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Expatriate Leadership in the Airline Industry

Lufthansa CEO, Wolfgang Mayrhuber
Lufthansa CEO, Wolfgang Mayrhuber

The industry is now witnessing an increasingly large number of expatriates in airline leadership roles. In this analysis by Spencer Stuart’s Global Aviation Practice, Michael Bell and Thierry Lindenau explore why that might be and what current industry trends may portend for the future.

For decades, leaders in the airline industry have primarily been local nationals despite the highly international nature of the sector. Even today in Europe, most legacy carriers are managed by nationals. Air France/KLM, Alitalia, Iberia, and SAS, for example are all run by country nationals and few, if any, expatriates are to be found in C-level positions. Although Lufthansa has a native Austrian, Wolfgang Mayrhuber, at the helm, he has spent his entire career with the German national airlines and is a native German speaker.

Even where national airlines have brought in non-nationals, those CEOs all share the native language of the home carrier - British Airways (Willie Walsh-Irish) TAP Air Portugal (Fernando Pinto-Brazilian), and Swiss (Werner Franz-German). So, while Europe has witnessed some migration of top airline talent, one could hardly call these individuals full-fledged expatriates.

The American Invasion of Europe

Europe first experience the internationalisation of management in the 1990s as two majors experimented with the introduction of airline division presidents from the United States - Jeff Katz (formerly with American Airlines and Sabre) into Swissair and Fred Reid (formerly with PanAm) into Lufthansa. Katz was accompanied at the C-level by Ray Lyons and Lee Shave, both formerly with British Airways. At the time, even pioneering low-cost carriers experimented in the same manner, with Virgin Express importing Jonathan Ornstein from the US. It was a virtual "American Invasion" of the European airline industry.

Despite the injection of US-style leadership at both airlines in the 1990s, both Swiss and Lufthansa today maintain almost exclusively national leadership models. Thierry Antinori, a Frenchman, is the only non-German at senior levels within Lufthansa. Why is that? Was the expat experiment unsuccessful? In truth, both Katz and Reid stayed at the carriers for meaningful periods of time and had major positive impacts on their evolution as more globally-minded progressive airlines. The influx served an important purpose as relatively more advanced practices such as revenue management were transferred Eastbound across the Atlantic. Both important Presidents subsequently went on to successful CEO careers at orbitz for Katz and Delta Air Lines and Virgin America for Reid.

A few mid- and small-sized European carriers also took on foreign leaders. Vagn Sorensen, a Danish national, served for several years as the CEO of Austrian Airlines before being succeeded by non-aviation industry native Austrian Alfred Ötsch. In 2007, Austrian also recruited Lufthansa's Head of Marketing, Dr Andreas Bierwirth, to serve as Chief Commercial Officer. Luxair recruited Martin Isler, a former Swiss executive, four years ago to serve as CEO.

The Gulf - leading the way

The Middle East region, and in particular the Persian Gulf, has played a key role in fostering the deployment of expatriate airline executives while serving as a showcase for successful expatriate transplants. Emirates Airline is a terrific example of a highly successful airline developed largely by expatriates but one which has also consistently maintained a healthy balanced those expatriates and locals. For more than 25 years, Maurice Flanagan has been at the helm of the carrier. Tim Clarke and Gary Chapman, both divisional Presidents, have been at the company in excess of 15 years each.

Emirates was initially forced into the expatriate model due to a sheer lack of local airline talent, as Gulf Air was, at that time, the only substantial carrier in what was then an undeveloped aviation region. As a result, experienced executives from other airlines around the globe were approached and recruited. Several other carriers in the region have since followed the Emirates model, including the likes of Etihad Airways, Qatar Airways, Gulf Air, and Oman Air. Today, more than six major carriers in the Middle East are headed by expatriates while many others are also to be found at the C-level.

Despite these examples, the 1970s, 1980s, and 1990s witnessed only limited flow of global airline talent. Why didn't the American Invasion and the successful Gulf experiment lead to a more immediate and broad-based flow of airline talent across national boundaries?

We believe that several natural "resistors" were at work impeding the flow, including:

  • National laws prohibiting, or limiting, non-national officers at airlines;
  • Concern over cultural adaptation;
  • Government interference in senior executive appointments.

LCCs: Nation-neutral

That said, over the past decade, the tide has begun shifting. As much as the low-cost sector has revolutionised the airline industry globally, it has also proven to be a key driver in the deployment of expatriate executives on the global stage. The list is long of European low-cost carriers which have or had expatriates on their management teams.

easyJet was one of the pioneers, bringing in Ray Webster, a New Zealander, as its first non-family member CEO. Although Wizz Air, the fast-growing low-cost airline headquartered in Budapest, is headed by former Malev CEO and native Hungarian Jozsef Varadi, three of his direct reports are expatriates, hailing mostly from the UK. Bratislava-based SkyEurope is currently headed by Canadian expatriate Jason Bitter. Before its current merger with Clickair, Vueling Airlines had several expatriates on its management team, including American Mike Bata as the former deputy COO and Lars Nygaard as Chief Executive Officer. FlyBaboo, a regional low cost carrier based in Geneva, is headed by a Frenchman, Jacques Bankir.

A similar trend occurred over the past decade in the Indian Subcontinent, as that region witnessed the emergence of its low-cost industry. SpiceJet, Indigo, Air Deccan, and JetLight have all had or currently have expatriates in CEO or COO roles and even full-service Jet Airways has a German, Wolfgang Prock-Schauer, in the number one post.

The same holds true in the Asia Pacific region. Warwick Brady (a former Ryanair executive) leads Indonesian low-cost carrier Mandala, Tony Davis (another Brit and formerly CEO of bmibaby) heads Singapore's Tiger Airways, and Gary Kingshott (an Australian and formerly CEO of India's JetLight) is now running Cebu Pacific. Even Australia, a country replete with strong aviation talent, has witnessed the arrival of airline expatriates including Stefan Pichler, a native German, as Chief Commercial Officer and deputy CEO of Virgin Blue and Alan Joyce, an Irishman, as recently appointed CEO of Qantas.

The time is now

So why might it be that more and more airline leaders are now moving to other countries in order to fill executive roles and why are boards of directors and CEOs increasingly looking for such expatriate leadership?

In our view, airlines - facing an increasingly global and menacingly competitive environment - are looking for the best talent available, regardless of origin. Whereas national and cultural considerations are still important, sheer talent, knowledge, and experience become overriding concerns when there is little room for error.

Why would it be that the low-cost sector has more readily adopted non-nationals into its leadership ranks? We believe that the answer lies in several related considerations:

  • Low-cost carriers are typically privately held with commercial success being an absolute imperative, thereby putting demands to secure the best available leadership talent;
  • Political and external relationship management skills for low-cost carrier executives are typically much less important considerations than for national legacy carriers; and;
  • The low cost/low-fare phenomenon was born in the US and then optimised by two European carriers and, accordingly, private equity investors typically go to the fertile hunting grounds within those two markets to secure leadership talent.

Whenever we, at Spencer Stuart, conduct executive searches in the low-cost arena, the mandate is unambiguously clear: "Search globally and bring us the best available low cost airline executives!"

Expat pre-flight checklist

With more airline talent flowing across national boundaries and oceans, it's important to consider the key success factors in expatriate airline placements. Independent of the type of carrier and its geography, our experience is that both the airline and the expat himself/herself should carefully work through the "pre-flight" checklist:

For employers this means asking the following:

  • Have we already successfully integrated expatriates in our senior management team? If so, what worked and why? If not, why not and what did we learn from the experience?
  • Are we international enough in our mindset? Is our daily business language English and how would a non-native language speaker fare?
  • Does our country provide a suitable infrastructure for an expatriate family given the criticality of a satisfied and happy spouse or family?
  • Does the cultural and personality of the expat fit ours?
  • Do we want to have the person on the team for the long-term and, if yes, what are his/her career progression opportunities in our organisation?
  • Can we legally give the individual the official title for the role or will he/she only be working as an advisor, given the number of such prohibitions around the world (eg, all senior officers of Brazilian carriers must be Brazilian nationals; only US citizens can serve as Presidents or CEOs of US airlines)?

For potential expats, this means asking the following:

  • Can I imagine myself living and working in this country? What about my family? Are the living standards, lifestyle, and quality of life acceptable to us?
  • Am I willing to give up my current social network and security?
  • What if I fail? What does the exit or return strategy look like?
  • Can I recruit others like me if I find that I need more expats on the team to pull off the mandate? Might there be a potential backlash if I do and how would I handle it?
  • Will I remain visible in the global talent market and what does this experience do for my career in the industry?
  • What are my primary drivers in making such a move - cash compensation? Equity? Professional or personal adventure? Will this situation satisfy those for me?

Several short-lived and failed expatriate appointments illustrate the importance of such due diligence. Kyrl Acton's appointment as Chief Operating Officer at South African Airways led quickly to cultural clash. Aerolineas Argentinas top ranks have experienced a virtual revolving door of expatriates who proved unable to deal with the complex governmental bureaucracy of Argentina.

Ensuring knowledge transfer

Clearly, successful expatriate leadership isn't easy; otherwise it would be much more pervasive. Very often, things look easier on paper than in reality and many have failed trying. If the exercise is well prepared and executed, it can work out and prove to be a very successful model - not only on the short term, but also in transferring knowledge to others, even if the expat's duration is limited.

An excellent example of this is LAN, the amazingly successful Chile-based pan-regional carrier in Latin America. For several years, LAN (then LanChile) introduced senior executives to achieve such knowledge transfer including Irishman Kyrl Acton into corporate strategy/alliances/commercial and Dutch-Canadian Chris Nassenstein into Maintenance & Engineering. With the knowledge transfer largely complete, and with a strong base of in-house trained Chilean nationals ready to step-up, the carrier's executive team is almost totally home-grown today. And, the results, including world-leading margins as a publicly traded company, speak for themselves.

The past year or so has now witnessed a similar trend in both India and the Gulf as expats are increasingly being replaced by local nationals or regional executives.

Such knowledge transfer doesn't occur spontaneously. Airlines that have successfully leveraged expats such as LAN and Emirates follow conscious plans to transfer leadership "technology", including:

  • Ensuring that the tenure of their expats are contractually limited;
  • Mandating their expats to identify and train local successors into their functions over time;
  • Instilling "shadow" organisational structures with most key roles featuring both an expat and a local national, with the latter typically holding the official title; and
  • "Checking" the ambitions and objectives of incoming expats to ensure that they are aligned with those of the airline.

Any airline executive polled in the 1980s would have thought it inconceivable that two Irishmen - Willie Walsh and Alan Joyce - would concurrently be serving as the CEOs of British Airways and Qantas Airways. But, such is the case today, a sign of the times that airline talent now flows more freely around the globe and that growth-conscious shareholders are increasingly blind to nationality. At the same time, we are seeing more airlines deploy conscious leadership technology transfer plans as outlined above, thereby lessening the need for foreign resources.

What model works best for your airline?

Contact the Authors

Michael J. Bell & Thierry Lindenau

355 Alhambra Circle

Suite 1300

Coral Gables, Florida




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