Aviation Insights Part 4: “Generating cash comes from performance and performance is driven by customer satisfaction.” Chris Tarry, Senior Advisor and industry expert
Aviation Insights Part 4: “Generating cash comes from performance and performance is driven by customer satisfaction.” Chris Tarry, Senior Advisor and industry expert
“A CEO needs to be visible and engaged—not just with shareholders, but with employees and customers. Good leaders have a capacity to lead from the front, rather than pushing from the back.”
Chris Tarry, Director and Advisor of CTAIRA, a specialist aviation consultancy
In this fourth conversation of our Aviation Insights series, we had the opportunity to reflect on the current state of the airline industry, leadership dynamics, and how the sector can adapt to future challenges with trusted independent aviation analyst and advisor Chris Tarry. Drawing on decades of experience as an industry analyst, Chris shared his thoughts on what drives long-term shareholder value, the economics of airlines, and the evolving skills required for future leaders within the industry.
How can CEOs and the airline industry drive long-term shareholder value?
It entirely depends on who the shareholder is. When the state owns the airline compared to a privately owned airline, the definition of value changes. Governments often measure success by the economic value the airline brings to the country, not just the financial returns.
Let’s be honest—many airlines struggle to deliver significant profits year after year. For many CEOs, the challenge isn’t so much about maximizing returns but rather about losing less than the year before or breaking even. This is especially true for smaller, state-owned airlines that play a vital role in providing national connectivity but lack the economies of scale to be consistently profitable.
Take Emirates as an example. While it’s publicly owned, it operates on commercial principles and generates solid profits thanks to its unique business model. But this isn’t the case for many airlines. For state-owned carriers, I’ve often argued that governments need to look at the opportunity cost if the airline were to fail. What would be the economic loss to the country if that connectivity disappeared? As so often is the case, keeping the airline afloat isn’t just about financial returns—it’s about the broader economic impact.
That said, whether you’re running a public or private airline, investing in the business is non-negotiable. Cutting costs might boost short-term profits, but it’s a race to the bottom if you’re not continually investing in your product, service, and fleet. Short-term thinking so often comes back to bite you, with the outcome of having to spend much more to recover and repair damages caused during a period of underinvesting.
You have to have a clear view of what you're going to do, and what your realistic objectives are and understand that you have to invest to deliver. You cannot maximise shareholder value other than for a very short period of time by cutting costs. Airlines that fail to invest in their product or fleet eventually pay the price—it’s just a matter of time.
Are there learnings from the ongoing consolidation in the airline Industry, that other industries could draw?
If there’s one thing other industries could learn from airline consolidation, it’s probably how not to do it. The theory behind consolidation is simple—you acquire to gain access to new markets and realize cost savings through economies of scale. But the reality in the airline industry is much more complex.
In the US, consolidation has worked relatively well because it’s a single market with fewer regulatory hurdles. But in Europe, cross-border mergers are complicated by national regulations, labour laws, and political interests. Even when airlines come under the same ownership structure, they often fail to realise the expected cost savings because of duplication in operations, management, and infrastructure.
I’ve sat through countless presentations where CEOs promise synergies that never materialise. In my experience, the truth is that the regulatory and operational complexities in the airline industry often outweigh the potential benefits of consolidation. So, if other industries are looking at airlines as a model for mergers, they should tread carefully. The promised “2+2=5” rarely happens in aviation.
Have priorities around airline economics shifted?
For me, airline economics boils down to one thing: cash is king. You can talk about profits and balance sheets all you want, but at the end of the day, airlines are cash businesses. The reason so many airlines fail in November and February is because that’s when the cash dries up.
Generating cash comes from performance, and performance is driven by customer satisfaction. If you’re not delivering a product that people want to buy—whether that’s based on price, service, or reliability—you’re not going to generate the kind of repeat business that leads to sustainable profits.
Look at Ryanair. It’s the most profitable airline in Europe, and it didn’t get there by accident. Their model is simple and efficient, and while customer satisfaction might not be the first thing that comes to mind when you think of Ryanair, the fact is people keep flying with them because they deliver on their promise: cheap, reliable travel. That’s a form of customer satisfaction, even if it’s different from what you’d expect from a premium carrier.
What skillsets and capabilities does a future airline CEO need to manage a profitable airline?
I don’t think airline CEOs necessarily need to come from within the industry. In fact, sometimes an outside perspective can be invaluable, especially when it comes to customer experience and service innovation. However, they need to be supported by a strong technical team that understands the operational complexities of running an airline.
Bottomline – the market determines the value of your company. Influencing the market's view on a company’s ability to implement its set-out strategy is fundamentally what the CEO is tasked with. Success requires you to have a credible and coherent strategy and implementation. As a leader, it will help to understand the specific intricacies and context of the aviation industry to deliver on this implementation.
Most importantly, a CEO needs to be visible and engaged—not just with shareholders, but with employees and customers. Colin Marshall at British Airways was a perfect example of this. He had an incredible attention to detail and was always visible among the workforce, whether it was on the ramp or at the check-in desk. That kind of leadership builds trust and drives performance. So often good leaders have a capacity to lead from the front, rather than pushing from the back.
Are ACMI Contracts the wave of the future for aviation?
I’ve been looking at ACMI (Aircraft, Crew, Maintenance, and Insurance) models for years, and I think they make a lot of sense—at least on paper. The idea of a virtual airline, where you own the brand and the customer experience but outsource the actual flying, is an efficient way to manage capacity and costs.
The challenge is in managing that model effectively. You need solid Service Level Agreements (SLAs) in place to ensure passengers don’t notice the difference between your own operations and those outsourced to ACMI providers. If the crew, service, and branding are consistent, passengers won’t care who’s operating the flight. But getting to that point requires careful management and a willingness to navigate potential pushback from labor groups and other stakeholders.
“It comes down to the airline’s leadership and its ability to manage change.”
The potential for cost savings is significant, but the real question is whether airlines can manage the transition without causing disruptions. The shipping industry might offer some lessons here, as they’ve been ahead of aviation in adopting similar models. But ultimately, it comes down to the airline’s leadership and its ability to manage change effectively.
Stay tuned for our next Aviation CEO Insights Part 5 in May 2025.
If you would like to discuss this further, or have a dialogue around talent management needs then please do get in touch with us at Alumni Global.
Hans Nilsson
Global Practice Leader Civil Aviation, Alumni Global
Lukas Hudec
Consultant Civil Aviation, Alumni Global
