Airline CEO Interview: Air Greenland

Transcript

Lee Lipton:

Hello, my name is Lee Lipton, and I'm a senior vice-president of aviation strategy with ASM Aviation Consulting, and I'd like to welcome Jacob Nitter, the CEO of Air Greenland to CAPALive. Hello, Jacob.

Jacob Nitter:

Hello, Lee.

Lee Lipton:

Thanks very much for joining us. I'd like to start in a place where most people I think, are not particularly familiar with Air Greenland and you've got probably one of the most complex set of missions and operations of any airline anywhere. So, perhaps you can start by just telling us a little bit about Air Greenland and its role in the country.

Jacob Nitter:

Yeah, thanks Lee. And thanks for getting this opportunity to tell a little bit about our little hidden secret called Air Greenland here on the Northern part of the world. Yeah, it's true that it's a complex operation. And Air Greenland was actually founded back in 1960 and it's actually a unique story. The founding of Air Greenland was based on a Danish Lieutenant Colonel from the air force who travelled around Greenland in 1958, and made a report on the need for aviation in Greenland. And he estimated, the number of total possible potential passengers per year to be 1200, across the country back in those days. And actually, that was the business case for Air Greenland back in the day. Of course, it has grown from the 1200 back in 1962 to about 400,000 yearly passengers to this day. But we tend to call Air Greenland your one stop shop for your every aviation need, because you can get almost everything in our shop, be it a single engine helicopter for slinging or heli-skiing or search and rescue medivac flights, or transporting passengers on a regional flight or transatlantic flights with an Airbus. And that's basically, just serving all the different needs of the country, very small volume and small markets. So, we have to do a little bit of everything to make it work, also from a financial point of view. So, it's a unique operation, it's very complex, a lot of challenges, but it's all kept together by great employees with lots of experience.

Lee Lipton:

And your primary domestic and international network flown with Dash 8s and the A330, correct?

Jacob Nitter:

Yeah, that's correct. You can say that, if you're going to Greenland you would usually start out from Copenhagen on an A330 and then you would land at a former US air force base in Greenland, then you would use the Dash 8 regional network to go to the coastal towns with airports. And if you're going further on to the smaller communities, you would most likely aboard a Bell 212 helicopter that will take you to your final destination. So it's actually, it's a very complex network. The country would cover most of Europe, if you put it there. So, we have about seven Bell 212 helicopters stationed around, that will feed into the regional network that feeds into the Airbus. So, we have a lot of city pairs, a lot of complex integration, and of course, with the weather situation and everything, it's a little bit tough sometimes to get it all to work out, but we usually manage.

Lee Lipton:

And given the range of things that you do and the difficult operating environment, how does that impact how you manage safety?

Jacob Nitter:

Safety is, it's the most important factor when operating here, because I mean, I know this has been said many times before, but if you think safety is expensive than try an accident. And we have in the past, of course, being a helicopter operator for so many years, we have seen accidents, also fatal accidents. And it's just something that we must do everything to avoid, and we have been successful for many years now. And we have a programme here, we call, of course, service first, but safety always. Because without safety, we're not in operation. And also, in Greenland, I mean, a fatality is something you always want to avoid, but in small communities, it tends to get really, really hard because everyone knows everyone. So, it's something that from also a community point of view is very, how can I put it? It hits really hard. And given the short runways that we operate in and out of, we probably do the shortest field operations with a Dash 8 fleet. And in the winter time, with steep approaches to short runways, contaminated runways, there's just no room for taking chances really. So, we take safety very serious. And I've seen seasoned pilots who, when they look at our wind limitations, crosswind limitations, etcetera, they say, "Ah, that's nothing. I mean, we can operate in 60 knots for 70 knots." I was like, "Yeah, sure. We can do that too." But it's just, you eat up your safety margin. So, we operate with conservative markets because we want to be able to do this tomorrow again, so to speak. So, safety is really important. When you're talking helicopter operations, we see also a trend from the customers, they demand higher and higher levels of safety. So, in the old days, aerial work with helicopters was a little bit more Klondike, to put it that way. You fill her up and you go, and today it's very, very structured and very, very procedural, and very much risk-based decision-making. So, I think that's very important.

Lee Lipton:

How's the business fared during the pandemic, especially considering the important role Air Greenland plays in so many communities around the country.

Jacob Nitter:

Yeah, the pandemic, of course, like any airline, hit really hard, because basically, our prime minister shut down all aviation related activities from one day to the other to protect the country. And then, fairly quickly, we entered an agreement with the government to establish an emergency schedule, to both get people around, get COVID tests around, patients transported around. But we were hit really hard in the beginning, especially on the passenger side, on the scheduled side. Fairly quickly, the domestic, because the government managed to keep the virus out of Greenland pretty much. So, we've had a pretty good domestic volume, we're right now at index 82 on the domestic, which is actually pretty good compared to pre COVID levels. But of course, the international route has been hit, so we basically decided, either we shut it down or we add that to the emergency schedule with the government, which we did. So, the transatlantic flights have been basically, kept running by the government. Then we have a lot of different areas that have not been affected by COVID, such as search and rescue operations, servicing telecommunication sites, different charter work. Also, the community government contracts for servicing the communities with helicopters, mail cargo. We're living on an island, so the infrastructure is basically by air. So, we have had some business areas that have not been affected by COVID as well. We've managed to actually be profitable, just by a small margin, throughout the pandemic, but with some help of course, from the government.

Lee Lipton:

And how are you expecting the reopening of the country from a business and tourism perspective to occur and how's that impacting your planning?

Jacob Nitter:

We expect demand to come back very quickly, as soon as the government lifts restrictions. We still have quite strict restrictions on entering the country, but once those restrictions are lifted, we expect demand to come back to pre COVID levels and even exceed those levels. We see a growing demand for tourism for sure, and we've been working through the pandemic also to get ready for the post pandemic situation. I think Greenland can offer unique experiences, which is something that the market asks for. And I think we can also offer a safe destination, because we have no active cases of COVID and we've managed to keep COVID at a very low level. So, I think also, that Greenland will be seen as a sort of safe destination. As an airline, we managed to refund all tickets within a very short timeframe. So, I think that also appeals to passengers, that they know that if they choose to travel with Air Greenland and something goes wrong, we will refund the tickets or re-accommodate or whatever is needed. We're definitely planning for a bright future, let me put it that way.

Lee Lipton:

Well, certainly COVID-19 is more than enough for anybody to deal with, but you've also got two new international airports coming. You've got Greenland's rise on the world stage geopolitically and the growth of the mining industry. You've got lots of tourism development, how's all that playing into Air Greenland's future, what are your plans?

Jacob Nitter:

There's a lot of interesting potential in Greenland and in the Arctic region, both within business and leisure travel. And we are of course, planning to tap into that. So, for the last 60 years, Air Greenland has basically told the passengers that, you have to fit into this box because this is a box that works, given the infrastructure. So you don't really have a choice, we know what's best for you. But with the new airports, the barriers of entry will be reduced and it will be much easier for other airlines to operate in and out of Greenland. So, what we're doing, is adapting of course, to this new situation where suddenly the customer will be the one defining the box, not the airline. And we have some core strengths that we are going to utilise, such as strong value chain representation. We are renewing our fleet. We are taking delivery of a brand new, A330neo in fourth quarter of '22, which will position us very well in terms of both products, efficiency, sustainability. And also we're investing in the value chain to increase the reason to go. We're planning a new ice fjord lodge, just close by Nuuk, where you will be able to see the Northern lights, you will be able to see the glaciers. You'll be able to see the local communities go ice fishing, see ruins, all very interesting things, just in one place on a year-round basis. And that's going to be one of the attractions, so to speak, that will hopefully bring more passengers into the new airports. But we're also, of course, working on reducing unit cost and efficiency to be able to compete with other airlines. Then we have to look at growing the market as well. And I think with your background, that's also something that you are a little bit interested Lee, the route development. So, we're of course, looking towards North America. There are a lot of North Americans who would like to go to Greenland, but today, because you have to go via either Iceland or via Copenhagen, it's a long trip. And that certainly keeps away a lot of people from going to Greenland. So, we're definitely looking at the potential for opening new routes towards North America and even Europe.

Lee Lipton:

What are some of the other changes, in terms of the political social situation in Greenland, with respect to Denmark and the new government, and how's that factoring into your future planning?

Jacob Nitter:

I think, with the new government in Greenland, definitely supports tourism as one of the future pillars of business, that will help Greenland work towards financial independence. And that's of course, also the reasoning by the investment in new airports. I think, also, there will always be strong ties between Greenland and Denmark, of course, with two to 300 years of history together. There are both business ties and family ties, but I think that the main growth is going to come from different markets. The market between Greenland and Denmark it's not saturated, but it's very mature, at least. So, the growth will have to come from other markets for sure. And that is something that our government is aware about as well, and supports also, be it Europe or North America, or a combination. And then, you have the geopolitical situation, of course, with lots of both researchers, scientists, but also military political interest, which is also outside of the traditional Greenland/Copenhagen market.

Lee Lipton:

Along with that economic development and growth in Greenland, and other kinds of trends, like the growth of e-commerce during the pandemic has paid a lot of attention to the cargo market. Where's the cargo market and Greenland today and how do you see it developing?

Jacob Nitter:

Yeah, that's a really good question, because that's something that the pandemic, I think for sure has shown that there is a future potential. During the pandemic, we have been very limited on the international flights, due to government restrictions. So, we've actually not been able to meet the total cargo demand. We've done a lot of things to accommodate the demand, but we haven't been able to fully meet the demand. I think that there is also, will be growing demand for cargo in the future. One of the reasons for us investing in the A330neo is the elite cargo capacity, and I think with 60% of the cargo going into Nuuk in the future, we will have a very strong position with the Airbus going direct to the market. Whereas today there is a big bottleneck because you have to ... it's fairly easy to bring the cargo in, belly cargo to Greenland with the Airbus, but then when you have to distribute it with the Dash 8 fleet, in a combination with passengers, it creates bottlenecks and it's very expensive. So I think in the future, we'll see a growing demand as well. It's a growing market for cargo, both because the bottlenecks will be removed and also because the customers will have an increasing demand. And then of course, one of the interesting things that we're looking at, is the export of fresh fish going the other way, because today, there is almost zero cargo going out of Greenland. It's very, very limited, so it's one way cargo. In the future, we hope that with the direct access to the markets, we can also begin looking at export of fish, which are of course, fished in the very clean waters of Greenland. It's very delicate, we have the halibut, we have the shrimp, that will be interesting, and even crabs. So, that's also a market that will hopefully develop once a new infrastructure is ready.

Lee Lipton:

One of the other kind of key issues across the spectrum of aviation and travel is sustainability and coming from a place that's trying to achieve the right balance between economic and tourism growth and sustainability. How is climate change impacting tourism in Greenland and how's it impacting Air Greenland?

Jacob Nitter:

Yeah, a very important question as well, because sustainability is definitely something that we need to take very seriously. Greenland is a fragile environment, and therefore, we also need to be very cautious on how we develop the tourism here. Of course, the climate changes are very visible here in Greenland. You can physically see how the glaciers are melting. You can see the changes almost from year-to-year. And so, it's very visible and I think Greenland needs to keep on branding itself on being a sustainable destination. And then you can say, how does that correspond with an airline because we burn fuel. Without fuel, we don't go anywhere. And I think, we are in this for the long run, so of course, the first main decision to make as an airline, is on the type of equipment and that's why we settled for the A330neo. It burns a lot less fuel than the classic engine options, so we'll be able to reduce the amount of fuel. We are putting more seats in the aircraft, which will again, reduce the CO2 footprint per passenger. And then, looking a little bit ahead, then you have the increase in availability of sustainable aviation fuels, that's definitely going to help out. And I think one of the things that Greenland can offer is, that when you get to Greenland, 70% of the energy in Greenland is actually hydroelectric power. So, it's green energy. So, the electric cars that we have in Greenland, are running on truly green electricity, because it's hydroelectrically produced. And by visiting Greenland, you will actually contribute to the development of the country. Right now, we are as a country, looking at producing even more hydroelectric power that can be used for E fuels, for instance, producing these emerging technology fuels, that will be even more sustainable. So I think, we are doing as much as we can in the short term. And then, I think in the longterm, there are definitely some very interesting potentials for narrowing in on the target of zero emissions, really. And then, you have the carbon offset scheme, where we are actually trying to develop a local offset scheme, where we can offset diesel generation in some of the smaller communities with solar power and wind power. And where we, as an airline, can set up an offset programme that can contribute to those changes. So, even if we don't reduce the carbon in the company, then we can actually help reducing the country wide CO2 emissions, which makes a lot of sense. So, those are some of the things that we're working on, and sustainability is definitely something that we must take very seriously, otherwise Greenland as a brand and as a destination will suffer. And luckily, everyone is agreeing on this issue and working really hard towards becoming one of the most sustainable destinations around.

Lee Lipton:

One of the other kind of sustainability-focused technologies in the works is electric aircraft. And I know you've been working with Heart Aerospace as part of a consortium of a number of airlines and other companies with Heart on an electric aircraft. Given how much of your operation is focused on regional type services, but in a difficult kind of operating environment from a weather standpoint, does an aircraft like that have a place in Greenland? And how do you see that coming to pass?

Jacob Nitter:

Well, I think the reason for teaming up with Heart Aerospace, was basically on the basic assumption that if you can make it work here, it'll work anywhere. And so, basically what we have done is, we have given our input to what the operational needs of an aircraft would have to be, in order to be safe and reliable and efficient in our environment. And those are the inputs that we have worked together with Heart Aerospace on. I don't think that in the short term that the electric aircraft will be a viable solution here, but I think as with anything, any emerging technology, you have to start somewhere and you have to aim high. And the higher you aim, the faster you will actually go through the development phases. And if you set breakthrough targets, then usually youachieve higher than you would if you don't set those breakthrough targets. So, I am not sure that the current development aircraft will be the solution for Greenland in the future, but may be the second or third generation will. By setting the standards from the beginning, I think it we will reach the target faster. And the other issue is that right now, there isn't really a replacement aircraft out there for the Dash 8. So, because of the runway constraints and the electric aircraft would actually be a viable from a performance point of view, replacement in the future. That was sort of the other reasoning behind working together with Heart Aerospace.

Lee Lipton:

And just to close, I think it'd be interesting to hear a bit more about your background. How did you arrive in the CEO chair at Air Greenland and how's that experience kind of played into how you manage the company?

Jacob Nitter:

Well yeah, I usually attempt to say that I'm a second generation immigrant, both Greenland and Air Greenland, because my dad used to work in the company. So, having a dad working for an airline, of course, you want to become a pilot. So I became a pilot, I've been flying in the company for a number of years, but have basically always engaged myself in trying to improve things. Seeing challenges and trying to overcome those challenges and see how can we do things a little bit better every time. And so, I've been working in management and flight ops, and I'm the director of flight ops for a number of years. And then, when the position was available, that the board of directors asked if I wanted to give it a shot. And I said, "Oh yeah, I would love to." And I've been in the position now for four years, and absolutely loving it. Because when you have a lot of good ideas, suddenly you're in a position where it's actually your responsibility to make those good ideas happen, and I think, that's really fun. We have some great staff working here, great people, very enthusiastic and engaged people. And so, it's a lot of fun, but it's also a big challenge. I think, from my operational background has been very important for me in the process of renewing the fleet, because there are so many operational constraints when you're talking aircraft fleet in Greenland, there are so many details that even the OEMs don't really see and don't know about. So, you can really make bad decisions if you don't know the operational side of things. I think, that's helped me a lot. And then, I have some good people helping out on the areas in which I'm not that strong or don't have that much experience. I think, all in all it's helped me a lot in the current position. Yeah, and so far enjoying it.

Lee Lipton:

And having come with so much experience and pedigree from inside the organisation, how's that influenced how you manage the culture and how has that culture evolving?

Jacob Nitter:

I think, it's both good and bad, because you know people really well, it's not a big company, so I know almost everyone personally in one way or the other. So, when I tend to ... I come up with new ideas and we have to move in a different direction sometimes, people will, "That's not what you said five years ago. That's not how we used to do things." It might be easier if some unknown person saying it. But I think it overall, it's a plus because people, I think, they know who I am and they know that when I say things it's authentic. I can't trick anyone because they know me so well that I'll just have to be honest with everything and transparent on how we do things. And I think that that creates trust with the employees. They might not always agree, but at least they know that I mean what I say. So, I think generally it's positive that I worked my way through the ranks. And sometimes, it might've been a little bit easier if you were a blank piece of paper coming from the outside. But I think also, the fact that that people know that it's an insider, of course, there is a tendency to want to support the insider. So yeah, generally I think people are really good to sort of work with the culture and say, "Okay guys, we have to focus a little bit more over here now." And I think generally, everyone accepts that and sees what lies ahead and buys into the vision basically, which is to become the preferred airline, serving Greenland in the future as well. When the customers do get a choice.

Lee Lipton:

I think that's all the time we have for today. Lots more we could go into, but really appreciate your sharing, your insight and expertise on Greenland and Air Greenland. So Jacob Nitter, CEO of Air Greenland, thank you very much.

Jacob Nitter:

Yeah. Thank you very much, Lee. It's been a pleasure.

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