Dubai has been such a growth story and an opportunity,” says Gary Chapman. He should know; the New Zealander has worked in the region since 1977. Chapman has been with the Emirates Group, the aviation business owned by the Dubai Government, since 1989.
As well as being responsible for the Group’s finance, HR, legal and IT functions, Chapman is also President of dnata, one of the world’s largest air services providers and the largest in United Arab Emirates (UAE), with 45,000 employees and a presence in 63 countries.
Part of what has made Dubai such a good environment in which to do business is the stability created by the ruling Al Maktoum family, Chapman suggests. “What you have is a very well thought-through approach, and through thick and thin they’ve stuck to it,” he says. Under Chapman’s leadership, dnata has seen remarkable growth. Founded in 1959, it runs four core operations: ground handling, cargo, catering and travel (which has a B2B side, providing services to the travel trade, and a consumer side that includes organising tours and holidays).
At Dubai International Airport dnata is the sole handler. Some might describe this as a monopoly, a characterisation Chapman disputes: “Monopolies imply high prices and poor service. We do not provide poor service and we do not charge high prices. And given that we are now global, clearly the customer base that we have is global, so if I’m handling an international airline in Dubai and they’re not happy, they will not work with me anywhere else in the world.”
Today 70% of dnata’s business is international. Achieving that kind of rapid worldwide growth has not been a walk in the park. “The real issue is around governance,” says Chapman. “As you get a global spread, you end up with businesses in different countries, either through growth of existing businesses or acquisitions. And with those acquisitions you will end up with different cultures and behaviours, so much of it is about the technology to give you the right information: financial, operational, safety.”
So, how do you bring multiple, fragmented businesses together to function under a single, standardised framework? “Getting the right technology is just the start,” says Chapman. “Many a Waterloo has been experienced by organisations in thinking, ‘Now I’ve got the systems’, but they don’t actually change the way people work and they don’t adapt to different practices. They tend to want to remain in the same cocoon, work in the same way and try and adapt systems to them, as opposed to the other way around.”
In a competitive environment, it’s essential to move fast: “If you see opportunities out there and you don’t seize them, then the competition will. You’ve got to keep growing, you’ve got to keep acquiring – the industry doesn’t stop for your technology implementations.”
These aren’t easy times for the aviation industry. Last year, dnata’s total revenue grew to US$3.9 billion (£3.1 billion), up 10%, and it recorded a profit of US$ 394 million, making 2018–19 its most profitable year ever. But this is largely down to a one-time transaction in which dnata divested its 22% stake in travel management company Hogg Robinson. Without this transaction, dnata’s profits would actually have been down 15%. “It’s pretty tough out there,” agrees Chapman. The Middle East has felt the impact of the drop in oil prices, depressed property prices and a turbulent geopolitical situation.
“It’s definitely had an impact on optimism, so travel in general, and especially on the corporate side, has been under a lot of pressure.” But crisis is nothing new in the region: “That’s why I always take the view that if you don’t think long term you would freeze and go nowhere. That being said, I’m not advocating blind optimism – the current uncertainty is not good for business and we need to operate accordingly.”
How then does dnata maintain a competitive edge when times are difficult? For Chapman it’s about making sure that “people are tuned in and aware and pulling in the same direction. Again, that is about creating the right culture.” He believes firmly that “providing a high-quality, safe service” should be an organisation’s main goal: “If you get that right, the financial performance will follow. You can’t have sustainability and longevity in your business if you provide an inconsistent standard of service or you don’t provide a safe service. Those are the pillars on which you’ve got to build a business, no matter what business you’re in.”
The other trick to remaining competitive, of course, is innovation. One of dnata’s successful recent innovations, already in use at Dubai International Airport, is the ‘turnaround tool’: a piece of software called the Hub Monitor that increases the efficiency of rosters, productivity and performance. Hub Monitor keeps real-time track of all the activities needed to prepare an aircraft for departure, such as cleaning the interior, making maintenance checks and loading luggage. The software alerts operational staff if any activity is delayed, enabling them to tackle the root problem and make sure the flight leaves on time.
"If you see opportunities and don’t seize them, the competition will. You’ve got to keep growing"
But in the current global climate, it’s easy even for innovators to be knocked off course by events they have no control over. Take Brazil, for example. When dnata opened operations there four years ago, partnering with local firm RM Ground Services, the country felt like the ideal base for expanding into South America. But immediately after the company opened for business, Brazil went through a period of political upheaval.
Although Chapman believes dnata has a “great reputation” and the perfect partner in Brazil, he admits the situation there “has had a challenging economic impact.” India, with its population of one billion, is potentially a huge market, but while dnata’s travel business now has an operation there, Chapman is cautious about moving other parts of the business into the country. “The psyche that people get wrapped up in is: how can you not be in those markets? Well, we look at other organisations that have entered the Indian aviation industry and have had to rapidly adjust their strategies to keep up with an ever-changing landscape. This constant state of flux makes it hard to remain profitable. So for now, I’m okay with not being in the thick of it.
“It’s the difference between wanting to be the biggest and wanting to be the most admired – we can resist the temptation to snap up businesses in emerging markets where there may be more challenges than opportunities.”
Brexit is also creating huge uncertainty, and while some businesses can prepare by risk-managing their supply chains, in the airline services business it makes more sense to “suck it and see, and be quick and responsive to whatever that throws at you. It’s very difficult to plan for something when there are so many uncertainties to it.” He’s all too aware of the potential difficulties caused by Trump’s protectionist policies in the US. But he has some sympathy with Trump’s desire to push back against China’s growth and level the playing field. And while the US isn’t an open trading partner, he points out, nor – like most other countries – is the EU. The hypocrisy is rampant: “At the end of the day, the strongest in any situation is probably the one that will walk away with the spoils.” The key to success, Chapman believes, is to be smarter and nimbler than competitors, so that the business is better at dealing with setbacks and swifter to seize opportunities. If there’s one thing he’s learned, it’s that nothing stays the same: “The thing about business today is to expect the unexpected.”
Emirates Group have been a member of the LBS Global Business Consortium (GBC) since 2003. The GBC is one of the world’s foremost learning consortia for businesses and brings together leaders from the world’s foremost organisations to share perspective, insight and expertise.