By Mark Pilling in Tokyo Photography by Kevin Phillips
Armed with his trademark slogan of “shouting politely” at suppliers and politicians alike, IATA director general Giovanni Bisignani has been relentless in his quest to make the association relevant again
Interview over, Giovanni Bisignani grabs his jacket and sprints out of his office at IATA’s 61st Annual General Meeting venue in Tokyo. It is the evening after an exhausting three days of endless speeches, handshakes, back-slapping and press conferences and he is now late for a dinner with outgoing IATA chairman and former Japan Airlines head Isao Kaneko.
He will run all the way there to make up the time. “The guy is tireless,” comments IATA director of corporate communications Tony Concil, as Bisignani disappears down the corridor.
The livewire Italian has not stopped running since joining IATA from online travel portal Opodo in June 2002. Since then he has turned the organisation upside down, launched a startling attack on service providers about over-charging and reasserted the association’s influence at the highest levels of government.
Bisignani is unapologetic about an uncompromising style that has not always won him friends from within IATA itself or from outside the airline community. But with the industry in dire straits in the wake of 9/11, IATA’s board knew a radical change was needed. “I had the full mandate when I arrived to make a revolution,” says Bisignani, who had served on IATA’s executive committee during his time as Alitalia chief executive in the early 1990s. “I saw nothing had changed since I’d left the industry 10 years ago.”
His first act was to ask his board what their greatest concern was and whether they even wanted IATA at all. At the time carriers were turning to every link in the supply chain for cost relief. But air navigation service providers (ANSPs) and airports were not responding quickly enough for the airlines’ liking. “The board said it was difficult to negotiate with providers, user charges were increasing at double-digit rates per year,” he says. The traditional approach of soft diplomacy was not working. “Our job is not to write a letter, we’ve got to hit the target. I was told the most difficult problem is Narita,” he adds.
Tokyo’s main international gateway was the most expensive airport in the world and, although it had not increased charges for years, it was unyielding when it came to discussing rate decreases. Characteristically, Bisignani decided it was time for action: “I said I’ll deal with Narita myself and asked what the first opportunity was in Japan.” In a quirk of fate, Airports Council International (ACI) had invited Bisignani to address its annual assembly in Tokyo in October 2002. It would be his first speech as IATA leader. Critically, it was the ideal opportunity to begin waging IATA’s now famous campaign against high charges and to plead directly to Narita and the Japanese government for a change in approach to the airport’s then pending privatisation and charging structure.
“I had prepared a strong speech but said to my team don’t give it to the interpreters, nobody.” When it did get released prior to the event the reaction from ACI and Narita was one of horror. “We were under pressure to change the speech – we were told it was not acceptable in a Japanese environment.” Not surprisingly, Bisignani declined. “I didn’t change a word,” he says. During the assembly, forewarned of the speech’s content, the entire front row of the packed auditorium, consisting of government ministers and a member of Japan’s Imperial Royal Family, left en masse.
That action alone ensured the speech had an immediate impact. “It was an event that did me a great, great favour. It made for strong stories as you can well imagine,” Bisignani recalls. Such direct action suited his straight-talking personality and began to create waves. “It was the first case where we said we’d had enough.” No longer was IATA going to be as diplomatic in telling airports and air navigation service providers what it thought of them. “We completely changed the theme. My approach was to shout in a polite way but we also had to start to change the content. Our job was to embarrass them with facts and figures about their performance.”
The “shouting politely” theme began in 2002 and is a familiar refrain today. “I was a fireman at the beginning and the fire we had to address was cost.” Bisignani knew he had to move quickly on all fronts. “I had to do two things at the same time – build a new strategy and put the right people and structure in place,” he says. In less stressful times, a new leader would not tend do both simultaneously. “I needed a very clear signal to my members that I would deliver very quickly.”
The IATA organisation, which had already been subject to some staff cuts immediately after 9/11, needed radical surgery, but there was huge internal resistance. “They told me, Giovanni, IATA cannot be changed.” A meeting with the head of the human resources department illustrated the problem. “He told me I cannot fire anybody – he was the first person I fired.”
After that the changes came thick and fast. He soon invited in Noel Tichy, a US management guru and former head of General Electric’s fabled Crotonville Leadership Center. Bisignani had come across Tichy during his time out of the airline industry in the mid-1990s working in shipping and logistics, including a joint venture with GE, a corporation he admires immensely. Bringing in Tichy to conduct a weekend brainstorming session for IATA senior managers was like “putting a bomb in a church”, notes Bisignani.
The shock tactics showed the group that change was needed. For many this was not an IATA they wanted to work for. Of the 70 managers that attended, about half knew they were not on board, says Bisignani. The transformation was not just about pruning out the dead wood, it was also about making IATA a “challenging place to work”.
“There was resistance from management but I was so fast to execute the change that nobody had the opportunity to really complain,” he says. The overhaul opened up new opportunities for individuals, while IATA began to pay market rates to attract top quality executives. In the end Bisignani is proud of the fact that he has changed nearly three-quarters of his management team and 68% of IATA’s total staff over the past three years. The headcount has fallen from 2,000 to 1,400. The London marketing office was closed.
In parallel with his swift re-engineering of IATA, Bisignani was acutely aware of the need to make the association work harder and faster for its members. The word “lead” was inserted into the mission statement. It now reads: “We represent, lead and serve the airline industry.”
Bisignani was providing that leadership with gusto through his campaign against service providers when another opportunity presented itself. In a meeting in late 2002 at the British Airways headquarters near Heathrow between Bisignani, BA chief Rod Eddington and then Lufthansa head Juergen Weber, the situation in the Gulf was discussed. War in Iraq looked imminent and the airline bosses told Bisignani that they wanted to avoid at all costs the incredible delays caused by the Gulf War in 1991.
“In a month we put a team together to negotiate alternative routes around Iraq with all the governments in the region,” he says. The speed of execution showed how IATA could respond when asked. It also highlighted the influence IATA could exert globally if it used its natural resources to the full. Bisignani moved to make the association’s global network, mostly made up of offices running its billing & settlement plan activities, more proactive. “Having these offices was like having a Ferrari and keeping it in the garage,” he says. The offices are now tasked not only with local airline liaison but have mandates and staff looking after user charges, routes, safety and marketing.
Throughout this upheaval, Bisignani has been recreating IATA as a leaner body along the lines of the Tokyo AGM theme: “En route to a low-cost industry.” In the past, special events, such as preparing for Y2K, meant going to members for extra cash. “Now we have a surplus for the first time. I’m running this organisation as I would any other company. We have to generate funds to invest in new projects for our members.”
The grandest new IATA project is its Simplifying the Business (StB) initiative, launched at the Singapore AGM in 2004, and targeting $6.5 billion in annual savings for airlines. It is an ambitious step, and one welcomed by airlines unused to such moves from IATA. “It is the first time in 20 years that I have seen IATA take a real business initiative,” says Vagn Soerensen, chief executive of Austrian Airlines. Altogether IATA is investing $11 million in StB and a major ramp up of its safety programmes, beginning in Africa.
Perhaps more than any other effort the StB programme illustrates the leadership role Bisignani desires. In the early days there were criticisms he lacked a strong vision for IATA. Bisignani argues that his first priority was licking the organisation into shape. “My second priority is to start to be an architect and, in this, you have to demonstrate leadership.” This means leading both large and small members through some tough decisions. He believes his time at Alitalia, a medium-sized flag carrier, gives him an understanding of the problems of the leaders of airlines of all shapes and sizes. “I go and visit the big and the small. Chief executives know they can call me and I’ll be there.”
Bisignani is beginning to see leadership too from some elements of the cost chain. “ANSPs have moved very fast, probably because it is easier to benchmark them,” he says. IATA is working on cost-efficiency targets with ANSPs but is finding the going tougher with airports. Bisignani’s relations with airports have frequently been fraught, most notably with the 2002 Tokyo walk-out and a furious argument – described by one airline chief as a “bar-room brawl” – with Toronto airport’s ex-president Lou Turpen over charges.
The relationship between IATA and ACI, and occasionally at individual airport level, remains an uneasy one. On the issues of cost efficiency and benchmarking, “airports are still on the defensive”, says Bisignani. “ACI has not driven this kind of campaign with the same effectiveness as CANSO (Civil Air Navigation Services Organisation).” IATA does make “individual wins” at airports, including a long-awaited breakthrough at Narita (see news story on page 9), but overall “there is not a community among airports that gets it”, he says.
Bisignani is not afraid to ruffle feathers. His approach is not softened when dealing with politicians either. But in many regions, IATA’s call for market liberalisation and against measures that add to the industry’s cost burden still fall on deaf ears. When it comes to influencing them to change, “governments, I must say, are more tough”, he says. In many cases, promises have not been kept. “My biggest frustration is in Europe and the USA,” he says of their collective failure to achieve transatlantic open skies. “I’m upset because I’m in a rush. We have a framework that we had when we were flying the DC-3, now we have the A380 and 787.”
Although IATA’s success at this level is patchy, Bisignani is admired by his members for the transformation he has spearheaded. “Giovanni has done a phenomenal job in so much as IATA was largely an ineffective organisation,” says Robert Milton, chairman of Air Canada. “His courage in shouting politely has made a difference.” Milton is the incoming chairman of IATA. “IATA has definitely become more proactive and more relevant,” adds Chew Choon Seng, chief executive of Singapore Airlines.
But as the industry heads towards another multi-billion loss this year, is Bisignani pleased with his performance so far? For the first time during the interview he pauses. Ten seconds go by. After much thought, he says: “One thing that is completely achieved is the change to the organisation: the need to act in a completely different way with speed, passion and commitment.” On the cost campaigns: “The results we are achieving have just started I would say.” He continues: “Could I have done this faster – probably yes. But if you benchmark what has been done with the [former] speed of IATA it has been like a rocket to the moon.”
During Giovanni Bisignani’s wide-ranging career he has held high-level posts at state and private companies. Direct airline experience came during his five years at the helm of Alitalia, when he also served on IATA’s executive committee and was chairman of the AEA.
He also had spells at other state-owned firms Italian energy company ENI and industrial conglomerate IRI Group. He left Alitalia in 1994, then serving as president of Tirrenia di Navigazione, the largest Italian ferry company and as chief executive of SM Logistics. In mid-2001 Bisignani launched the Online Travel Portal, soon renamed Opodo, backed by Europe’s major carriers.
Within a year, Bisignani was chosen to succeed retiring Pierre Jeanniot as IATA director general in June 2002.
He has been a member of Pratt & Whitney’s advisory board and chairman of global distribution system Galileo International. He is also on the board of NATS Holding, the UK’s air traffic services provider.
Bisignani studied in Rome and at Harvard in the USA. Born in Rome in 1946, he speaks Italian, English and Spanish. He is married with one daughter and enjoys golf, tennis and riding.