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Global Airline Industry: Diversity Is Stuck On The Ground

This article is more than 8 years old.

Is anyone listening when it comes to the link between greater diversity and better commercial performance ? When it comes to the international airline industry, apparently not.

While it is hard to demonstrate that link conclusively - and correlation is not causation as reiterated by a study just out, it should nevertheless provide considerable food for thought for an industry that is revealed to be startlingly homogeneous in composition.

Egon Zehnder, the global executive search and leadership advisory firm, has just released the full findings of a diversity study in leading international airlines which shows that a group of the top 15 airlines has achieved both markedly greater diversity in all categories and superior business performance over the past ten years.

Carolyn McCall joined easyjet on July 1, 2010 as CEO Source: easyjet, London

"It is noteworthy" it says, "that of these top 15 airlines, low-cost carriers (LCCs) perform better and have significantly higher diversity."

These LCC's appear to be in the top group as they "seem to combine a clear business model and strategy with the potential derived from higher degrees of diversity and inclusiveness, which in turn fosters shared creativity and stronger change readiness" says the analysis.

Lessons to be learnt? “Airlines need to venture out on a truly transformational journey if they want to secure the viability of their business and this needs to be cascaded comprehensively and quickly across the entire organization,” says Christoph Wahl who leads Egon Zehnder’s global Services Practice.

“To accelerate the transformation, airlines need to promote internally much earlier based on potential – to allow for leap-frogging - establish inclusive leadership that allows 'outsiders' to have a lasting impact, and to identify mission-critical roles and staff them with experienced hires from outside” he adds.

In terms of homogeneity, the study finds that at most airlines, those in key leadership roles are long-tenured in the industry and with their current airline. Among CEOs and senior managing directors in charge of business units and/or subsidiaries and senior executives of core airline operations, maintenance and engineering and the like, executives tend to have been with their current airline for an average of 12 years and in the industry for an average of 18 years.

At slightly above 50 years, the average age of airline executives is higher than that in such industries as banking, telecommunications, automotive, and fast-moving consumer goods (FMCG).

Only 34% have worked in at least one other industry, and just 33% have worked for at least one other airline.

Women (of course) are a rarity among CEOs and in other top executive positions. Carolyn McCall (pictured above) who has led easyjet for five years, is a rarity, as well as a good representation of the potential of women in tough positions in business. But less than 5% of CEOs and less than 13% of top executives are female.

"Despite some small improvement in gender diversity recently, few women are found in key functions of airlines. Instead, they are concentrated in classic support functions such as Finance, PR or Human Resources" says the report.

And then there's cultural and national diversity in the international airline business. It is "largely lacking" says the report. Just 18% of airline executives differ in nationality from their airline.

"Not surprisingly, companies located in Europe and North America, the most mature aviation markets, and in Asia, still dominated by legacy carriers, have the least internationally flavored executive teams. What is surprising is that given their aspirations to be genuinely global, these companies continue to seek talent primarily from national talent pool" says the report.

As Egon Zehnder says at the start: "In many respects the global airline industry appears to be flying high. Profit margins are up, load factors are at record levels, and fuel costs are down. But those benefits are unevenly distributed, varying widely by region, type of carrier, and individual airline."

It goes on: "The general improvement obscures the underlying reality for the overwhelming majority of airlines: to succeed they must find ways to adopt or innovate their business models, operate more efficiently, and become much more customer centric in many ways. That will require new ideas and approaches...."

With an excellent touch of creativity in its writing, Egon Zehnder's report is entitled How Profit Flies On The Wings Of Inclusion: The state of diversity in the global airline industry.