IAG (the parent company of British Airways) held its annual investor update on Tuesday, where it sets out its plans and priorities for the future. There were a few interesting nuggets during it. I would concentrate mainly on BA during this article.
In the overall aims for the group, investing in IT was mentioned, which is good as BA’s IT is absolutely shocking most of the time. The money they must lose by people giving up on bookings or people not booking direct must be substantial. Growing IAG Loyalty was also a top priority. We can see this already with the new initiative, such as earning tier points through the BA Premium Plus Amex that was announced yesterday.
In this post:
BA Seats and fleet
However, during the 2023 Capital Markets Day of IAG, the airline has stated that all Heathrow based long haul aircraft will feature Club Suites by the end of 2026, including the A380s, which they recently announced will be refurbished with a new First class as well. They have currently completed 60%; this will rise to 75% by the end of 2024 and 100% by the end of 2026. The A380 refurbishment program will start in late 2025.
Premium capacity is not expected to get back to 2019 levels until 2025 due to the high J configuration aircraft being retired. This would explain why business class is so expensive currently, as well as the general lack of capacity in the system and the increase in demand for premium cabins.
No mention was made of when they will complete the B777 fleet, which should have been completed by the end of 2022.
For those hoping for a return to Asia, it does not sound promising. IAG revealed that the majority of BA’s top earning destinations are within the US, and they plan to concentrate on that country still. The only mention of Asia was in reference to the joint partnerships with China Southern and Qatar in Asia. There were no destinations mentioned in the growth slide.
They expect to grow their Gatwick operation next year above the 19 aircraft they currently have, and Aer Lingus also expect to expand at Manchester.
Luis Gasllego, IAG’s CEO announced that there would be considerable investment in British Airways, in particular IT and customer experience. c.€2.5bn will be invested in customer experience over the next three years.
The business has become more leisure-focused, with 75% of BA’s market being leisure travellers. They plan to continue to be the market leader in London. They want to improve customer satisfaction in premium cabins through staff engagement and a large improvement in punctuality (which is very poor currently, as anyone who flies a lot with BA will testify to). They admitted that over two-thirds of the cause of delays is down to BA, not external influences.
Full-scale refurbishment of Heathrow lounges is mentioned. It’s an interesting choice of words as currently, some have had a change of furniture, but areas like the toilets have not had more than a light refresh with some new handles etc.
BA is making its biggest investment ever in its app and website. The new ba.com website should roll out next year, but the app will relaunch in 2025. This will enable customers to manage everything online, which is good news. They plan to have a leading IT system when it is all complete. IT resilience is also key, with half the desks at Heathrow can still work if the system is down.
IAG Loyalty has a revenue of £1 billion and is increasing profits by 10% per year. Their profit is up by 65% versus 2019. The theory is that it will attract more customers to the brand with non-flying earning opportunities. 60% of collection of Avios is now through non-flying methods (and will probably increase its share thanks to the new, less generous earning on flights with BA/Iberia).
It was interesting that the Avios-only flights have not sold out completely with 25% of the seats still available.
The company plans to implement a single virtual Avios balance across all its airlines, which you will be able to see in your account. Qatar already shows your joint BA/Qatar balance.
More improvements and changes:
- Consistent recognition of status across all the brands
- Consistent tiers across the airlines – no further detail was given, but this is a slightly alarming one given things such as the Gold Upgrade vouchers, which are unique to BA
- In 2024, there will be an improvement in pay with Avios, where you can discount the ticket down to £1 on most commercial fares
- Iberia will introduce Reward Flight Saver
- They plan to launch more opportunities to redeem for hotels and car hire in conjunction with BA Holidays