What's the best way to groom an up-and-coming airline executive for general management? Put him or her into the top of a regional airline. Evidence is mounting around the globe that one of the most effective professional development strategies for aviation executives is rotation through the senior management team of a regional carrier.
The senior management ranks of successful regional carriers in the USA are laden with top-flight talent that could well represent the next generation of general management for major carriers. Examples include Bryan Bedford of US Express carrier Chautauqua Airlines (and ex-Mesaba, ex-Express); Kerry Skeen at Atlantic Coast Airlines; Jonathan Ornstein at Mesa Air (and formerly Virgin Express and Continental Express); Jim Ream (ex-Continental Micronesia). Many others have recently rotated through the top job at a regional carrier and now hold senior leadership roles at major carriers. Dan Garton, now executive vice-president, customer service, at American Airlines came up through American Eagle. Dave Siegel, president of the Budget Group is ex-Continental Express, while Greg Taylor stepped up from the US Airways Express arm to become senior vice-president, planning, at the major.
Another classic example is Comair, the Cincinnati-based Delta Connection carrier that was recently acquired by the major. Delta not only acquired a highly profitable regional - it also gained access to a strong management team. Since the acquisition, David Siebenburgen has been elevated to lead the entire Delta Connection network - including Atlantic Southeast Airlines. At the same time, Randy Rademacher, at 43, was promoted from chief financial officer to president of Comair Holdings.
While time will tell if this trend holds true, early evidence suggests that regional executives do go on to prosper in the majors. John Kelly, chief executive of Alaska Air Group, came from its regional feeder, Horizon Air. John Selvaggio, a president at US Airways Express and Midway Airlines is now senior vice-president, airport customer service, at Delta, leading a workforce of over 20,000. South African Airways chief financial officer Andrew Viljoen was president of regional subsidiary SA Express.
A similar pattern is developing in Europe. One need only look as far as Crossair, which under the leadership of Moritz Suter, has become a force to be reckoned with across the continent. Despite being majority-held by SAirGroup, Crossair continues to operate independently, providing its leadership team with significant management latitude and so development. Carl Michel was also given the job of running Deutsche BA before becoming commercial director at British Airways proper.
Traditional airline organisational structures offer few, if any, true general management positions except in the chief executive's suite. Airlines largely remain a collection of functional divisions. Often, only the chief executive, president, and chief operating officer, can lay claim to managing a profit centre. Managing the bottom line rests in the hands of a select few.
Yet, some large international carriers have evolved into group structures with an array of profit centres in areas such as engineering, catering, cargo, information technology and more. The Lufthansa and SAir groups are both examples. A product of that approach is an avenue to develop younger executive talent.
Where such group structures do not exist, regional carriers play an important substitute role. Generally, regionals are a microcosm of the larger entity. They are typically independent profit centres with discrete organisational structures and the full gamut of functions from sales and marketing to human resources and finance. The developing junior executive can rapidly learn what it means to manage all of these key functional areas before moving up to the mainline.
As observers of airline talent, Spencer Stuart has developed the view that the quality of management talent is as good, if not better, in most regional carriers than it is in the majors. Regional airline executives must craft and execute robust business strategies, establish and defend niches in competitive markets and handle myriad operational issues that arise in the larger carriers. It is now widely accepted that some of the best-managed airlines in the world are regionals.
These great training grounds may not be available much longer, though. A fundamental shift is under way in how major carriers manage their feeder networks. The acquisition and consolidation of the previously independent American Eagle carriers, for example, has stripped those airlines of most of their planning and marketing authority. Several regionals now provide feed on wholesale arrangements, charging on a "fee per block hour basis", effectively removing sales and marketing from the mix of functions under the chief executive's direction.
The absolute number of independent regionals may also be in decline as they are acquired and folded into the majors. Many regionals may be plum acquisition targets, but an unintentional downside of that may be to erode the major benefits such regional carriers provide in the area of executive development.
In the meantime, carriers in need of progressive, well-trained general managers should give serious consideration to the leadership ranks of the regionals. Aspiring general managers, take note - the fastest route to the top may very well be via the general management Express.
Source: Airline Business