Tony Tyler has had a busy first year as the IATA director general, and – if the day I met him in Brussels was anything to go by – things still aren’t slowing down.
I caught up with Tyler in Brussels after his first – and very successful – IATA annual general meeting as director general, where his plans for the reform of IATA met with unanimous approval. He managed to squeeze in a lunchtime interview between a morning of meetings with lobbyists and members of the European Parliament and heading off for an afternoon session with European transport commissioner Siim Kallas. And the following morning he delivered the keynote address at the nearby SITA/Airline Business Air Transport IT Summit.
Having succeeded long-time IATA DG Giovanni Bisignani at the fractious 2011 IATA AGM in Singapore, Tyler admits he failed in one of his key objectives in his first year: “I came to the job intending to do less travelling than Giovanni, but I’ve been told by my colleagues and my long-suffering fiancée that I’ve been doing more,” he jokes. “But it’s been a good learning experience, it’s been fun, and I’ve enjoyed working with the team.”
Tyler, who found a slot in his busy schedule to marry his wife-to-be, Charlotte, on 4 August, has used his first year trying to better understand the people, the airlines and the parts of the industry with which he had less involvement in his many years in airline management with Cathay Pacific Airways, the most recent as chief executive.
“I’ve put a priority on getting to know everybody. Getting out to parts of the world that I didn’t know well, like South America, Africa and the Middle East. I also wanted to meet other airlines.
“IATA’s a broad church. For example, it has traditional European carriers who see themselves challenged by the new groups in the Middle East, and we’ve got the Gulf carriers who see themselves as the more modern way of doing things. So I wanted to make sure I understood everyone’s viewpoints.”
Significantly, one of Tyler’s first ports of call during his extensive road-trip agenda was the Middle East, which he visited shortly after taking the helm at last year’s lively AGM in Singapore, where several Gulf-carrier chief executives criticised the way IATA was being run under his predecessor. The frustration from members that boiled over during one of the 2011 sessions was eloquently summed up when Emirates boss Tim Clark described the perception of IATA as being “run for the few by the few”. A year ago, IATA essentially stood accused of lacking transparency – particularly around auditing and board-member voting procedures – and looking after only certain members’ interests.
Tyler says he took strength from that baptism of fire as he took the helm from Bisignani, and the evidence from the 2012 AGM is that IATA has listened to the criticism and responded. “What we saw at last year’s AGM was a bit dramatic and unusual, but the underlying sentiment is positive,” says Tyler. “You’ve got a bunch of busy people who are not too busy to care about IATA.”
There was a different, more relaxed atmosphere around this year’s AGM in Beijing, and IATA insiders say the same is true within the walls of the organisation’s head offices. And this is as much to do with Bisignani’s departure as it is Tyler’s arrival.
The mild-mannered Tyler says the AGM changes in themselves were not deliberate: “I did want to make the point that we’re here to talk about the industry’s achievements and needs, not so much IATA’s. The first session was about what’s going on in the industry, and the second was to tell our members what IATA’s going to do about it. As I said in my opening speech, it was partly a move to promote the transparency.”
Tyler says he “didn’t want to make radical changes” to the AGM format and there were “just a few tweaks here and there”. “The ‘state of IATA’ session was new, and we replaced the Eagle Awards with the new Innovation and Partnership [awards].”
IATA introduced the Eagle prize-giving session in 1998 to recognise air navigation service providers and airports that gave “outstanding performance in customer satisfaction, cost efficiency, and continuous improvement”.
The awards were dropped as “we all felt that they had probably served their purpose”, says Tyler. “It was getting increasingly difficult to find worthy candidates. And one or two CEOs had said to me: ‘Please can we not have to sit through those award ceremonies?’.”
But Tyler’s contrast in style to his predecessor was evident from the start at the 2012 AGM. He dispensed with the more produced, pre-orchestrated format of old and gone were the traditional backdrop of slides. Instead, his words were the focus of the presentations. “I didn’t think it would do any harm to do it a bit differently. Slides can be distracting and I’m not a huge fan of PowerPoint, but I always felt Giovanni used it very creatively,” he says.
However, Tyler admits that one or two slides might have helped when he was “rattling off all those numbers” – so don’t be surprised if there is the return of one or two graphics in 2013.
Another new theme this year was Tyler’s repeated encouragement for involvement from members. He emphasised that IATA was “your association” and that this was “your AGM” as he sought to address criticisms over transparency and engagement.
“IATA has nothing to hide and is doing a great job, so why not let the light shine in on it?” he says. “And if we’re not doing a great job, nobody wants to hear about it more than I do. We’ve got everybody working hard so if there working in the wrong direction, or things they’re not doing are a higher priority, then tell me. We’re here to serve and we want feedback.”
EVOLUTION NOT REVOLUTION
The IATA organisation that Tyler inherited had been under the control of his predecessor for a decade, but the new man does not feel wholesale structural changes are needed. “We’re here to make the world a better place for our members to do business, which is very much my focus and something IATA’s being doing that for years. And so I don’t want to make change for change’s sake.
“We’ve introduced openness and transparency, and I’ve gone out of my way to make sure that members are satisfied with how we are doing things, and that when I get feedback and people have issues with what we are doing, I respond to it. But I think we’re essentially on track.”
Tyler’s view is supported by the fact that his master plan for reform was met with unanimous support at the AGM. Qatar Airways chief executive Akbar Al Baker, who had led the revolt last year, declared himself happy, saying: “There is a breath of fresh air into IATA.”
And it was perhaps no coincidence that Qatar Airways was the member that seconded the motion regarding the changes to governance. “The members voted unanimously to accept the governance changes we made, and I was very pleased that it went through with such a solid message of support because it shows we’re a united house,” says Tyler.
Central to the changes were shake-ups of the IATA board structure and the allocation of regional representation, and the launch of a tender process for its auditor services.
“We’ve probably raised the bar in terms of expectations, having had a successful AGM. Our members will be saying ‘ah, great, IATA you’re doing a good job. Right, well, come and fix my problem.’ And that’s a good thing. We’ve probably also raised expectations in terms of next year’s AGM.”
But Tyler knows that to be effective, IATA needs the support of all its members. “It’s a virtuous circle – if we do the right things, our members will support us, and IATA will be stronger to do more right things.”
And the greater the IATA membership, the more clout the association will wield. “Our members account for 84% of total world traffic (passenger and cargo), which means
we can represent the industry with proper credibility, but I’d like to have more carriers on board – we welcome all categories of business model.”
The association has long been the preserve of the full-service or network carrier types although that has started to change with recent members from the “new model airline” arena such as Air Berlin and JetBlue Airways. Indeed, the latter’s chief executive, Dave Barger, is on the IATA board.
“It would be great to get the so-called budget carriers like EasyJet, AirAsia, Southwest, WestJet and JetStar. I’ve said to some of these carriers that when you first join IATA you don’t have to be a member of the Billing and Settlement Plan (BSP), but you might find it interesting to look at.
“It costs money to be a member of IATA and most airlines think that it is good value for money. But these types of carrier are very cost conscious and so making sure they understand the value of membership is a bit more challenging.”
One area where IATA’s mission operates beyond its own members is in its safety drive. “We want a safe industry for all the obvious reasons,” Tyler says. “And if there is an air crash – nobody asks whether the airline involved is an IATA member or not – it tarnishes the whole industry.”
Tyler points out that more than a third of the 380 or so airlines registered for the association’s IOSA safety-oversight programme are non-members. “The accident rate last year for IOSA-registered airlines was 52% lower than for non-IOSA carriers in terms of hull losses. So there’s clearly a correlation between superior safety standards and IOSA registration, and that is recognised by governments and airlines around the world.”
Another theme coming through at the AGM was Tyler’s emphasis on partnerships. “Since I took over, I’ve been trying to make the point that there are a wide range of stakeholders in this business and we’ll be much more effective if we work with them on things where we have common interest than if we concentrate on the points that we disagree about.
“For example, we’ll always have an issue with suppliers on what things cost, so if we concentrate on areas where we have an alignment of interest then perhaps we’ll make some progress.”
This is a complete change from the IATA of Bisignani’s era, where the industry got used to the Italian “shouting politely” and declaring “basta” (enough) to organisations and governments he had lost patience with.
“Regulators are people too and I recognise they’ve got a job to do,” says Tyler. “But if you can think of areas where you can actually work together, then we should work together on these. For example, if they are putting a whole range of proposals together on the airports package, my approach is very much ‘there are some things I like about this but there are some things I can’t possibly support publicly because my members would think I’ve gone mad’.
“In the immortal words of Mick Jagger and Keith Richards, you can’t always get what you want. But if you try, sometimes you can get what you need. Regulators are always going to regulate, so what we try to do is show them in advance some of the unintended consequences that could arise if they regulate unwisely.”
WIDENING THE MARGIN
An ongoing frustration for IATA and its members is the fragility of the airline industry’s profitability on a global basis. Airlines struggle to stay in the black and when they do, many only achieve single-digit margins.
“We’ve done a great job of improving efficiency and bringing down costs, but we’ve handed that benefit straight to our customers,” Tyler says. “As soon as someone’s got a cost advantage, instead of charging the same price and making a bit of profit, they use it to undercut their competitors and hand the value straight to passengers or cargo shippers – and you’ve got to ask why? I think one of the reasons is that the way we sell our product forces us to commoditise ourselves.”
One of Tyler’s partnership initiatives is to work with – rather than shout at – the global distribution system players to create a new distribution capability that he believes will help members differentiate their product offerings and enable them to improve their earning power. “This will allow us to get out of that straitjacket when we are distributing most of our tickets through GDSs that display price and availability based on a class of travel and make everything look the same on the GDS screen.
“When you’ve got completely different products being made to look the same, the only way to compete is on price. If you can differentiate the product you can charge a premium for it.”
The impasse between Europe and the rest of the world over the implementation of the EU’s emissions trading system is reaching crisis point, and IATA has been among the chorus calling for the commission to take a positive step to resolve the dispute.
“While Europe continues to say publicly it wants ICAO to come up with a global solution but it won’t modify its own position, we won’t make progress because other countries are going to say ‘if that’s your attitude we’re not having anything to do it’. So we need Europe to make a concrete step which will be unequivocal evidence that it’s prepared to compromise, in order to find a global solution. And if it doesn’t, the positions on both sides will become entrenched and it will be self-fulfilling that ICAO won’t find a solution.”
But as he headed to his meeting with Kallas after our lunchtime interview, Tyler admitted that he wasn’t about to launch into an ETS broadside: “The Transport Commission is generally sympathetic to the airlines’ viewpoint but it’s not in their hands,” he says.
“I want to talk to governments about the things where we can really make a difference and not waste time where we can’t,” he added, again emphasising that fresh, pragmatic IATA approach that the industry is now adjusting to