CEO Insights and Debate at the 71st IATA AGM
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Closing out the first day of IATA’s 71st annual general meeting was the CEO Insight panel discussion, moderated by Richard Quest, international business correspondent for CNN. The forum was comprised of the following members:
- Carsten Spohr, CEO, Lufthansa
- Brad Tilden, CEO, Alaska Air
- Claudia Sender Ramirez, CEO, TAM Airlines
- Christoph Mueller, CEO, Malaysia Airlines
- James Hogan, President & CEO, Etihad Airways
Quest launched right into his signature style of questioning with a query to Christoph Mueller, freshly-appointed CEO of Malaysia Airlines: “What’s it like being a ‘technically bankrupt’ airline?” He then suggested that the audience leave donations for the airline at the door on their way out. Mueller does have a difficult path ahead, tasked with rebuilding the airline in the wake of 6,000 job cuts and the persistent mystery surrounding the disappearance of flight MH370 in 2014.” We will leave old things behind and take off with a clean sheet of paper,” Mueller responded, before quipping that he may indeed accept those audience donations.
Quest turned the conversation to the difficult topic of pilots’ mental health, following the Germanwings 4U9525 crash in the French Alps, and asked the panel what their opinions were on potentially-mandated psychological testing. The mental state of pilots, everyone on the panel warned, is a difficult subject. It’s not always possible to foresee this type of behavior, and the panel called on the ability of the pilots’ community to recognize and rally around any suspicious signs of mental illness. “Peer monitoring within the pilot community is very important,” noted Mueller. Tilden added that in the United States, a rigorous regime of psychological testing would likely be difficult given the FAA medical process and the mandates of the pilots’ union.
And while the public wants a quick answer, this is terrain that needs to be navigated slowly and carefully. Ramirez acknowledged that we most often expect threats to come from outside of the cabin – but this one came from within, and that makes it particularly difficult. How is the industry to respond? Media and public opinion has been quick to jump on the issue of depression and whether or not the actions of Andreas Lubitz, the co-pilot who is believed to have deliberately crashed Germanwings 4U9525, were preventable. Spohr was emphatic in pointing out that the issue at hand is not specifically about depression: “[That] doesn’t cause people to do this.”
When asked what this event taught him and what advice he might impart to his colleagues, Spohr pointed to social media and the speed at which the public expects information. “Do not give in to the pressure to give immediate answers,” he said, adding that you should never attempt to be faster than good data. Providing accurate information is more important than an instant response, and maintaining this requires discipline.
“We are members of IATA – it brings us together as a community.” – Carsten Spohr, CEO, Lufthansa
Quest then directed the panel to the subject of aircraft tracking. All CEOs on the panel noted that they are tracking their aircraft every 15-30 minutes, depending on routes – with the exception of Lufthansa, who is now tracking every five minutes since the Germanwings crash, despite how costly this activity is. All agreed that a more cost-effective solution would benefit the industry. Quest asked why, in light of recent events, an industry-wide solution has not yet been enforced: The public is asking for it, airlines want it and the ultimate endgame is to implement real-time flight tracking. Spohr lamented, “Every part of Earth can be observed by a satellite. I didn’t expect that we would be so far behind when it comes to basic things like aircraft tracking.”
Quest then led the panelists toward the “Gulf 3 versus US 3” battle and the Open Skies debate. There have been many barbed discussions on this issue in recent months, but Quest’s ultimate question was whether or not the relationship between these sparring airlines would ever be able to recover. Spohr took the diplomatic approach, commenting that despite the arguments on the table, “we are members of IATA – it brings us together as a community.” The final verdict on this subject was that, despite, the “deep wounds” inflicted, airlines would be able to mend these strained ties and push forward.
Audience polls were also quite telling during the forum. At one point, Quest asked the audience if there should be more consolidation within the airline market. With more than 250 operating airlines globally, even the biggest player in the market has just a 2.5 percent market share. All of the panelists surmised that more consolidation would be of benefit, and 125 of 170 respondents in the audience poll agreed.
The CEO debate closed on an agreeable issue. When asked for their advice on how to build successful industries, the panelists aligned on some key points: Treat your customers well, be reliable and cultivate a strong company morale. “Building good people and teams, that’s the key to success,” said Ramirez.