Defining the ingredients of the ideal airline CEO; now and in 2035

Aviation's rules are weighted against efficiency

To these features are added (up to) 70-year-old prohibitions on majority foreign ownership, in a framework designed to support weaker countries' airlines against too much competition - a framework that therefore makes rational decisions like acquisitions and mergers largely impossible. At the same time, the intrusive role of government encourages even listed companies to seek government protection from competition.

And then, just as some airlines do aspire to be investment grade, market analysts target the CEO for failing to increase profits, quarter over quarter - not for lacking vision, but simply for not delivering short-term dividends, where long-term strategies are often needed.

In these circumstances the issue could really be: who would want to lead such an organisation?

Mostly it is not for the money. Many much easier, less conspicuous chief executive roles are more lucrative. More often it is for the buzz, the excitement, the constant challenges.

History has not been kind to many airline CEOs. It has been a wild ride, especially during the 21^st century.

This report will explore some of the issues; they relate closely to the commercial handicaps imposed on the industry by ownership and control restrictions, and the essentially mercantilistic bilateral air services "system".

In search of the CEO models:

"Today we lost one of the most influential thinkers, creators and entrepreneurs of all time. Steve Jobs was simply the greatest CEO of his time." - Rupert Murdoch, Oct-2011

Rupert Murdoch may have been right about the former leader of Apple. Steve Jobs could see around corners. He eschewed traditional market research - imagine asking a focus group 15 years ago if they would like an iPod, with all the accompanying issues of access to copyright music. He changed the way the world listened to music and viewed media. He was not always first to the point, but his result was always markedly better and his marketing flawless. With Mr Jobs went epithets such as 'relentless', 'visionary', 'a creative genius', 'inspirational', 'revolutionary' - along with the qualities of perseverance and stamina.

In a changing world Steve Jobs touched billions of people's lives and he actually played a role in changing it. Technologically he was a great, yet his biggest strengths were promotion and product delivery. Together these made an unbeatable combination.

But he could only achieve what he did with near-unfettered power to implement what he fiercely believed was right. And he was relentless in pursuing his goals.

He had undoubted brushes with morality in some of his dealings; he was frequently brutal in his relations, with competitors, partners and staff alike. He was at one time sacked and later brought back. When he returned, Apple's share price soared under his leadership. Do these attributes qualify him to be considered the "the greatest CEO of all time"?

One thing is sure: Steve Jobs would not have been a great airline CEO. He would have been a disaster. But then he would never have got into the business - unless it had been there to be disrupted.

Imagine Jobs dealing with 20 unions, locking in close partnerships with companies around the world….So, the airline CEO is something else.

Being an outstanding airline CEO brings forward rare qualities - is there something about the Irish?

One measure of success has to be profitability. As has been said, if you don't survive in the short term, there is no point in looking at the long term. A CEO who does not go a long way to producing profits will fail, even if he (or sadly - rarely - she) scores top marks on all other counts.

Despite the airline industry boasting many more high profile brands globally than any other area of commercial activity, very few CEOs force themselves forward as outstanding leaders in today's market. Some of the reasons for this emerge below.

One current leader who has undoubtedly been successful in generating profitability is Michael O'Leary, CEO of the European LCC, Ryanair. Yet he is abrasive publicly, has a relatively high turnover of management (although junior staff tend to have greater longevity). Even allowing for his recent conversion to singing sweetly to business travellers he can hardly be said to have sympathetic people skills. Mr O'Leary could not be further removed from the progenitors of the model his airline emulates - Southwest Airlines.

Herb Kelleher (at first with Southwest's founder Lamar Muse, and later supported by Colleen Barrett) would have to be one prime contender for people's pick as the best airline CEO of all time. He was inspirational and innovative, he constantly generated profits and, above all - he established a remarkable culture in the granddaddy of all LCCs. Moreover, the culture was institutionalised, so that it survived into the next generation of leadership. He had the innovation and persistence of a Steve Jobs, but where he really excelled was in people skills. He created and institutionalised a culture that endured.

Some CEOs are tank battalion commanders - who are themselves other skilled conductors of a complex human machine. In each of these cases investors have benefitted and their airlines have grown rapidly, but other outcomes could not have been much more at odds between an O'Leary and a Kelleher.

Two other Irish CEOs who have a closer balance between tank commander and orchestra conductor also stand out in the international market. Both have achieved remarkable turnarounds of venerable, but ailing, geriatric airlines - a truly rare achievement.

Willie Walsh, coming from the left-hand seat of an Aer Lingus aircraft to CEO of that company, and onwards to CEO of an ailing British Airways, has performed one of the industry's Houdini exploits of recent years.

Now that he is heading the International Airlines Group that he masterminded, British Airways can again make claim to a level of favouritism with its passengers. IAG is also the most profitable of the big three European full service airline groups. Mr Walsh has achieved this by a willingness to confront where necessary, but also by an ability to manage a complex relationship with the Spanish part of IAG. Mr Walsh was assisted in his BA dealings by having the support of the British government, government support being an important ingredient that many CEOs are unable to achieve with their flag carriers.

On the other side of the world, Qantas recently celebrated its 95^th birthday. It was a celebration that would have been much more muted just four years earlier. At that time, another Irishman - the CEO, Alan Joyce - took the extraordinarily extreme step of shutting down the airline in the face of continuing intransigence by two of its key unions. He was castigated on all sides and politicians of all colours demanded his resignation. In the 2015 financial year Qantas turned in the biggest profit in its history; it will be even larger this year. Moreover, the morale of staff and customer satisfaction have rebounded to record levels. Mr Joyce has gone from zero to hero.

In both cases there was obviously more to the turnarounds than Irish accents. Each CEO was able to combine an ability to be tough when necessary, to forge high level partnerships where possible and to have the vision to break through the fetters of geriatric decay.

Other outstanding CEOs, of widely differing natures, would include Sir Tim Clark. He has gone from founding part of a tiny Emirates Airline to running the largest international airline in the world, one that recently reported a profit of over USD2 billion - a remarkable feat in an entirely open, international market. His tactical skills and courage in pursuing courses for which there were no road maps are nothing short of remarkable.

In a very different way Tony Fernandes, also a founder and highly innovative airline leader, has changed the way that Asia's aviation works, breaking through seemingly impossible international operating barriers to create the region's largest LCC group. One of a new breed who (like Richard Branson) came from the music industry and learnt on the job, Mr Fernandes has had success that is all the more notable. One of his key attributes owes something to Herb Kelleher - a cultural sensitivity to his staff and to his customers alike. These are counterbalanced by a sometimes healthily confrontational relationship with some of his airport partners.

And, given the dearth of women at high levels in airlines, it should be noted that the success rate for women as CEOs is proportionately vastly higher than for men: easyJet's CEO, Carolyn McCall, came from a background which had nothing to do with the industry and she has been a revelation, both commercially and in skilfully handling an intransigent shareholder.

Airlines are too complex and often too old for the markets to understand

The airline that these CEOs must direct is many businesses under a single roof (and often many roofs in many countries). The day-to-day issues involved could hardly bring with them a wider range of challenges: aircraft maintenance, catering, running a frequent flyer programme; distributing product through multiple channels; handling bags and freight; training, managing and retaining skilled staff such as pilots; making risky multi-billion dollar investments in future aircraft; hedging currencies and fuel prices and keeping investors and lenders happy. All of this with costs and revenues (and staff) spread through perhaps 60 nations, and dealings with a host of different industry partners.

That is even before navigating the mountainous daily log of regulatory matters in an industry where safety is the unspoken fixed reference point, and arcane economic constraints apply. Government and regulation are ever-present in an airline CEO's line of sight.

There is another distinguishing feature: the airline industry is a very old business which boasts vastly more sexagenarian companies than any other. Several well-known brands are well into their 80s and beyond. KLM, Avianca and Qantas are all well into their tenth decade and Mexicana just fell short, at the age of 89, when it finally collapsed in 2010. That this longevity is a child of regulation is no secret.

As with the fragile human body: age can frequently bring with it sclerosis. In industry terms these are known as 'legacy' issues. They embrace pension funds, the issues attached to older (more costly) employees and, above all, numerous highly organised and often globally coordinated unions. With a dozen or more unions to negotiate with, airline CEOs cannot afford for personnel issues to be far from front of mind - for better or for worse.

Burdened with hurdles and fences: regulation has been the scourge of the industry

Always in view is the half-pregnant nature of the industry: part economically regulated, part not. It is fiercely competitive, yet nationalistic hangovers preclude international mergers. The result: the global industry almost never returns its cost of capital. It is consistently the worst-performing industry, bar none. It only exists because its constituent airlines tend to pay their debts. Equity is not the foundation.

Few investors see airlines as a long-term place to park funds. They are simply too complicated, prey to unpredictable forces and extremely fluctuating. Stock prices rarely even cover the asset value of an airline. Although today there is a hint that airlines might cast off this unwelcome mantle, the likelihood is that - at best - a small proportion will ever return their cost of capital under the current regulatory regime.

This has given rise to the occasional attempt to privatise an airline company in order to expose and sell down the profitable parts, such as frequent flyer programmes, the rentable value of the fleet and various other functions such as catering and maintenance. In this way, the thinking goes, the simplified company structure allows better value assessments by analysts - and each company with its own CEO. Where it has happened however, with Air Canada for example, the residual airline takes its place along with others - struggling to make a living, because a legacy airline is intrinsically such a poor business.

Thus airlines essentially exist to support a host of suppliers and financiers - as well as to perform a remarkable socio-economic function. The industry drives world tourism and in doing so ensures that it is always in the spotlight, among consumers and politicians alike. If a politician wants to get some quick media coverage, attacking the airlines is guaranteed to get front-page column space.

The three Ps of leadership: people, processes and profits. Of these, the 'People Priority' is a key ingredient for airline CEOs

This old industry is in transition. The process has been accelerating over the past two decades but the reality of a new world is now unavoidable, as global economic conditions decline and growth in mature markets is no longer there to paper over the cracks that appear. Short haul routes are under attack by low cost competition; long haul is becoming more competitive as regulatory controls are lifted and new entries from Middle Eastern and Asian airlines are introduced.

The People priority is not a switch to turn on or off. It is the core of a management culture and it generally takes time to develop - and it must be nurtured. One right move can sway opposition, just as one wrong step can unravel years of hard work.

The valuable leader must be able to formulate and articulate corporate goals that all staff can recognise. Especially in a highly unionised environment, managing staff expectations is key to this process; ensuring that they believe in it, and feel some ownership. At the same time, customers also need to be able to relate to the innovations being made.

The People Priority is also important in external dealings, in partnerships. Thanks to the arcane regulatory system within which international airlines have to work, rational business decisions are often distorted. For example, no thought of a hostile multinational takeover of, or merger with, a competitor ever crosses the airline leader's mind. Instead, partnerships can be the make-or-break of an airline's prospects. A minority equity share is the best that can be hoped for.

So, the ability for an airline to secure and nurture partnerships with other airlines is increasingly important as the industry liberalises, while having its feet still anchored in the cement of national ownership requirements. The 'poor man's merger', or alliance, therefore assumes ever-higher priority. Today these are not optional relationships - they are an essential extension of market reach.

Forging partnerships: a vital role where the CEO must lead

"In a world of mega-connectors and mega-alliances, it is impossible to go it alone when trying to compete on the global stage. The regulatory challenges, the daunting cost of entry and the might of the legacy carriers create incredibly high barriers…We've used partnership since day one, in the form of a growing codeshare network, but the equity investments took that approach to a new level." James Hogan, CEO.

Whether it is in a global alliance or in a series of bilateral links (often both), the CEO is focal. In bilateral relationships especially, good personal chemistry, as well as the necessary strategic synchrony, are a precondition to success.

Beware of the CEO becoming a COO

The hands-on nature of this person-to-person ideal involves drawing a fine line between leading from the front and being so engaged that the high level goal-making becomes blurred. The complexities in drawing together numerous different businesses can easily force the CEO into becoming predominantly an operating officer rather than an executive - a chief operating officer, not a CEO.

The CEO can easily become too operationally focused, compared with what would be likely in another company. That has some positives - it ensures a full grasp of all the interactions within the airline, for example, and it allows for a CEO with a good personal touch who is seen to be managing difficult problems, entrenching hero relationships in the process. If that is within his ability.

But it can also mean that everything that goes wrong is directly personally sheeted back to the CEO, regardless of actual accountability.

Balancing risk management with innovation

Airlines are typically institutionally weak in risk management. This may seem odd for an industry that is so risk-prone. Despite - or perhaps because of - the wide array of uncontrollable external hazards in particular, risk minimisation and management is typically distributed across a variety of corporate areas.

The constant pressures - such as fuel prices and currency management - will typically be the responsibility of the treasury. Otherwise, the management of 'unanticipated' events - such as terrorist attacks, volcanoes and ash clouds, pandemics, accidents, government tax impositions, union actions and any of the numerous events with a potentially serious impact on the bottom line - is dealt with across a number of "silos".

This institutional incoherence therefore forces the airline CEO to become involved in almost every aspect of managing the fallout from a major event. Apart from anything else, the media demand that the CEO not 'hide' when something happens, so the constant diversions into managing risk undermine the ability to manage creatively; he or she is massively distracted from seeing the big picture.

The other side of hands-on risk management is innovation - or often, lack of it in most airline managers of recent years. Steve Jobs was always striving to innovate. He was a master of technology and had the luxury of being hands-on in developing new models in an area where rapid advances made innovation de rigueur. His was a young industry, overthrowing the longstanding powers of music distribution and communications. Without innovation, Apple was dead.

The same is hardly the case for network airlines. Here the status quo can be charmingly - and deceptively - attractive.

In this situation the airline CEO is typically hemmed in by such an array of unfriendly external events and myriad suppliers (including airports, employee unions, government regulators, debt providers and lessors, even apart from the host of other service and equipment providers) that conservatism rules. Taking a low-risk approach is so attractive that it becomes almost irresistible.

Using regulatory anomalies as competitive devices can be illusory and self-defeating

Like the Sirens in Homer's Odyssey, the beautiful voices of the regulatory status quo can unfailingly lure management onto the rocks in today's new world. Economic regulation has distorted the nature of the airline business throughout the modern history of aviation, so it is perhaps only normal that reliance on government intervention becomes the refuge of last resort. But to use it actively to stifle innovation by others or as an excuse for inaction cannot be a sustainable strategy. It is simply, instead, a means of delaying - and encouraging - the inevitable.

As the late Peter Drucker, widely considered the father of modern management, observed: change provides the opportunity for innovation. He also urged that the process be systematised. Unless there is a system in place, the default position too easily becomes resistance to change, not innovation. Few industries are undergoing more change than airlines, yet the opportunities to innovate are seemingly going begging, notably among the longer-established incumbents. The result can be that any thought of systematising innovation is excluded by a fear of change in the first place.

The new entrant airline, by contrast, has all to gain and nothing of the status quo to lose. Innovation is a prerequisite, even if it means slavishly following the basic principles of an LCC. This often requires people skills such as those so well illustrated by Tony Fernandes, the CEO of AirAsia, whose people skills extended well beyond internal inspiration, through to being able to establish new forms of cross-border partnerships. Contrast again though the Michael O'Leary style, which pays little heed to such personal skills.

While European legacies have been leveraging ownership structures and driving alliances, US full service airline CEOs have typically ranked among the low-risk takers. That is not necessarily a criticism, although it can scarcely be a compliment, given the overall performance of the sector over the past 20 years.

During that time the US majors have been characterised by a barely indistinguishable chorus: consolidation, partnerships, and bankruptcy - almost as a strategy. Non-LCC capacity growth since 2000 has been negligible and all of the service and operating initiatives, even including such simple but vital revenue earners as charging for bags, have been borrowed from new entrants. Innovation has been conspicuous by its absence.

It might be tempting to mistake a flurry of bankruptcies followed by consolidation for innovation. This has produced some of the lowest average cost full service airlines in the world but it came at a heavy cost, in people pain and in delaying the ability of US airlines to launch into international markets with products comparable with those of the competition.

The new entrants, by contrast, have been responsible for delivering improved service quality - such as have JetBlue and Virgin America, or easyJet in Europe - along with numerous initiatives around reservations and distribution, and passenger facilitation. Not all of them have survived, but these attempts certainly have the advantage of starting with a blank page, a good place to start when innovating. In effect, there is no reason at all that they should have had to show legacy airlines the way in such areas as baggage charges!

As Peter Drucker observed, the 'comfort zone CEO' consequently sees the outside world through distorted lenses, with little first-hand knowledge of what is happening. Everything is seen through an 'organisational filter'. This is a dangerous place to be when the world around is changing so fast.

There are challenges for some cultures in fostering new-world airline concepts

CEO skill profiles are estimated varyingly in different parts of the world. For example, in the more hierarchically oriented cultures of Japan and Korea the approachable CEO may be valued less. Leadership is still highly valued, but it takes different forms. Yet even this stereotypical leader is fast disappearing as generational power shifts occur.

Asia and the other high-speed economies of the Middle East, Latin America and Eastern Europe (as well as Africa) are home to vibrant, expansive airline markets. They can be intensely competitive, but they are redolent with opportunity. Innovation does not come automatically in these circumstances. The Asian flag carriers mostly derive from a recent history of government ownership and protection, so for the CEO to take potentially risky new moves is not instinctive.

Yet the fast-expanding Asian markets are spawning new entrant LCCs that in turn provoke responses from the various flag carriers. As the LCCs establish across national borders using a uniquely Asia Pacific/Middle East joint venture formula - some 20 full service airlines across these zones now have their own low cost subsidiary of one kind or another and in several cases, more than one - complex management skills become more valuable.

Managing the potentially conflicting goals of the different airline subsidiaries was something that the US and European companies found too hard in the late 1990s; today the formulae are different, supported perhaps by less rigid work practices and the potential for growth (as opposed to substitution) that encourages successful solutions.

Identifying a CEO's most important attributes varies with place and time

The airline industry has reached a watershed as reduced international market entry barriers, new technology, new entrants (short and long haul) and increasing signs of legacy sclerosis emerge. Increasingly too it appears that we may be at a turning point - or at least an intensifying battleground - as employee and union preparedness to make further concessions evaporates.

For the growth markets, the simple fact of market expansion provides an escape valve; keeping staff contented is a lot easier when the organisation is successful and growing. Employee desperation does not exist in expanding markets. There is also plenty of room for management innovation.

But where markets are stagnating and new entrants are challenging the status quo, expansion is difficult and costs come under greater pressure - ideal conditions for disharmony and union unrest. In some cases a belief is emerging that there is nothing left to lose; there can be nothing more dangerous than a cornered beast with few options but to tough it out.

Here is where the great CEO's human talents are most appreciated. Innovation as a goal may appear a lot more remote, but keeping the workforce onside and informed of company goals is central. The human element takes on a priority as never before, because without the corporate will to restructure and adjust the other two Ps - profits and processes - simply cannot be achieved.

So, faced with today's two-speed global growth pattern, defining the ingredients of CEO leadership must vary according to time and place. One CEO hat cannot fit all.

The very fact that there are so few examples of enlightened leadership in the airline industry suggests there is a preference for conservatism in management, rather than risk-taking with new opportunities, and that in turn raises the question of which is the wise direction to take. If everyone else does it, it becomes the safest option - or so this thinking rolls out. However, history does not offer a great deal of comfort; most airlines have performed poorly, essentially imitating their competitors and underachieving.

This perhaps belongs to a way of management thinking that prefers benchmarking against other airlines - as opposed to against other companies generally. The Kellehers, O'Learys, Clarks, Walshes and Fernandes' of the business never did that; they breached the conservative barriers that confined all others. Not everyone can easily think outside the square of airline introspection - least of all the large incumbent flag carrier leaders.

The shape of the airline CEO in 2035; just part of a bigger picture

Over the next 20 years the forces of nature will drastically change the way airlines are operated. Until then, it is easy to overlook the fact that there has been a fundamental change in the way that most governments regard airlines in their overall economic strategies. Previously the airline was at the heart of the matter - what was good for the airline was good for the country; today that no longer applies. The airline is now just one input to a formula that revolves around maximising economic and social benefits - this is the case in most countries, at least.

That is the driving force that makes change inevitable. Nothing compares with the power of air services to transform the economy of a country. The more remote the country, or difficult its access, the greater the potential value of air services. Air services are vital to commerce and economic activity; it is also one of the most extensive forms of international aid, distributing billions of dollars from wealthier nations to often-poor receiving tourist destinations.

Many nations sink or swim on tourism. It is not a fluffy luxury, but an immense creator of jobs, an underpinning of economies. Ask Egypt, or even France.

This value was recognised when the current aviation framework was established 70 years ago - although no one could ever have imagined the size that mass tourism would achieve, nor the developed reliance on the travel industry as one of the world's biggest businesses.

What has changed in the meantime? Other than scale, not much, in terms of fundamentals.

But the way the industry operates has changed. From a time when the only non-government-owned airlines were American, now private and listed airlines (along with one or two that are government-owned) have transformed the industry. Governments had to act first, relaxing bilateral controls. Then the rise of independent LCCs showed a stolid, ageing industry how blindingly easy it was to reduce unit costs by 40%, and the Gulf airlines illustrated how a combination of geography and new technology could potentially reroute a quarter of the world's travellers. And Emirates in particular is also a low cost operation.

These new entrants have only gone to reinforce the importance of innovation and relative freedom in stimulating world trade.

There is another factor too: Asia. And China especially, which is fast becoming the largest aviation market in the world.

These fast-growth countries have not been participants in a system that was mostly developed and controlled by the trans-Atlantic forces. With the proliferation of cross-border joint ventures they have shown how impatient they are with constraints that clearly have little relevance in the 21^st century. If these companies want to develop economically, these barriers will be broken down.

Already, companies like HNA are developing airline, tourism and travel consortia around the world. For now the equity investments being made are well within the boundaries of the conventional systems. That will not remain the case beyond this decade.

International law is malleable and the powerful have the ability to redirect the way things are done.

A level playing field is needed - but that has nothing to do with protectionism

When some airlines and governments talk of wanting a level playing field, e.g. to compete with the Gulf carriers (and previously there was a time when the concern was with the US airlines), there is often a kernel of justification. But not for the crude protectionism reasons.

Apart from the Gulf states' geography and the alleged government subsidy of their airlines, a vital ingredient is constantly overlooked: their governments' big picture view of the travel industry and its massive socio-economic impact.

Airlines are one, vital, part certainly - but importantly these governments explicitly recognise the national airline is only one part of a bigger picture.

Singapore was the first to realise this, with its 'Singapore Inc' system - triangulating on airline, airport and tourism/trade. Although there are other ingredients (Singapore's paterfamilias, Lee Kwan Yew, observed that it was air conditioning that allowed the island state to pretend towards becoming a financial centre, by facilitating high buildings), the Inc has made Singapore the remarkable state it is today.

And it is interesting to follow the evolution of that strategy. Singapore Airlines, one of the great brands of the industry, was at first government-owned, but it operated in a generally free access regime. Singapore wanted everyone to fly there. There was some government protection for SIA, but a time came when the economic importance of the national airport, Changi, overtook the airline's. There were now enough foreign and independent airlines that air services were assured.

Did it matter if they were government owned, public or private, subsidised or not? No, they simply served to bring money (and a global culture) to Singapore, to feed the fires of the economy. And SIA is still profitable. It has had to adjust massively, to compete with the LCCs and the Gulf carriers. But it has not been protected.

However, whereas 70 years ago the recipe was to own airlines and restrict competition, in future the solution will be simply to relegate the central importance of airlines to a mere public convenience, secondary to the broader economic and social needs of the country.

That can be achieved in a commercial framework by removing all constraints on international operations, so that airlines can become like the underwater cables or communications satellites that circle the globe. With no restrictions on ownership they can rationalise, gain scale, and serve the wider need.

It is possible for government-owned and private airlines to coexist, just as large and small do

Even though such a reappraisal may sound a dramatically revolutionary, the reality is that government owned and (often) subsidised airlines have co-existed with private airlines for decades. Why did governments own airlines in the first place? Because they considered it in the public interest. That doesn't mean they always got it right.

There are many shades of white; Air New Zealand, Singapore Airlines and Air India each have substantial government ownership, yet their presence in the market varies widely and their governments' policies vary.

The reason for the airline variegation is not their ownership, but the regulatory regime that their governments adopt. New Zealand and Singapore embrace open skies and leave their airlines alone; their airlines are successful and efficient. India has been protectionist and meddles constantly; Air India needs hundreds of millions of dollars a year in subsidy.

It's not easy being government-owned: Air India on concerns about taking decisions in a government-owned entity:

"Do I play safe and let the organisation sink. Or take major decisions and run the risk of being run down myself when my decisions would be dissected in hindsight?... Perhaps there are no easy answers and I have to depend only on the voice of my conscience"; Ashwani Lohani, Chairman and MD of Air India.

The current system of regulation is designed solely to tilt the level playing field

And the concept of a level playing field in aviation, whatever it might mean, is risible. There is a whole body of economic regulation specifically designed to tilt the playing field!

Take domestic markets: they have typically been protected from foreign airline operations; this is a fundamentally unilateral decision. Any government has the power to open its own skies to foreign ownership (Australia and New Zealand have), so there can be no issue with the international regulatory system there.

And it is hard to avoid the conclusion that, where US airlines generated half of the entire world's profits last year, there is a link between market protection and airline profitability. Even if that profitability comes at a high cost - of limiting high-quality competition and market growth.

In short, while the industry has always struggled to be profitable, government ownership is not the reason the airline business is such bad business. The main reason is the distortions on ownership that exist; the inability to rationalise these global businesses. Unless they are removed, the 2035 IATA AGM will still be bemoaning the fact that the industry cannot achieve a decent financial return.

If today a government started with a clean sheet it would have to confront the facts: the international airline sector is so vital to the national economic well-being that leaving air services wholly to commercial chance among a thousand financially inefficient airlines is unthinkable.

The justifications for nationally owned international airlines are redundant

Long gone are the days when having locally established airlines created thousands of engineering and skilled labour jobs. Most airlines now send their aircraft offshore for heavy maintenance. The vast bulk of employment created by airlines today reflects the profile of the new airlines - and of the new airline CEO: they are not engineers, as they used to be until 20 years ago. Today the jobs are in sales and marketing, IT, customer relations, finance; in short, the airline employee of today is transferable between most consumer businesses. Losing a locally owned international airline would scarcely change the national skills profile.

The 2035 airline CEO becomes an engineer again

In this environment, the role of the (few) airline CEOs would go full circle. Relinquishing the responsibility for selling seats and cargo space, they would be solely occupied in ensuring the operation of efficient and effective global networks.

Remarkably, that smacks just a little of the nature of today's branded global alliances.

The vital part of the airline business is simply getting people from A to B

That proposition is totally at odds with the need for a thousand airlines to make a profit. Transporting people can be performed by a handful of efficient global operators, supplemented by smaller regional connectors. They fly the aircraft, and meanwhile a thousand brands around the world sell their seats, with competing ground-based companies adding greater or lesser ancillary products.

It is a simple model. It does work, because tour operators (and cargo operators) have been doing more or less this for decades. They could do it because they operated in more open, less regulated markets. Telecoms companies do it.

The only things preventing this inevitably logical outcome are rugged nationalism, the political influence of the airline unions - and of course the safety card.

Today these inertial forces are insurmountable. In a hopefully more logical and environmentally-pressed future, logic will prevail.

After all, the alternative is that a system cobbled together amid the ruins of the Second World War should persist for 100 years. Does anyone really want that?