The past few months have brought into focus a new form of leadership at troubled carriers around the world: management team for hire. The list of struggling airlines - typically in developing nations - that have taken steps to introduce wholesale management change through importing a team of executives is large and increasing. Does this portend a new means of management development or is it simply a symptom of how badly and how quickly change is required?
In the past, airlines may have taken action to bring in new management to address change, but the model for doing so seems to be evolving. Historically, the injection of new management at the top of an airline would take the form of one or two strategic appointments into key positions.
Of late, in the context of transformational change, the scale of management shake-ups has increased as carriers have woken up to the hard realities of market deregulation.
Work at Spencer Stuart in "remaking" the Delta Air Lines leadership team is a clear example. No fewer than 15 external appointments at the level of vice-president or above have been made within the past two years. But what appears to be at play in some of the world's more troubled carriers is distinctively different from even this sweeping change. The trend there appears to be towards wholesale introduction of new, "pre-packaged" management teams. This seems to be occurring in at least three different models, each of which appears in vogue:
The first model is built around a small group of three or four senior executives who have worked together before, perhaps at one or more successful carriers, and which offers its services on a time-limited basis.
The second relies on the introduction of a group of experienced executives and/or management consultants from a recognised international aviation consultancy.
The third model involves the exporting of a group of executives from a major global carrier into a developing carrier in which the major has made an equity investment or which has joined a global alliance as a junior partner.
The first of these models was readily demonstrated earlier this year when a team of four ex-Cathay Pacific executives - Andrew Fife, Peter Foster, Mike Scantlebury, and Richard Wall - formed their own management consultancy, Regent Star, and arrived en masse at Philippine Airlines to craft a rescue plan. Whereas the effort was short-lived, we suspect that we may soon see more of this phenomenon at work, particularly as sea-change at established carriers such as Cathay and British Airways displaces quality executive talent.
The contracting of top management at BWIA to Conrad Aleong's management consulting firm, Air West Indies, is another example of the trend.
The second model appears to be a clever way for specialist aviation management consultancies, often the subsidiaries of major airlines themselves, to add value to their core consulting services. Recent examples include the injection of new management talent at Garuda and Philippines (both Lufthansa Consulting) and Olympic (Speedwing).
This seems to be a larger-scale version of the more common and widespread practice of secondments from consultancies into mid-level or highly specialised functional roles at airlines, with John Harrison's appointment as Director of Planning at TACA Group on loan from revenue management consultant Talus as an example.
The third model also looks likely to increase in frequency with time, particularly as the "senior partners" of the major alliances recognise that it is in their interests - economic and otherwise - to ensure strong management at their partner carriers and investments
In light of recent failed investments in foreign carriers ( Delta into AeroPeru, for instance), the need for management influence - if not control - is becoming apparent. A recent example at work includes the appointments of Diego Cousino as president and chief executive and David Cush as chief operating officer - both ex-American Airlines - at Aerolineas Argentinas, an AAlliance partner and equity investment.
Some may comment that management transplants of this sort are not new. And they would be right. In fact, Iberia attempted this in at least two South American partners - VIASA and Aerolineas Argentinas. In both cases it was unsuccessful.
Perhaps the lesson learned is that the model works best when the source of the executive talent has proven deregulated market success itself.
The forces at work in the global airline industry - economic volatility, globalisation, deregulation, alliances, and consolidation - all point towards increased trouble for many smaller national carriers and, in our view, increased demand for "management for hire".
For those seasoned airline executives contemplating a quiet retirement on the golf course, it may be time to ''hang out the shingle" and pad the retirement fund!
Source: Airline Business
