Vueling's new CEO only needs to stay ahead of rival LCCs on service quality. And keep cutting costs

Earlier in Nov-2015, Vueling's parent company IAG announced that the Spanish LCC's Chairman and CEO Alex Cruz will replace Keith Williams as head of its largest airline subsidiary, British Airways, in Apr-2016. Vueling generates the highest return on invested capital among IAG's airlines, and was the first to beat IAG's medium-term targets (before these targets were increased).

Moreover, Mr Cruz has established Vueling towards the premium end of the spectrum of LCC business models; indeed, he is not a fan of the 'LCC' epithet. He has achieved this while ensuring that Vueling's unit cost is consistent with that of a European LCC.

However, Europe's largest airline by passenger numbers, ultra-LCC Ryanair, is starting to improve its own brand offering without giving up its cost advantage. What's more, Ryanair has strong and growing positions at Vueling's two largest bases, Barcelona and Rome Fiumicino. A replacement for Mr Cruz has not yet been announced, but the new CEO will need to ensure that Vueling competes, both on service quality and on unit cost.