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Tuesday 19 June 2012

Vueling's CEO outlines some key points about the future of the airline

Mr.Cruz speaking. The event was chaired by renowned historian Paul Preston (foreground)

A few days ago I had the chance to attend a presentation by Vueling's CEO, Alex Cruz, at the London School of Economics (organized by the Spanish Chamber of Commerce of Great Britain and LSE Enterprise). It's been a few days already (traveling and other work have prevented me from posting more often lately!) but I guess most of what he says remains valid.

Here are some of the points he touched:

-Vueling has a really competitive cost structure, at a unit cost per ask of €4.18 it compares favourably to Easyjet's €4.36, and even better with regards to other competitors such as Air Berlin, although still some way off cost-leader Ryanair, at €2.22.

-Vueling is unique among low cost carriers in that it participates in two frequent flier programmes: its own, Punto, and IAG's Avios.

-Mr. Cruz explained how when they set up Clickair, an Iberia subsidiary that later merged with Vueling, they followed the textbook examples (Ryanair) of what a low cost carrier should do and should not do, but after some time in the business they started challenging some of this "established" knowledge and experiment with things such as assigned seats or connecting flights, that have yielded satisfactory results so far.

-Vueling is continuing to pursue its hybridisation strategy, with the aim of attracting business customers (the recently launched Vueling Pass goes in this direction)

-They aim to strengthen cooperation with other carriers within Oneworld, such as BA and LAN, to support its growing, although still small, connecting traffic via its Barcelona base.

-Regarding network, and asked by the audience about the long-haul plans some airlines have announced (for example, Norwegian) Mr. Cruz stated that their intention is to continue flying only to cities that are no more than a 4-hour flight away from Barcelona (they do not like hotel expenses!). He still sees new opportunities within this geography, though, for example in Eastern Europe and Russia, maybe even some destinations in Africa.

-Regarding fleet, the aim is to reach 100 aircraft as quickly as possible, since this would provide the scale required to remain competitive. Vueling is likely to remain a single aircraft-type operator for now, although they have considered different options, including Boeing and Bombardier.

-To conclude, one thing that keeps him awake: the risk of the company growing to the point that it loses its personality, its dynamism and freshness...

Still some way to go, I think....

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