Why is it that airlines are looking outside of the industry to appoint senior executives? Academics believe it is caused by a dearth of business-minded managers who can put smiles on the faces of both customer and shareholder.
However, there has also been a lack of graduate-level education programmes for aviation managers. While many courses teach operational skills relevant to the industry, few cross deal with such disciplines as financial accounting, organisational behaviour, business economics and information technology. Fewer still teach industry-specific "soft" skills such as airline marketing, airport operations and the aeropolitical environment.
That is changing, largely prompted by a unique trade-university initiative launched in 1992. The International Air Transport Association (IATA) formed a partnership with Montreal's Concordia University to create an international aviation master of business administration (MBA) programme. As IATA director general Pierre Jeanniot points out, this programme has gained a worldwide reputation as the premier graduate level course for aviation managers. "The programme equips aviation professionals with the business and leadership skills as well as the aviation specific knowledge that the industry is now demanding," says Jeanniot. "It meets the needs of aviation managers today and adds significant value to their organisations and to the industry as a whole."
The IATA-Concordia programme has prompted other universities to create similar MBA programmes aimed at airline middle managers who already have a few years' experience at an airline and who have either been identified as fast-track candidates or who wish to hone their management skills. One of the newest is an MBA launched by Embry-Riddle Aeronautical University in Daytona Beach, Florida. While this university has a long and excellent history in aeronautical education, its executive MBA programme, launched in 1998, has added a new dimension. Designed for business managers and supervisors who already have a strong body of knowledge in their functional area, the course expands their grasp of advanced management and strategic decision-making principles. The current course - the university's first - has eight students. A second class begins in March and expects to teach between 15 and 20 students. Similarly, the Concordia course began with 12 students in 1992 and is now seeing classes of up to 30 per year.
What the designers of such MBAs must take into account are the diverse backgrounds of their students. They arrive at the university from different airlines in different countries with differing skills gained at those airlines. Curriculae have to be tailored to the fact that many of these mature students have job and family responsibilities. Consequently, there is a trend towards fragmented courses on which students can divide time between on-campus learning and at-home study, often backed up through Internet and other technology links.
Dale Doreen, director of the IATA-Concordia international aviation MBA (IAMBA) programme, believes his course continues to offer unique features. As the university's brochure points out, this course was set up as a direct response to the rapidly changing market forces of today's aviation industry, including intense global competition and privatisation. "Aviation industry managers of today and tomorrow must possess skills different than those that were needed when the industry was less competitive and regulated. Successful aviation managers must be able to view risk and change as opportunities rather than threats," states the brochure's introduction. Doreen adds: "We are the first aviation school that has emphasised the management side. Historically aviation education at university level concentrated on the operational side, addressing such issues as safety. That remains important, but as the world has deregulated, the emphasis has shifted to a requirement for different management skills."
Seal of approval
Concordia's faculty of commerce and administration wears its trademarks proudly. Not only is its partnership with IATA an exclusive one, it is also the only course of its type to be accredited by the International Association for Management Education (AACSB). This prestigious seal of approval has been won by only three other business schools in Canada and only 330 of more than 1,200 business schools in the USA, including Harvard, Stanford and Wharton.
"Our programme is evolving with an integrated approach that brings together issues such as airline management, airports and regulatory authorities," says Doreen. "Those issues have tended to be put into their own boxes, but we feel that is not an ideal situation in today's environment, so we bring them all together." A typical IAMBA format takes place over one year and four semesters, beginning in October with two weeks' orientation in which students acquaint themselves with the campus and its resources and are offered workshops designed to make the process of "going back to school" easier. The course progresses from general processes, such as financial accounting, managerial statistics and marketing management, to specialised airline courses such as air transportation economics and finance, airline marketing and yield management, and the aeropolitical and legal environment. Students must also complete a management research project designed to enhance their diagnostic skills and ability to develop innovative, practical responses to complex problems.
Almost from day one, says Doreen, students are learning skills that complement their airline jobs. "They get fresh ideas that they can feed back into their companies. Their airline becomes their laboratory. It's a very healthy education process." Guest speakers from the industry are also arranged, and have included IATA's Jeanniot, Philippe Rochat, Secretary General at the International Civil Aviation Organisation (ICAO), Barry Humphries, director of government affairs at Virgin Atlantic, and Steve Nielsen, managing director of the leadership Institute at Federal Express.
According to Doreen, there is a strong international flavour to the student mix. The 1998 class had a significant representation from China, but students regularly arrive from Africa, India, the Middle East and Europe as well as from the Americas. A "careful selection process" helps to ensure a high completion rate - 22 of the 24 1998 students have successfully finished the course. But students are also highly motivated to succeed. Courses such as the Concordia IAMBA typically cost around $25,000 plus living expenses. "A lot of ego, anxiety and money goes into this," says Doreen.
Team Builder
Education comes in many guises. IATA's international aviation management training institute has devised a training tool that can be taken direct to airlines and which teaches employees from all aspects of an airline to think as a team and to understand the business issues that their company faces day-to-day.
The Air Mercury airline business simulation model is an interactive tool that can be set up within a temporary classroom facility and which houses five years of past data on a fictional airline, including all of its finances. Over a five-to-10 day intensive course, students will be taught the basics of airline management, including yield management, marketing and fleet management. They are then confronted with a case study - a fictional airline which is headed for severe financial trouble unless corrective action is taken.
The data that the students deal with is real; they can make any adjustments to routes, costs, fares, and fleets that would be possible at a real airline. They have access to information, such as "competitor" route structures, and can make changes to their own airline's cabin mix. However, each time they enter a change, the data will automatically log the company-wide effects that those changes would create.
Students - who will be selected from a cross-section of disciplines, from flight crew to maintenance managers, reservation staff and marketing staff - are encouraged to discuss their options and are given professional guidance. But the final decision about how best to solve the problem is left to them. Once they have entered their final solution, the tool replays the result of their actions - either the airline is "saved" or it disappears into red ink.
"It's holistic training," says Guy Chiasson, director of IATA education services. "People tend to come out of this rather like a missionary coming out of the jungle. It's very interactive, you see a lot of cross-functional dynamics and it becomes a team builder."
IATA takes the course out to airlines around the world and is often called back for a repeat visit because of the success of the model. From June, IATA hopes to run a similar course for airport managers and which will be based on airport data.
Virtual classroom
Concordia is preparing to launch a two-year MBA course that will allow students to base much of their studies from home. Students will combine short visits to the university with work done via a virtual classroom using the Internet and other technology interfaces. Concordia also intends to set up five or six "hub" faculties around the world. China is seen as a high priority.
The virtual classroom technique is also used at Embry-Riddle, which launched its executive MBA (EMBA) course in March last year. Over 14 months, or two fiscal years, students attend six semesters that each include two weeks on campus and six weeks at home where classes are run via a web site. Students also get assignments and post course work over the Internet. Applicants must have between seven and 10 years' experience in the aviation industry, and again come from airlines and manufacturers all over the world. This year's class includes a student from the UK and another from South Africa; next year's is expected to include candidates from Kuwait, Hong Kong, Singapore and Brazil. Around 70% of inquiries come from outside the USA, says Deborah Shafer, Embry-Riddle's director of executive management institute.
Four specific areas of focus drive the EMBA curriculum: organisational evolution, which acknowledges that no industry or company can survive by remaining static; cross-functional competencies; leadership and entrepreneurship; and global strategic thinking. Students are also given an executive project which is jointly selected by the student and his airline and which addresses a real issue at the company. "This provides an immediate payback to the company - the student is actively working on resolving a problem," points out Shafer.
Shortage of educators
While the number of aviation-specialist MBAs available around the world is growing to meet increasing demand, there is a shortage of educators in the field and also of resource material. Concordia University hopes to correct the balance by announcing next year the launch of a centre in aviation management and research. "You look around and there are such centres to exchange information in just about every other field, from corn to the sex lives of mice. But there is nothing in aviation," says Concordia's Doreen. "There is a real lack of pedagogical material." The university aims to pull together various industry organisations and the private sector to raise funds for the centre. "We think this will be well endorsed by all of the industry," he says. "The interest being shown in these MBAs shows there is a profound need for this type of attention to be paid to the industry."
Source: Airline Business
