4’s Today programme, Tony Fernandes, the CEO of low-cost airline Airasia, said: “I believe that, in the end, you will have five-star airlines that focus on premium passengers and low-cost, long-haul airlines that will focus on the mass market.”