Can de Juniac deliver?

By Shayan Shakeel 10 November 2016
Can de Juniac deliver? Alexandre de Juniac fields questions from reporters at the 2016 World Passenger Symposium in Dubai in October

Alexandre de Juniac hails from a line of nobility; the ‘de’ was first conferred to an ancestor in Napoleon’s cavalry during his campaign in Italy. But for three years since 2011, de Juniac had been waging his own turnaround battle at Air France before being appointed CEO of the group, Air France KLM, in 2013.

Hired to revive a struggling carrier, De Juniac’s plan driven by job cuts, gave Air France its first glimmer of profitability in in 2013. But his appointment to head Air France-KLM would prove an even more arduous task. In 2008, the mega carrier led the world in revenues. By 2013, it was merely Europe’s largest, and hadn’t turned a profit in six years.

Competition had come from regional low cost carriers, the three big Gulf airlines beating it on long-haul flights, and wages, which accounted for well over 30 percent of its revenue. Given France’s socio-political climate at the time, it was inevitable that De Juniac’s plans to turn fortunes around by cutting costs through massive cuts in staff would be met with resistance from Europe’s labour unions–and they did. Protests in 2014 were the largest in the company’s history, and a 14 day labour union protest last year resulted in the company’s HR director having his shirt ripped off as he tried to enter the company building. Strikes cost the organisation hundreds of millions of euros, and forced de Juniac to concede some ground. But he continued with his plan.

Earlier this year, Air France-KLM recorded its first profit of the decade. At 180 million euros (AED 726.3 million) it was a fraction compared to its closest competitor, IAG, which brought in less revenue and delivered over a billion more in net profit. Many observers say no small credit was due to a 20 percent reduction in fourth quarter fuel costs. But however small, a profit is a profit, and the market saw it. The company’s stock soared above the CAC 40, France’s benchmark stock index, for the first time since 2014. Air France-KLM’s ‘iron-handed’ CEO had delivered.

 

"Safety is the result of a mindset focused on global standards and years of experience. Passenger needs, however, evolve much more quickly.”

 

Amid all the turmoil holding down arguably Europe’s most unenviable job, De Juniac caught IATA’s eye. The world’s super-influential airline trade lobby had been looking for a replacement for outgoing chief Tony Tyler. Names it was considering were even rumoured to include Temel Kotil, Turkish Airlines’ former CEO.

What the industry’s biggest trade body was looking for was a man that could help the global airline industry navigate the tough stretch of turbulence it was expecting– from presenting a unique model for a single traveler identifier to ease a passenger’s journey, to lobbying with tough-to-budge global governments to restructure airspace.

That AF KLM’s stock price plummeted soon after the announcement of his departure, is irrelevant. De Juniac managed to move an elephant in the water and IATA was confident it had found its man. In April the organisation announced a resounding vote of confidence in a statement: “Under de Juniac’s leadership Air France and the Air France-KLM Group have undergone a successful restructuring which has improved efficiency and strengthened performance.” In June, at its Annual General Meeting, he was confirmed.

De Juniac is tough. He said as much in my conversation with him about his flight to Dubai, which he took on Emirates, once a competitor. “I am tough, very tough. I look at everything,” he said. “But I must say, it was very good service,” he added in a manner that reflected the natural ease expected of a statesman.

To say de Juniac is trained in the art, and in diplomacy as well, would be an understatement. Educated at the best and most elite of France’s schools in civil service, Ecole Nationale d’Administration. he has significant senior level experience in France’s aerospace sector, and also served as an advisor first to former French President Nikolas Sarkozy, and then as Chief of Staff to Christine Lagarde at the French Finance Ministry before she was appointed to head the IMF.

It’s precisely the kind of skill that would be invaluable to IATA as it looks to approach a set of challenging conversations where it will find itself embroiled with the world’s governments, airlines, airports and travel authorities. His agenda is yet to be finalised, but during IATA’s 2016 World Passenger Symposium in Dubai de Juniac made sure those conversations would be key to his tenure.

At the event and on its sidelines, he spoke at length about the impending infrastructure crisis looming in the form of congested airspace, and the trajectory where aviation needed to do something about making traveling easier.

“Clearly, the main issue is to improve the efficiency and capacity of the sky,” he said. “You have some countries, such as the UAE in the GCC, which are ready to make an investment to pave the way, but then there also needs to be an enormous effort of initiation among other states.”

 

"The benefits [of long term planning] are not always obvious to a politician who has a one two or even three year term.”

 

Getting everyone to talk about airspace is going to be tough accedes de Juniac. At the time of our conversation, IATA had just received word of Heathrow’s approved third runway expansion, but according to de Juniac, “When you have contradictory interests at play you can see how difficult enough it is to approve an airport or runway. Building new airports in the US and Europe is a very big issue, especially when the industry needs to have long term planning, to invest in the next twenty, fifty, or even two hundred years. But looking ahead, the benefits are not always obvious to a politician who has a one, two or even three year term.”

That is one area where the GCC benefits greatly from its counterparts in the west, says de Juniac. “Governments here have a long term planning capacity which is why they are doing such a great job. Even in parts of Asia where they can plan long term, such as in Singapore, they are planning for the future very well.”

A career punctuated with stints at various aviation companies lends a strong industry tint to de Juniac’s conversations which will be critical in his conversations with policy makers when presenting his agenda. “As traffic increases, complexity is becoming a real issue and preventing the sector from growing as quickly as it should were it managed on a unified basis,” he says. ”Airline’s need to fly from A to B, but governments will chop that up and say you need to fly through Qatar, or through Bahrain. What we need is for governments to cooperate so there is efficiency.”

De Juniac also explained how there was much to be done beyond pure airspace policy. A passenger’s traveling experience has become much more cumbersome than it used to be, he says. Changing that would reflect on the industry’s responsiveness.

A major issue facing the industry, for instance, is the ease of travel. Aviation is a transportation industry competing against others, he says, and right now trains are easier to board. “You simply need a ticket for stops and that’s it. One identifier.”

It is time, he says, for a change. Instead of boarding card numbers, passport numbers, and numerous other documents, all that is needed for a passenger to fly is the certainty of identity and security to match with the person flying. “It is too complicated right now. You have too many numbers, too many verification systems. All of it is totally useless by the way. One is enough.”

“How do you think we got to e-tickets?” he asks rhetorically, referring to a time when issuing paper-based flight tickets were the norm in the industry. “Maybe it’s normal now,” he says, “but I can tell you in 2001, e-tickets weren’t normal at all.”

 

"[Aviation] is really just catching up with the standard practices of almost every other company doing business over the internet.”

Southwest Airlines in the US is credited with being the first to introduce e-tickets in 1994, before an IATA resolution at its annual general assembly meeting in 2004 made them mandatory for all member airlines. IATA stipulated 100% adoption by 2008, estimating savings to the industry at $3 billion annually.

But the e ticket revolution signifies both the opportunity and challenge of a unique identifier. IATA had achieved 99 percent adoption by 2008, but until December 2013, Airline Reporting Company (ARC), a financial settlement services provider which settles over $88 billion in transactions annually, had reported over 1,500 airline tickets were still paper based–if even one leg of a flight took place with a carrier that did not support e-ticketing, the booking would need a paper ticket. The lag resulted despite IATA extending the deadline for 100 percent adoption from 2007 to 2008. A similar lag, it is reasonable to assume, could come from having multiple agencies determining securities, visas, check-ins and baggage collection, move towards a single identifier. The upheaval could require tremendous investment in systems and infrastructure, at a time when revenues in the industry remain shaky. But de Juniac insists that isn’t the case.

“The technology already exists. All that is needed is to apply the same protocol standards to everyone in the chain. Budget carriers, network carriers, police and security, all have to apply the same standards.”

De Juniac says, the aviation industry is “really just catching up with the standard practices of almost every other company doing business over the internet.”

Part of the reason for that is that keeping up is a major challenge for an industry whose first priority always must be safety, he says. “Safety is not measured by speed. And our excellent record on safety is the result of a mindset focused on global standards and years of experience. Passenger needs, however, evolve much more quickly. And it is a real race to meet their expectations. The good news is that we are beginning to move fast.”  

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