Leadership

posted on 14th May 2019
Leadership

Strong leadership is essential in the fast-moving aviation industry due to the intense competition and diverse range of operational challenges writes David Smith, who spoke to three industry leaders

Baltic Ground Services: Kristijonas Bakutis

There are large mega-corporations where Kristijonas Bakutis’s leadership decisions would be undermined by the byzantine bureaucracy. But that is certainly not the case at the agile Lithuanian ground handler Baltic Ground Services (BGS), where Bakutis has been Business Development Manager for the past four years. The great thing about being in a leadership position at BGS, he says, is decisions are taken fast and there is immediate action.

“We’re a great example of how fast and easy it is to take decisions in a smaller company – unlike in big corporations like Shell, or Total. I’ve been in negotiations with a lot of big companies and we’re incredibly fast by comparison,” he says. “We have under 1,000 employees in all countries and less than 100 managers, so there’s not a lot of bureaucracy and when changes are needed in a particular market, we can decide the same day.”

Bakutis is a busy man with two leadership roles at BGS. Aside from his main for the whole operation with an important influence on decisions about expansion and strategy he is also CEO of the Czech Republic-based subsidiary that carries out interplane fueling there. “I opened the Czech facility and we’re planning to open two new fueling stations there, so it makes sense for me to be the CEO as the expansions are directly related to strategic decisions, I am involved in at head office,” he says.

Founded in 2005, BGS has quickly built a diverse portfolio of businesses. At three airports, in Moscow, Warsaw and Vilnius, it handles eight million passengers a year and 50,000 flights. The BGS refueling business provides 450 000 tons of aviation fuel annually at 16 stations. BGS also operates a logistics business that trucks more than 400 million litres of fuel for non-aviation customers in the Baltic, eastern and central Europe and Scandinavia.

Bakutis says that BGS has ambitious expansion plans, but the company’s philosophy is to go steadily and not lose the advantages of being a small and stable company. In Europe, the plan is to open ground-handling operations at three new airports in the next six years, as well as another 15 refueling stations. But in the long-term Bakutis is looking at the potential to expand abroad, especially in Asia.

“Europe is an old-fashioned market. The attitude tends to be ‘if something works okay, why bother to change it?’ The Asian market is different. It’s expanding fast, lots of people are investing and they want to get the best know-how involved. It’s an exciting market for a ground handler to be involved in,” he says.

India is the primary target of BGS’s ambitions overseas. Last year, the Airports Authority of India (AAI) invited bids for ground handling at dozens of airports and BGS took part in the tender. Bakutis says it looks likely that local companies will be favoured by undercutting rivals. But BGS continues to explore the Indian market for ground-handling opportunities. “Our goal is not to be stressed with a mass opening. We’d like to start with one, or two stations, in India so we can show the high quality of BGS as a European brand,” he says.

The BGS expansion plans for refueling operations overseas are on a larger scale. Bakutis says Asia is opening up rapidly for BGS and the company is planning to both sell and uplift fuel in the Indian and Indonesian markets. Moves are afoot to move into the Chinese fuel market, too. “The numbers in China are potentially huge, ten or even 100 times bigger than our fueling operations in Europe. But we’re happy to expand fueling operations much faster than ground-handling, which is a more complex, time-consuming process. It involves sourcing all the manpower and finding all the financing so it’s better to go slowly,” he says.

BGS’ expansion plans are helped by being an independent company within the global Avia Solutions Group, which has more than 30 subsidiaries worldwide. Bakutis says Avia’s backing makes it much easier to obtain good financial terms from banks. There are also advantages in having sister companies scattered around the world in strategically important places. For example, he recently visited sister companies in Vietnam and China to talk about how they could help BGS to enter those markets. “The sister companies have helped me to get lots of chats with authorities and airports. They have already breached the market so it becomes easier to speak to people that already know us through the Avia network,” he says.

Manchester Airport: Julian Carr

For the past two years, Manchester Airport’s Aviation Director Julian Carr has been riding the wave of developments at one of the UK’s most dynamic airports. Carr previously held leadership positions as Commercial Director at Bournemouth and East Midlands airports, but the speed of Manchester’s evolution is faster and on a different scale. A £1 billion redevelopment of Terminal 2 is ongoing and Manchester’s growing clout on the international stage has helped land several high-profile routes in recent years, most notably to Beijing and Mumbai.

Carr’s role is to grow passenger numbers, which is essentially a numbers game, but in practice it’s not that simple. There’s a balancing act to strike between satisfying current clients and courting new ones. “Existing carriers could be undermined if we grow recklessly. We need sustainable growth on routes that are going to work, and we have to take into account constraints on runways and terminals,” he says.

For long-haul flights, the business community is the overriding consideration. Business-class seats are high yield and help fund the routes. In this regard, Manchester has no rival outside London, he says. Manchester has five times as many business-class seats as Edinburgh and major airlines such as Emirates, Etihad and Qatar, have highly successful offers. These relationships with high-profile clients have often taken years to nurture. Fortunately, Manchester has so much to offer that it’s “not a hard sell”.

Carr’s confidence is justified when one considers the dominant position of Manchester Airport in the North of England. Last year, it had 28.3 million passengers, compared with 5.3 million from Newcastle, five million from Liverpool, four million from Leeds-Bradford and 1.2 million from Doncaster-Sheffield. For businesses in the densely populated, urban corridor running from the North West of England into West Yorkshire, Manchester Airport is a vital lifeline. Carr says there are 22 million people living within a two-hour drive, which is more than the populations of Sweden, Norway and Denmark combined.

Despite the impressive statistics, the case for a new route must be made carefully on an individual basis. Decisions are taken based on multiple factors, but the crux is always the size of the potential market. Carr must do lots of research before he meets his counterparts at the target airlines and airports. “Airlines with global fleets never make kneejerk decisions. Our strategy team studies the data, so we know how many people travel to the target city from a different airport but live within our catchment area. We speak to local business organisations about the trading potential and we look at case studies of the overseas markets. When we go to a client, we can say confidently ‘here’s the potential to develop business links’,” he says.

Although it came before Carr’s time as aviation director, the decision of Hainian Airlines to begin flying to Manchester from Beijing in 2016 was another coup. Manchester became the first hub outside London to offer scheduled non-stop flights to the Chinese capital. Carr says the route has driven significant increases in exports, inward investment and a rise in international student numbers.

lso in 2018, the launch of Ethiopian Airlines’ flights between Addis Ababa and Manchester was driven by trade considerations. Carr believes 400,000 people could benefit and it will serve as a key trade route for Northern businesses. The route is not just about Ethiopia, but also facilitates connections to more than 58 destinations. Carr is now working hard to land new routes to other important destinations unserved by Manchester, especially Bangkok, Shanghai and Delhi. Closer to home, he expects the short-haul operations to expand, too.

The £1 billion development project is crucial to the airport’s growth ambitions and Carr has been involved in planning the commercial side. He promises an additional 60 retail and food and beverage outlets in Terminal 2 and far much more space for security checks. When the extension is complete in 2022, T2 will have the capacity to handle 35 million passengers a year. Meanwhile, the airport is also adding 148,000m2 of new taxiway and apron by July 2020. “The expansions will unlock the pinch points that are preventing us from taking advantage of the existing runway capacity. The problem is terminal space, especially in the morning when short-haul EasyJet and Ryanair flights go out. The T2 extension will help increase the number of passengers. It’s an exciting time here as we’re in the process of creating a world-class airport,” he says.

Eurowings: Florian Gränzdörffer

No European airline had such a tumultuous year in 2018 as Eurowings. The Lufthansa-owned low-cost airline handled the largest growth ever seen in German air traffic. Last summer, it served more than 19 million passengers which was a rise of 17% on the previous year.

In 2019, however, Eurowings has decided to take a breather, and consolidate its position in the market. “After the extraordinary growth and increase in complexity of our operations in 2018, we’re focusing on ‘tidying up’ and making sure our business is stable and reliable,”, says Lufthansa spokesperson Florian Gränzdörffer. “We will continue to grow in 2019, albeit much more moderately than in 2018. The industry now needs above all qualitative growth, not more and cheaper flights.”

The key to Eurowings’ rapid growth in 2018 was the integration of 77 aircraft from the Air Berlin fleet, after the long-established German airline went bankrupt. While it took 40 years for Air Berlin to build up the fleet, Eurowings managed to absorb the planes in 40 weeks. It meant hiring 3,000 new employees for cockpits, cabins and ground operations, purchasing 120,000 new items of uniform and splashing ten tonnes of paint on the new livery. Thanks to the extra capacity, Eurowings says it became the “the number one” at six German airports: Cologne, Düsseldorf and Stuttgart, Hamburg, Nuremberg and Hanover.

Such a breakneck speed could not continue for another year. Nevertheless, Eurowings is predicting that many airlines in Europe have unsustainable business models. It expects many to fall by the wayside and it wants to play a major role in the long-term consolidation of the market. “There are 160 airlines in Europe trying to participate in the boom in leisure travel. As a result of these overcapacities, ticket prices have fallen so sharply that taxi rides and parking fees at an airport are sometimes more expensive than flights,” says Gränzdörffer. “Many airlines will no longer succeed at these pricing levels. They will either leave the market or join companies that offer them a sustainable partnership. The Lufthansa Group will play a leading role in the consolidation of European air transport and we want Eurowings to be an active consolidation platform in point-to-point traffic. Although we have taken a step back in 2019, we remain committed to becoming a leading European point-to-point airline.”