Style Change

When Giovanni Bisignani took the helm at IATA in 2002, he embarked on a world tour to meet the people he would be working with. By all accounts, it was sometimes hard work merely to get an audience. Fast forward to 2011 and IATA’s global importance is raised to a whole new level, thanks to the firecracker personality and results-driven ethic of Bisignani.

Bisignani shook up things, without question. IATA’s annual AGM has been transformed from a sleepy, agenda-checking affair to a major, global media-grabbing event. So when former Cathay Pacific CEO Tony Tyler was appointed IATA DG and CEO in July and began his own introductory world tour, the world rushed to greet him. And not just the higher-ups of the aviation community: Tyler has been granted audience by state ministers, lawmakers and even kings.

For this, Tyler is vocally grateful to Bisignani, whose status he has inherited. But it’s a double-edged sword. How to make one’s own imprint when following the legendary footsteps of one who so changed the style and impact of IATA?

Tyler is not daunted by the challenge. The ultimate multi-national diplomat, he is comfortable in his own skin and with his own style. Even in the first months of his directorship, it’s clear he will lead IATA by making best use of the negotiating skills he has honed through his 30-plus years at Swire and Cathay. It’s obvious in his globe-trotting speeches. He reaches out to the community he’s addressing — there’s little or no chastising and instead a lot of reaching out and empathy on why a particular region sees things a certain way. And his message always strikes a positive note, even when the topic is problematic.

A good example is his speech in early November to Washington, D.C.’s upper echelons at the Washington Aero Club. Tyler, who has identified security as the top issue where he wants to achieve change during his tenure, made clear that he understood the US’s unique perspective on airport security, framed as they are by the events of 9/11. And he gave credit to the heads of the Department of Homeland Security, Janet Napolitano, and the Transport Security Agency, John Pistole, —both of whom have granted him private audience—for their enthusiastic support and willingness to cooperate with the global community on security issues and replace the one-size-fits-all approach to security. He also lauded the TSA’s new Trusted Traveler program as a model of the kinds of new security practices that should be pursued.

This kind of reach-out is still not universally common in the aviation industry, where many make pointed digs at the TSA and its cumbersome security screening processes that treats every traveler as a security threat and which assumes it knows best. Tyler, however, won’t be drawn into finger-pointing and complaining.

“Shouting and whinging is not my style. I prefer to talk quietly and strongly,” he told ATW. He’s also a believer in the team. “I do believe in working together, cooperating and pulling together in the same direction, because that can get a lot more done. IATA can be much more effective as part of a choir than as a solo voice,” he said.

Emissions Row 

That’s a philosophy he is already applying to the first big and controversial issue of his directorship: the European Union Emissions Trading System (EU ETS) carbon tax that the European Commission is set to impose unilaterally from January. True to his personal character, Tyler’s comment on this is that it would be better to stop the rock throwing and instead focus energy on working a solution from within ICAO.

Tyler’s view is that the aviation industry is right to support market-based measures, including emissions trading, but they must be coordinated among governments through ICAO. He reminds audiences that the airline industry has “done its homework” to address the 2% of global manmade emissions that it produces and that it has committed to improve fuel efficiency by 1.5% annually to 2010, cap net emissions from 2020, and cut emissions in half by 2050 compared to 2005.

In other words, he is careful to spell out the good work the industry has achieved and its continued commitment to being a good eco-citizen.

But he also describes the EU plan as “misguided” and one that took a distinct wrong turn when it over-reached and imposed a unilateral and extra-territorial fee. “Issues of sovereignty are something that governments don’t take lightly; it’s too important,” Tyler observes.

 “I would like very much for states to start working together inside ICAO rather than throw rocks at each other outside ICAO, which is what is happening now. If we put that energy into achieving a common solution, we would get there pretty quickly, I think.”

That may be an overly optimistic view. Many criticize ICAO for not grasping the importance and urgency of the emissions fees issue and putting it on a fast track. Critics point out that ICAO’s reputation for treacle-slow processes is partly why the EU decided to push ahead with its own solution. Tyler himself says the EC “can take great credit” for raising the visibility of the issue.

However, reaching a global solution within the fast-approaching deadlines that the EC has placed seems unlikely unless Tyler and the heads of governments as diverse as the US, China, Russia and India can accomplish some rapid, behind-the-scenes footwork that not only gains Europe’s approval, but also can be steered through ICAO at breakneck speed.

Optimism Always 

Tyler’s enthusiastic optimism will likely also be stretched as the industry gears for what is expected to be a rough ride, given the bleak economic outlook at least in the initial year or so of his directorship. As he acknowledges, the high price of oil and an anemic economic outlook—with Europe a particular concern—means that IATA forecasters believe airline profits will fall to $4.9 billion in 2012 for a 0.8% margin. If that forecast proves right, then airlines will have lost $25 billion on $5.5 trillion in revenues since 2001. “The problem with the airline business will continue to be that it’s all turnover and no leftover,” he quips.

Bringing a community together, as Tyler strongly believes in doing, is tough when its constituent parts are focused on survivability and gaining some kind of competitive edge.

But Tyler’s optimism is genuine: his passion for the aviation industry is as palpable and fresh as it likely was the first day he joined Swire. He gives the impression of someone who almost can’t believe his luck to have become the head of the industry he loves. “I am passionate about aviation and I believe strongly that it is a force for good in the world,” he says. And despite having been a loyal and energetic Cathay man for more than three decades, Tyler is clearly relishing the switch from airline CEO to IATA DG. He points to the “massive range” of activities for which IATA has responsibility, including handling some $300 billion of airline money each year through its financial system.

“When you are running an airline, you have very direct responsibilities for what happens day-to-day operationally and also to the shareholders,” he said. “What I have now is a much broader scope. But personally, I find it’s fascinating and it takes a lot of thinking about and it’s very intellectually rich indeed. There’s a lot to analyze and think about.”

A global remit

An Exclusive ATW interview with Tony Tyler

You’ve been traveling worldwide since becoming IATA director in July. What’s the initial feedback you have heard from IATA members?  The good thing is they are all members and stakeholders and regulators and government people, and they all have a huge respect for IATA and they really know how the industry works and so that’s a terrific starting point for me.  Talking to members, the things that bother them is how business is going. The first thing they will tell me is that while business passenger-wise is holding up surprisingly well, cargo has hit the skids and that’s a problem particularly for Asian carriers.

But the world, of course, is not homogenous and some parts of the world are doing well and other parts are struggling. The Middle East has come off its heady double-digit growth, but that’s to be expected. You can’t keep that sort of growth going forever. Latin America is doing very well. North America is going pretty well on the net results because of the capacity discipline. But Europe is a worry and the European carriers are very worried, understandably, about the economy and I think everyone we speak to knows that next year will betougher than this year.

Aside from the economy, what else is on everyone’s minds?  Well some countries are very worried about taxation and regulation, and that includes EU ETS. But the great thing is that everybody believes that IATA does a good job and has a big role to play.

So what are airlines looking for from IATA?  I think basically, anything that we can do to help them do business better. One issue is to keep control of the trend of taxation and regulation charges. That’s bread and butter work for us, as well as to make it easier for them to develop their business in new directions. For example, E-ticketing was a great initiative, but the hugely important by-product was the revolutionizing of the whole sales and distribution model so you can sell much easier over the Internet.

Now we are trying to do something similar in airfreight, which is a much more complicated issue. Also, collecting the database on baggage rules so that a one-size-fits-all can apply to all airlines, which is what people want, so that airlines can do their own thing on baggage without bringing the whole integrated global system to a standstill.

We have five Fast Travel issues, with things like automated document check, bag drop, self-baggage check, self-check kiosk and self-boarding. And we now have five airports and five airlines onboard with that. So basically, it’s about making it easier for people to do business.

But how do you reach out to those who influence how airlines do business, but who are outside the IATA community?  The theme for me is that aviation is a huge force for good in the world. What we do makes the world a smaller place; it turns the planet into a community. It facilitates trade and family links and peace and understanding. What we do is great. And we have got to get that message across.  And we are doing that in a number of ways. One is that we have commissioned over 50 studies of the benefits of aviation. This is not IATA propaganda—this is hard economic analysis—and we are communicating this not just to the world’s transport authorities, but to treasury ministries and people who make policy on issues like taxation so they can get a better understanding of the contribution that aviation makes.

Because what the world needs now is growth. Europeans are worried, quite rightly, about the mess they are in and how they are going to get through this crisis, but ultimately the way out is economic growth. That’s the silver bullet. And if governments can see that aviation can help, then they won’t inhibit our ability to deliver and develop growth.  And coming from Asia after 30-plus years, I have seen it work. Countries that support aviation, or just let them get on with it—we are not asking for subsidies or special treatment —see it work.

IATA’s role, then, is to convey that message to those outside aviation?

That’s a really important point. We are all very good at talking to ourselves, but we have to get the message out to other communities.  Clearly, we haven’t done that, or we haven’t succeeded. When you look at how we are treated by taxation authorities around the world and by the environmental groups, then we need to do a better job.

The airline industry seems to have become a cash cow for taxes.  Some cash cow! I mean our margins since the Wright Brothers took to the air are negative and this year we expect margins of 1.2% and next year, 0.8%. So we are a pretty skinny and unhealthy cash cow.

But that’s not how the outside world sees it. They see huge orders at air shows and a glamorous, well-paid industry.  As an industry, we are 100 years old and we are a very special industry, absolutely. We are very exciting and it’s about aircraft that connect people to an infinite range of possibilities—and that’s a very special thing. But it doesn’t translate into profits.

So what are your key priorities as IATA director general?  I expect to have five years in this job and I would like to make a big difference in one particular area, and that’s security.  I have inherited from Giovanni the Checkpoint of the Future program and I’m very happy to have done so because I think if we can bring together information and technology in the way Checkpoint of the Future aspires to do, then we can make a huge difference to the passenger travel experience. Nowadays, frankly, very often the whole perception of the journey is colored by the security experience. If it goes well, then you feel good about it. But so often, and at huge expense, it’s done in a way that’s an irritation. It’s something that costs the airlines, we estimate, just under $7.5 billion a year and we are screening 2.8 billion passengers a year and how many of those people are a genuine threat? So it’s a huge amount of effort going intounproductive channels.

What is the security solution?  Risk-based, intelligence-led security. We are not talking about profiling or discrimination; at the moment, authorities are collecting information from airlines on passengers and using it to assist the immigration process. And what we are saying is, let’s use that information at the beginning of the journey to assist the screening process. And also, we can get other information, provided voluntarily by passengers, that can make their passage through security screening quicker and simpler and less trouble. So the passengers we know, and who go through a thorough screening process, go through one channel, and people we don’t know much about go through another channel, and others on a watch list go through a third channel. Then technology comes into place —not available now, but it will be— that enables us to keep things moving. People will go through a tunnel of technology. So we don’t have to stop and disrobe, takes off our belts and shoes and get our laptops out and all that stuff.

If I could look back in five years and see that happening, then I would be very happy.

But whether it’s security or taxation or something else, how  feasible is it for one organization—IATA—to represent the views of all the world’s airlines?  Some airlines are at very different stages than others, but generally there is an understanding that IATA has a broad constituency and some things that are not important for one airline are nevertheless a priority for others. So as long as you are doing enough for everybody, it’s not a problem. Some people say the center of aviation is moving to Asia, but I don’t think aviation has a center; it’s a global business. The center of gravity is moving a bit further East because Asian carriers are growing faster and becoming relatively bigger.

Maybe a decade ago, IATA was most concerned with Europe and North America, but that’s certainly not the case now.  We have a global remit.

—Interview by Karen Walker