At a Glance
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A major challenge that CEOs face is the need to ensure employees in the organization are ready, trained and enthusiastic to implement digital changes.
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Communication and transparency are key—not only about the change itself but also about why change is important, how it will impact teams and the company and what is expected from the organization.
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COOs of the future will need to excel in new dimensions, such as strategy and vision, diversity and inclusiveness, collaboration and strategic partnering, general management and business orientation. Talent can – and should – come from industries outside of aviation.
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Aviation must move from customer-service orientation to true customer-centric thinking, keeping the traveler in mind at all times.
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Managers must increasingly assess leadership talent from a perspective of potential – including both drive and ability to develop. Factors that were previously minimized, such as curiosity and engagement, are now critical in assessing leaders of the future.
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The airlines that manage to find synergies in business opportunities and sustainability will inspire change across the industry.
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Agility is imperative as companies implement these changes.
Consumers are in the cockpit when it comes to driving change within the aviation industry. Heightened safety concerns, expectations for more sustainable practices and the demand for unique experiences have airlines and their partners sprinting to keep up with customers’ needs. To find out where the industry is today and where it is going, the Egon Zehnder aviation team met with more than 30 executives across the industry – ranging from the largest airlines to regional carriers to travel tech players and top aviation experts – during the International Air Transport Association (IATA) Annual General Meeting. Some takeaways follow.
Technology is only as good as the team in place behind it.
While the CEOs we spoke with asserted their commitment to embracing the digital future, they face many challenges in transitioning to new models. One such challenge is the need to ensure employees in the organization are ready, trained and enthusiastic about making the shift. Updating big organizations with legacy systems, global teams and thousands of employees takes a lot of time.
Our take: Change that resonates across the organization will help with successful implementation, and a top-down approach often falls short. Communication and transparency are key—not only about the change itself but also about why change is important, how it will impact teams and the company and what is expected from the organization. The more granular the better, we believe, and addressing potential struggles directly is often the best approach.
A well-designed change management and transformation plan and an effective Program Management Office are not negotiable. You’ll also want to encourage active participation from well-regarded decision makers from across the business, which will help expedite feedback and mitigate roadblocks.
We have entered a new era of Airline Operators – are you there yet?
For any airline, safety and security come first. Decades of focus on safety, compliance, disruption and crisis management across major parts of airline operations has led to niche specialization and career silos as well as top-down leadership cultures. CEOs have recognized that they can significantly benefit from overcoming the challenges they
face by:
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Increasing the use of big data
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Integrating the customer dimension in decision making
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Creating digitization procedures and workflows
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Increasing the organization’s willingness to automate
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Using advanced algorithms for planning and steering
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Reducing the prevalence of manual interventions
Our take: Thinking more broadly about career progressions, the COOs of the future will need to excel in new dimensions, such as strategy and vision, diversity and inclusiveness, collaboration and strategic partnering, general management and business orientation. We have seen some CEOs start to question the well-established industry rationale for hiring traditional operational leaders from within the airline sector and be more open to consider talent from outside the industry. Candidates from other industries or pick back up with strong cross-functional backgrounds (including operations, finance, network/RM, etc.) are being considered as COO candidates; these individuals understand the importance of collaboration to drive business results. Furthermore, they have backgrounds and experiences that allow them to bring new perspectives on how to address the use of data, how to automate and digitize more rapidly as well as scenarios where operations is a driver of strategy and operates in a fully aligned end to end process with all internal stakeholders.
Customer experience should be the driving factor in decisions – but it often isn’t.
Although not a new concept in the industry, all successful airlines and organizations must orbit around the customer. Many in the industry have added new leaders at the top who own and lead initiatives to guarantee cohesiveness from the C-suite down to the operations level. These Chief Customer Officers oversee a mandate to bring the entire company’s focus to the traveler. A move from strong customer service orientation to true customer-centric thinking and the creation of end-to-end, well-segmented customer journeys require fundamental transformation, both in terms of mindset and behavior.
Our take: An effective customer officer function must include several key factors: the right structure (such as a direct reporting line to the CEO), the ability to influence across functions (operations, marketing, digital/technology and innovation) and the utilization of data and analytics to drive decisions. An openness to talent from other sectors with more established customer centricity will bring fresh perspectives. The broader B2C hospitality industry (e.g., hotels, cruise lines, etc.) typically has more advanced customer functions with very relevant parallels to airlines, such as large workforce management, many customer touchpoints, similar customer journeys and similar opportunities for “moments of truth.”
HR is upgrading talent development programs.
Non-airline executives in particular are raising the bar in their approaches to talent development. One executive shared that his team has flourished since a merger with a new emphasis on enhancing employees’ strengths, analyzing team dynamics and culture, and unlocking potential through increased team satisfaction. He has been able to develop a team that is greater than the sum of its parts. This shift from traditional HR practices to strategic business development, complemented by more modern leadership structures, is driving productivity and innovation. CHROs that embrace digital capabilities, transparency, collaboration and transformation will bring the strategic drive necessary to meet the future work force’s expectations.
Our take: Managers increasingly assess leadership talent from a perspective of potential – including both drive and ability to develop. Factors that were previously minimized, such as curiosity and engagement, are now critical in assessing leaders of the future. The aviation C-suite of tomorrow is eager to be challenged and engaged in their work. We hope that airlines will be able to integrate cutting-edge HR practices into the business units to reduce turnover, promote relevant skillsets and create new worlds of working and collaboration.
Sustainability is no longer optional.
Climate change discussions have hit the travel industry, and the calls for greener business practices have become louder. This brings opportunities to improve both business and the planet as customers now expect airlines to be proactive and creative with sustainable changes. The airlines that manage to find synergies in business opportunities and sustainability will inspire change across the industry.
Our take: In this context, CEOs have come to realize that air travel growth is not necessarily as safe a bet as it used to be. Changing customer preferences might substantially impact the core airline model, triggered by sustainable thinking, environmental political agendas and a new generation of users who tend to make different choices in transportation. It is time for airline CEOs to challenge their core business model and identify different areas of mobility and travel to stay relevant.
Agile companies will be the ones that survive.
Agility is imperative as companies implement the changes above. Multi-year alignment across all potential stakeholders was once valuable and necessary. Today, new technology, practices and ideas outpace that rate of change. Implementing agility across all aspects of the business – not just in digital transformation but across business functions and operations as well – is a focus for all executives. In our discussions, several airline CEOs who had recently visited Chinese tech companies discussed how impressed they were by the speed of innovation and evolving business models in the market. They continue to analyze and adopt best practices in the customer and data-centric business models for their enterprises.
Our take: As the industry addresses major change, leadership is more critical than ever for navigating challenges and seizing opportunities. It is time for bold leaders in this industry who are ready to question the status quo, and to do things differently. Rather than moving from a defensive strategy in matters such as sustainability, leaders must adopt a positive, industry-shaping attitude. Successful future leaders will cultivate open and inclusive cultures that capture the full potential of individual talents and teams. To that end, they will also question how they scope a mission (e.g., driving innovation and automation) and define the organizational positioning of critical roles (e.g., ExCo level) as well as eventually recruiting for such roles.
We believe that the trend of hiring from outside of the air transport industry will continue and extend to functions such as Flight Operations, Customer Operations, Technology Transformation, and Human Resources. The goal: to develop a more strategic, transformative, and team-oriented approach to these crucial (cross-) functional disciplines.
