Richard Anderson, Jeff McClelland and Andy Studdert all have two things in common. None holds a maintenance engineering license. Yet each has recently been in command of the technical operations function of a major US carrier. Northwest, America West and United Airlines, respectively, put these high-potential executives at the helm of their engineering operations despite the lack of prior technical experience. And the experiment appears to have worked. Not only have the airlines benefited from spirited business leadership in a cost- and asset-intensive function, they have also used the opportunity to develop individuals' skills for general manager postings. Since heading up the function, both Anderson and Studdert have risen to the level of chief operating officer.
So why are carriers turning to non-technical managers to head their maintenance, repair and overhaul (MRO) departments? Are airlines falling short of suitable leaders for engineering operations? Has the nature of the business changed so dramatically? Is a new profile emerging for the modern engineering executive? The answer is yes on all three counts.
Shortage of supply
As most executive search consultants will attest, there is perhaps no tougher search in aviation than that for an outstanding vice-president of maintenance and engineering. There is no shortage of qualified engineers and technicians - the problem is rather the lack of strong business executives and leaders, individuals capable of seeing engineering as a strategic asset, to be managed for both revenue and cost performance.
Traditionally, airline engineering executives have emerged from two primary sources: the military and up through the ranks of the aviation industry. The US Air Force has played a key role in North America in developing individuals experienced in the management of large fleets and facilities. And many qualified individuals have succeeded in making the leap to the commercial arena. Robin Wohnsigl at Air Canada is a classic example, having spent time with Northwest and US Airways after leaving the USAF.
Likewise, several successful executives have risen through the ranks from the hangar floor - often starting out as front-line mechanics before progressing through the various departments to the top job. Tom Duffy of Midway Airlines models this profile well, having started his career on the shop floor at both Midway and Braniff.
While many airlines would be delighted to have such individuals heading up their technical operations, others are starting to look beyond the traditional "tech ops" profile. A review of the current executive search requirements for vice-president engineering roles yields the following new profile:
an executive who is strategic in orientation and has a strong business focus. Successful candidates will have as much business acumen as technical proficiency; a creative individual, resourceful in developing solutions; an "ideas person", who can think laterally to identify and implement leading-edge solutions; a strong leader - experienced in the management of change - who knows how to motivate people.For example, Spencer Stuart recently was looking to recruit a chief executive for the newly-merged Ansett Australia-Air New Zealand Engineering Services. The requirement was for a general manager with a technical background and recent commercial experience. Bill Jacobson, formerly vice-president of commercial repair and overhaul at what was AlliedSignal Aerospace and is now part of Honeywell, was eventually recruited.
Jacobson had spent over a decade selling third-party work to commercial carriers and was ideal for the dual mandate of the role - to merge the Ansett and Air New Zealand technical operations and take the combined entity to the global MRO marketplace as a business enterprise. It is this combination of technical and commercial skills that is in shorter supply than pure engineering competence.
No longer cost central
For decades, airlines looked upon their technical divisions as major cost centres. The emphasis was on resourcing them with the necessary talent, facilities and equipment to maintain standards and keep costs in line with those of industry peers. Yet that began to change in the 1980s as carriers started to place a premium on utilisation of assets - aircraft, facilities, people and know-how. They came to appreciate how much money could be saved through increasing daily block hours and by cutting the time required for heavy maintenance checks.
Information technology solutions pointed to the need and opportunity for more aggressive management of spares and inventories. Industry consolidation and alliances presented opportunities to focus facilities on fewer aircraft types and to create centres of technical excellence. Operationally, airlines have come to appreciate the need for predictable performance in technical operations and understand the direct impact that maintenance can have on competitiveness.
The net result is that engineering now is seen less as "cost central" and more in terms of competitive differentiation or revenue generation. Some have elected to sell out, such as British Airways with the sale of its engine overhaul business to General Electric. But others have developed their sizeable in-house operations into stand-alone businesses that aggressively seek out third-party work. The Lufthansa and SAirGroup "technics" are a clear example, while in Asia too airline departments have evolved into strong and independent operations such as HAECO or SIA Engineering. Even in North America, US carriers are showing more interest in external work, while aerospace manufacturers are steadily emerging as a key new force in commercial MRO.
A new leadership profile
Faced with these trends, airlines are inevitably seeking a new profile for the leadership of technical operations. That change is under way is clear; what is less obvious is what that profile ultimately will be. There has already been a certain amount of experimentation - sometimes successful and sometimes not. Andy Studdert, an information technology executive, appears to have fared well at the helm of United's technical unit and has broadened his portfolio to cover everything from flight operations to operational services and systems control. Jeff McClelland, a finance executive, dabbled in operations at Northwest, before taking on the role at medium-sized America West.
Northwest has not been shy in trying different solutions. Rick Zella was recruited from Chrysler in 1995 to bring a fresh perspective to technical operations, although the out-of-industry appointment was ultimately rejected for reasons of cultural fit. That did not stop the airline from trying a different route, putting a lawyer, Richard Anderson, in charge of the division. Since then, Anderson has risen, at age 44, to serve as executive vice-president and COO.
Although the end game may not yet be well defined, it is clear that airlines are turning less often to internal candidates for MRO leadership. For those on the outside looking in, these developments are encouraging. A function once considered the exclusive domain of engineers is now up for grabs, offering new opportunities in executive development. For internal candidates, however, the path upwards has suddenly become more congested.
The Internet is propelling this change still further. The advent of new business-to-business online procurement exchanges, including myAircraft.com and Aeroxchange, represents a new force that is likely to wrest more control away from the supply chain management functions of the technical departments within individual carriers. These enterprises may well be led and staffed by individuals with strong business backgrounds, possibly from outside the industry.
Onwards and upwards
But all is not lost for insiders. Many young and progressive technical operations executives are taking heed and adopting specific measures to make themselves more marketable. Such steps include complementing a technical/engineering degree with broader business credentials, such as an MBA; seeking a temporary transfer outside the function; and driving or creating the third-party business agenda. Ty Cross, recently recruited from BFGoodrich to become vice-president line maintenance at American Eagle, is a good example. He combines core experience from United with third-party commercial exposure at BFGoodrich, recently complemented by an MBA, earned part-time.
Whether insiders or outsiders, future executives will be a different breed to those of the past. These new leaders will be:
business people first and technologists second; identifiers and creators of commercial opportunity; leaders of people, capable of transforming historically combative cultures.While these trends tend to tilt the balance in favour of commercial skills, the harsh realities of airline safety and operational reliability can never be forgotten. It could yet be that the pendulum swings back a little in favour of technologists under the scrutiny of regulators and special interest groups. Without doubt, the sands are shifting in technical operations - wherever they eventually settle.
Source: Airline Business
