New IATA director general and CEO, Tony Tyler, provides his thoughts on leadership, the organisation’s relationship with ACI and the challenges ahead for the aviation industry.
Why did you decide to take up the 'hot seat' at IATA?
After over three decades at Cathay Pacific, the last four years as its CEO, it was time for me to start thinking about what do to next. I certainly was not ready to retire; I was on the IATA Board of Governors and had the honour to serve as its chairman in 2009-2010, so I knew the organisation and its work fairly well. When the opportunity arose, I decided to throw my hat in the ring.
Of course, I did that with purpose – I am a firm believer that air transport is an important force for good in the world. It connects economies, business and people in a way that has turned our planet into a community. Along with the virtual connectivity of the Internet, the physical mobility of air transport has defined modern life. I looked on the opportunity to lead an organisation that plays such a pivotal role in air transport as a great challenge. I am always up for a good challenge and IATA is certainly providing that.
Will Giovanni Bisignani be a tough act to follow?
Giovanni is a unique figure in aviation. He changed IATA and provided leadership during our most challenging decade. And he leaves behind a list of very impressive achievements: making the industry safer with the IATA Operational Safety Audit (IOSA): modernising industry processes with Simplifying the Business; e-ticketing, barcodes, kiosks, and a host of other initiatives, including uniting the value chain around targets to address climate change.
He will be a hard act to follow, but he has also left me some great tools. IATA has a high profile and is relevant both within the industry and to governments around the world. And IATA has 1,200 highly talented people on the payroll, who are deeply involved in almost every aspect of aviation all around the world.
How would you describe your style of leadership, and will it differ greatly from your predecessors'?
Everybody has a different leadership style, but results are more important than style. IATA's mission is to deliver value to our member airlines. That is what we need to do.
The last decade brought some unprecedented challenges. It started with 9/11 and the need to secure the industry against new kinds of terrorist threats. We also had SARS, H1N1, new business models, rising oil prices, natural disasters and economic crises. And we had to get our act together on climate change. If you look at how we met these challenges, the greatest successes have one thing in common – a combined effort by all those involved.
We live in an industry with a complex value chain and a lot of stakeholders whose interests will not always be 100% aligned. That is understandable, but the best way to get things done is to find the common ground that allows us to work together and deliver results. This is nothing new – it is how we have improved safety virtually since the day the industry began. My goal will be to build on and develop this approach to deal with the many issues that aviation faces.
Bisignani was, at times, a fierce critic of airports on the subject of user charges. Can we expect more of the same from you?
Giovanni and I have different styles, but we face the same challenges. And the reality is that, in some cases, airport charges are a major issue for our members. They are equal to about 9% of our revenues.
Airports should understand that their charges could constitute a very large proportion of the marginal cash costs of a new route, which is what matters when airlines are weighing up whether to launch a new service or frequency. Besides, airfares have been falling for decades in real terms, while many of our costs have not. One of IATA's key functions is to articulate clearly what is not acceptable. IATA has a good track record of raising awareness of the issues and encouraging a more customer-focused mindset in the managements of many airports.
It is not a win-lose scenario. I plan to take a co-operative approach to achieving solutions that are good for both airlines and the airport. There are plenty of examples of great airline-airport relationships that are working well – COPA and the Panama Hub of the Americas, Alaskan Airlines and Sea-Tac, Changi and Singapore Airlines, or my former airline Cathay Pacific and Hong Kong International Airport. The goal is to increase the list of great partnerships.
Do ACI and IATA share common ground on the environment, safety and security?
Absolutely, and on so much more, of course! Passengers cannot get to the aircraft without passing through the airport. We have a common interest in improving the passenger experience on the ground, keeping cargo moving smoothly and making aircraft turnarounds fast, efficient and safe. So, as the associations representing airlines and airports globally, it is important that we work together.
If we focus on the passenger's trip through the airport, there is a lot we can do to facilitate a better experience. A natural step is continuing to introduce new technology into passenger processing. With e-tickets, barcodes and kiosks we can give the passenger more convenient options, but ensure that they arrive at the door of the plane completely satisfied, we need to improve the way we do security. The IATA Checkpoint-of-the-Future concept is a vision for a seamless process that is both more efficient and more effective. I see security as a priority focus for our co-operation.
What do you see as the main leadership challenges ahead for you and IATA?
My mission is to help our members do business. That means being safe; providing a quality product; being environmentally responsible; keeping revenues ahead of costs, and delivering appropriate returns to shareholders. IATA can and does play a very relevant role in all of those areas.
The leadership challenge is two-fold. First, we have to keep the industry united and working together on key issues. IATA can deliver leadership ideas like mitigating climate change, improving the scope of our auditing programmes and delivering new technology initiatives. We can also smooth some regulatory hurdles and help set industry standards, but it is the airlines that ultimately deliver the results. They have a lot on their plate, and to keep them engaged, we must pick the issues and projects that are most relevant to them and make implementation as easy as possible for them.
The second challenge is keeping a twin focus. IATA needs to be engaged with our stakeholders, members and partners to solve the problems of today. We must also be constantly looking ahead to anticipate the challenges of tomorrow and prepare for them by delivering solutions today.
How important is good leadership in today's tough operating climate?
Aviation is not an easy business and I don't see that changing any time soon. The goal posts are moving constantly and good leadership is required to manage through the crises and shocks.
Fortunately, our industry has been blessed with great leaders who have succeeded in the face of enormous hurdles – such as an $82 billion fall in revenue between 2008 and 2009 or the increase in fuel from 13% to 30% of costs over the last decade.
We are fortunate to have a Board of Governors that brings this same leadership to the industry level. They take time out of their busy company schedules to provide guidance to ensure that the work of their association delivers value that helps them run their businesses and prepare for the future.
Do today's airline and airport bosses need to be politicians and top communicators as well as good businessmen/women?
Yes. It is a complicated business with a lot of stakeholders. The job of a CEO – airline or airport – is about more than having solid business skills. Aviation is a high profile industry, and it is a plus point that we are 'top of mind' with many politicians and in many communities. The communications and political skills of the CEOs are needed to keep it from being a lightning rod for criticism. Transport links are critical to any community. Despite having connected the world virtually with the technology of the Internet, no city can advance economically without efficient transport and logistics links, especially air transport.
Herein is one key challenge. We're great at some things in this industry, but not too good at communication. Too often we talk to each other and fail to realise that our message isn't reaching the outside world. Aviation has many strong points, but effective communication is not among them. The reality of today is that advocacy has never been more important – to achieve common sense solutions on climate change, to avoid crippling taxes and to ensure adequate infrastructure capacity.
Do you believe we will see an ever-increasing number of CEOs recruited from outside the industry in the future?
Having spent over three decades at Cathay Pacific, I am an airline person, so I would like to believe that this industry is unique and the great young people that we employ today are the pool of candidates for tomorrow's leadership. At the same time, outsiders may find it easier to identify things that can be done differently or better and drive change accordingly. Some of the most innovative aviation leaders over recent years have come from non-aviation backgrounds. I'm sure there will continue to be a balance as time goes on and that's a good thing.
What is your take on the airport security process 10 years on from 9/11?
We are much more secure today than we were in 2001. Cockpit doors have been sealed, and we have put a lot more hurdles between check-in and the gate. We also know much more about our passengers – and governments even more – but we have some serious problems still to resolve.
A good starting point is the airport checkpoint. Our current airport checkpoint model is not fit for purpose; it was designed four decades ago to prevent airline hijackings by detecting the metal weapons that hijackers carried, and since then more and more processes have been added in knee-jerk reactions to incidents of various kinds. In the face of new threats following 9/11, we have added checks for shoes, hidden objects, put restrictions on liquids and gels, and required pat downs and manual checks in some cases. In the name of security, our passengers suffer many indignities and a lot of delay and inconvenience.
The airport security experience does not have to be this way. We can use knowledge about our customers much more effectively to take a risk-based approach to security. And we need to put technology together so that we can screen passengers effectively without queuing or disrobing. This is the premise behind IATA's Checkpoint-of-the-Future.
Should the world be concerned about a potential future shortfall in airport capacity?
Yes, but it is not the world so much as local governments. Business people need to travel and goods need to get to market. Companies will locate in areas where there is sufficient capacity to meet their needs, and they will relocate if those needs cannot be met. Connectivity drives the global economy. This is not just about the Internet. It is about having the mobility to drive your business globally.
Those countries that are investing in airport infrastructure are increasing their relevance in the world. We see this in the Gulf and in many points in Asia, but I am very concerned about Europe and a few key bottlenecks elsewhere, like São Paolo. We need to help governments to understand that failure to build effective capacity to facilitate growth is equivalent to taking a decision to shrink your economy.
Justifying a failure to invest in infrastructure in the name of the environment is deceitful and false. Emissions can be managed with newer technology, improved operations, globally co-ordinated economic measures and more efficient infrastructure. Failure to build infrastructure either results in inefficiencies that increase emissions or that shift the issue to a different location.
What are the predictions of the latest IATA Global Outlook report?
There are definitely challenging times ahead. We see profitability falling to $4.9 billion for a 0.8% margin in 2012. This is based on zero growth in cargo yields, less than 2% improvement in passenger yields and continuing high oil costs.
It is a difficult environment to run an airline in. Airlines will be will be redoubling their efforts to protect a weakening bottom line by improving efficiency, cutting costs and adapting their businesses models. In light of this, I look forward to discussing ways to further strengthen the airline airport partnership with the ACI membership when we meet in Marrakech.