Dubai Airports CEO On Conquering The World
Paul Griffiths, 60 anni, discusses everything from F1, space tourism to Crude Oil prices and the shortfalls of democracy
Let’s start with a big picture technology question, as you are a former computer science student. With the exponential pace of technological change where do you see aviation going in the short, medium and long term?
“I believe that technology will take center stage in the future of aviation. Airports, for too long, have been considered just infrastructure businesses. Actually, we have a vital role to play in enabling a level of customer service that certain airlines have already got right in the air but some airports have let them down with on the ground.
“We are obsessed with building stuff and creating ever-larger foreboding terminals in the pursuit of capacity but my view is that this approach is slightly misguided. If you don’t work on getting the flow rate right, you get massive queues and you need a big building to lose all those people in. Instead, let’s use technology to optimise the flow through the airport and reduce the pressure.
“We keep increasing the size of the pipe but actually what our passengers want is to spend less time going through process. This is where technology comes to the fore with more efficient operations. It’s about the quality of the personalised customer experience where people don’t have to walk more than 500 metres. That is the design goal and technology is central to that.”
And will spaceship-style super-jets be leaving the earth’s atmosphere so that they can travel vast distances in almost no time at all as the futurists are predicting – do you think we will get to that point eventually?
“We have taken a step back here. Unfortunately, Concorde proved without doubt that the balance of technology and economics wasn’t quite right on that aeroplane; it consumed too much fuel and was far too small. It really didn’t provide the technical leap to justify the cost of it. That’s why airlines didn’t buy it.
“But without doubt, the only way to fly faster is to leave the earth’s atmosphere or to fly to near space but it’s expensive to get there in terms of the thrust and the fuel you need. We need a technological breakthrough in terms of how you propel aerial vehicles before we have the economic capability to make outer space travel work.
“It’s quite a hurdle. You have to take the fuel with you so you need something calorifically dense. At the moment, it is very difficult to produce fuel that doesn’t weigh so much that the cost is too significant.”
In that case, what sort of timescale do you think we are looking at to make the technological breakthrough?
“You might find it happens sooner than you think. I would say within 20 years, we would start to see the technology that makes it possible.”
So do you expect to see a dominant player emerge in terms of space tourism even despite the recent Virgin accident and could that new force emerge from the Middle East given the global rise of the ‘big three’ Gulf airlines and the United Arab Emirates space programme plans?
“The commercialisation of space travel is very difficult. It’s technically challenging and the resources required are significant. When you look at the billions of dollars it took to place a man on the moon in 1969, the reason why we are not venturing into space beyond what was achieved then is because it is so technically difficult that making it cost-effective is a huge struggle.
“Until there is a reason such as speed, prosperity or a compelling economic driver to make space travel more of a commodity, it will be difficult. Space travel was only there to demonstrate that humanity had the craft, skill and capability to do it.”
True, although there are normally unexpected economic spin-offs from such exploration.
“Absolutely right. Look at the computer that propelled man to the moon. A modern iPhone is 1,300 times faster and weighs just 0.3 per cent the 70lbs of the Apollo guidance computer. The space race gave us Kevlar, insulation, compact electronics and all sorts of spin-offs as by-products.”
Returning to the now, how much of a tourism boom has occurred in the region as a result of the low oil price and reduced costs for airlines and passengers?
“The way that Dubai has successfully invested in its tourism infrastructure is something that is much bigger than any fluctuation in the cost of crude oil. When you look at the geocentric location of the UAE, we have one third of the world’s population within four hours of flying time and two-thirds within eight hours.
“During the next 20 years, if you look at mainland China and the Asian region more generally you are likely to see another 1.5 billion people travelling per year because of the growth of disposable income among the middle classes. That is an incredible market to facilitate by having a global intercontinental hub here in Dubai.
“We originally forecast 78 million to go through the airport here by the end of this year. But actually the latest forecast suggests we could comfortably exceed that figure. So, yes, the lower oil price does help airlines to provide a more competitive commercial model in the short-term but people are coming here because of the efficiency of the hub and the quality of service on the airlines and in the accommodation. It’s a great place to do business and people find many opportunities here.”
But, I guess the flipside for state-owned airlines in the region is that depressed oil revenues mean shrinking government investment in aviation. Would you say that is the case?
“I don’t think so. I don’t really believe there is a correlation. There is a long-term strategic benefit from continuing to invest that should not be diverted by the short- term fluctuations of the oil price. The sector is a profitable loop so it should not rely on funding from an external source.”
Moving to your organisation specifically, how will Dubai International Airport and Dubai World Central complement each other; how do you see the symbiotic relationship working out in the future, will it be a classic case of collaboration and competition?
“There is definitely coordination here. Dubai has joined the club of 2-airport cities. There are plenty of places around the globe where more than one airport serves a growing city. For example, Tokyo, London, Sao Paulo, New York and so on.”
Okay, aviation traffic and visitor numbers have grown in Dubai by double-digit percentages in recent years. What are the ballpark numbers you are projecting for the years ahead?
“Our original projection was that we would grow DXB to be capable of handling 90 million passengers by Y 2020. We have now raised those goals across the two airports to 126.4 million passengers by Y 2020.
“With the opening of Concourse D here in Dubai International later on this year, we will be in a position where there is not anymore space to build further infrastructure so we are planning to optimize what we’ve got to grow this airfield to be capable of handling about 100 million. That is probably the absolute ceiling. The other 26 million will come through Dubai World Central.”
With those figures in mind, will the air traffic control capacity be in place to cope with so many planes in the sky; won’t we hit a wall at some point in terms of the physical limits on sustaining such high levels of growth?
“It’s a challenge and probably the biggest single risk in terms of the coordination required to make it more effective and efficient. At the moment, there are so many different sovereign interests within the air traffic domain and so many handover points across regions, and so safety margins obviously have got to be built in.
“The move towards a single air traffic management approach takes a lot of time, there is a lot of politics involved and a lot of decisions to be taken about how to harmonise all the interfaces. Unfortunately, we are rather further away from that objective than we need to be to fulfil the growth that we are hoping to sustain.
“I think technology again will come to our rescue. At the moment, you have to maintain five nautical miles between certain types of aircraft. The wake profile of the A380 superjumbo, for example, is still being thoroughly researched. If we can safely reduce the separation between the aircraft to three miles that would result in an increase in capacity.”
Let me ask, how did you celebrate when Dubai overtook Heathrow as the busiest international airport in the world in January of this year?
“Well, a lot of people were very generous. I’ve never seen so many cakes and flowers. We’ve been a bit coy about it though because, quite honestly, the achievement is a volumetric measure. I would rather be judged on quality.
“Our focus is on facilitating growth, for sure, but at the same time we want to be able to improve the quality of the customer experience. Those two can be diametrically opposed so the struggle here is to upgrade the quality in the face of increased demand. We are working really hard on achieving that.”
Previously, you have spoken out against governments taxing the airline industry as a “soft target”. However, if significant industries like aviation are to be left outside the tax regime then who do you tax at a higher level instead to maintain the public finances?
“The things is, any form of taxation where you are not giving any form of benefit – like the siphoning off of revenue from the aviation industry to subsidise public spending – is a pariah against the goals of economic growth and social mobility. The Dubai model is excellent because instead of having that bureaucratic layer of governance, which needs to be fed to finance questionable and inefficient public spending where money is wasted, you have a government that has direct financial interests in commercial businesses. And through the dividends paid to the government it is, therefore, able to directly fund its public expenditure.
“To me, that is a very efficient and effective way of meeting everyone’s objectives. Businesses are left to function and government gets the revenues it needs to invest in public expenditure without the inefficiency of that civil service layer, which is necessary with other forms of government.
“I don’t support tax on aviation. I believe it is counterintuitive to aviation being a driver of economic growth. The proportion of gross domestic product generated in Dubai by aviation is 27 per cent. Why would you want to put the brakes on that by putting the burden of taxation on its back?”
So you are saying the real issue here is the political model in the west?
“The democratic model and the division between government and commerce come at a massive price. That price is efficiency and growth. And that’s why other regions of the world that don’t have the same administrative and bureaucratic burden tend to grow at a faster rate than those that do have that model.
“The United States is a halfway house between and is, therefore, far more resilient in times of adversity as well being able to respond quickly to growth opportunities when they arise. The European model of bureaucracy, though, is not the most effective way to run things. The point is that the aviation industry is a real engine for growth for a city or a country.”
You are somewhat of a celebrated figure in the industry and the region. In addition, people talk about you as one of the most personable CEOs. What do you put your longevity down to and how would you describe your own personal management style – is there an iron fist inside the velvet glove?
“Any manager has to learn very quickly that leadership is a combination of having a steadfast and unwavering vision to achieve a particular goal and realising how impossible it is to achieve that goal on your own. Therefore, getting people to believe and share in that vision is one of the most powerful drivers to unlock.
“I spend a lot of time making sure that I have the best people I can possibly find. You also need to create a workplace atmosphere where people want to come and give it their best. Then you leave people alone provided they are competent, motivated and capable. If you support them to the hilt, you get the best out of people.
“In the last few years, we have more than doubled the size of the organisation but the management has remained the same size. You give people the latitude but you also have to be quite demanding in terms of performance. People here now do 2 appraisals a year and they are marked strictly against their objectives and that then goes to peer review.
“We reward people in accordance with their performance. The downside of that is that people who don’t perform are very quickly exposed and you have to deal with that as well.”
Moving on, it is possible that your life could have turned out quite differently had you pursued your passion to be a full-time professional musician. Do you have any regrets or ever ache for that alternative less stressful life that could have been?
“Well, when I was in my early teens and I was passionate about playing the organ, I wanted nothing more than to move into the cathedral circuit and to eventually be a director of music. The turning point came in my early 20’s when a job came up at a cathedral in the United Kingdom and the reality of what that life entails, the commitment you have to make to it and the economics of being a full-time musician hit hard.
“My father’s words to me that ‘you’ll never pay your electricity bill no matter how finely you play Bach’ have resonated with me ever since. His advice was well placed. As far as stress goes, in June of last year I played at the iconic Westminster Abbey and seeing a crowd where it was standing room only; that was actually a pretty stressful moment. So running an airport and playing to that sort of audience is probably equally stressful.”
When working for Virgin in the UK, you oversaw the introduction of the revolutionary Pendolino train. If there is no time pressure on you, what is your preferred method of transport – flying, rail or something else altogether – and why?
“From an early age I’ve always been interested in transport. When I was 16, a whole gang of us had 50cc mopeds and the taste of freedom I got from that I will always remember. That sense of control over your own life is so impressive.
“In the aviation business, you are facilitating social mobility on such a grand scale. As a force of good, it is just an incredible thing because you are uniting families and nations, and enabling global enterprise on a scale that was unimaginable 50 years ago. Aviation has helped the whole social development of the planet really. In time, that mobility could solve global issues such as poverty, disease, war, unrest, disorder and all those things.
“As far as my own particular interest goes, I don’t enjoy travelling by sea and on coaches. Any other form of transport – be it cars, motorcycles, trains or planes – I really do enjoy. You might find me on a Friday at 6am on my Ducati motorcycle sweeping around the twisty roads through the mountains to Fujairah. I am usually grinning from ear to ear, as it is just such a lovely thing to do when the sun is coming up. The sound my Ducati Monster bike makes can wake the dead, it’s amazing.”
Turning to another method of transport – the car – what is being done to mitigate the impact of so many new airport arrivals on the city’s road network in Dubai? As all of us residing here are well aware that traffic during the ever- extending rush hour period is already a test of patience. Is Dubai Airports working with the Road and Transport Authority to introduce new infrastructure projects to cope with the extra capacity?
“The RTA plan we have had input on should help improve the circulation on the roads system and provide better access to the airport. It will be completed within two years. Here, I can just walk into the RTA director general’s office and have a conversation. Imagine trying to do the same thing in the UK or France.”
And what exactly does the plan include, are we talking about widening roads here?
“Yes. We are talking about flyovers at junctions, widening roads, eliminating pinch points and providing alternative routes. It’s a multi-faceted programme, which will create significant improvements.”
Actually, I hear you are a motorsport nut so presumably you would love to see the F1 Grand Prix come to Dubai at some point. I know there were previously discussions about that possibility. Would you like to see the debate reopened given the city’s international profile and ready- made mass transportation and hotel infrastructure? It’s clear that Dubai could easily cope with the F1 travelling circus, is it not?
“Indeed, Petrol-head I think would be the correct term for me. The Dubai Autodrome circuit is fully certified and capable of hosting an F1 race. Lots of people say it’s better than the Abu Dhabi circuit but I love both equally, they are both fantastic and it would be great to see F1 in Dubai at the autodrome.
“And wouldn’t it be great to see F1 on the streets here in Dubai. That would be a spectacle that would amaze the world. I can just see the cars sweeping around the boulevard in Downtown and going along the Sheikh Zayed Road; I’d love to see that, it would be great.
“Look, this city is already a place of spectacle and in the future it will become even more so. We will astound the world with what we are able to achieve and host. Expo 2020, for example, will be a wonderful showcase.”
Changing tack, what stance do you take on the dispute between US and Gulf airlines over subsidies? Some commentators have said this is simply a case of sour grapes from America where subsidies and tax benefits have played a part in the majority of leading US industries throughout history.
“First of all, usually when you get a dispute like this one party has suffered. What I don’t understand about this is the big three – Delta, American and United – made $6.8bn last year. American on its own made $4.2bn, which is the largest profit it has ever recorded and those carriers serve six points in the region. I am not entirely sure why they are complaining so much when the ability to demonstrate that damage has been done seems so elusive.
“The second thing is if you look at the approach taken in Australia, for example. There the minister stood up and said ‘what is best for the Australian people?’ and made the decision that the best thing to do was to liberalise the air transport market and encourage the maximum number of people possible to visit Australia. The attitude is ‘I don’t care how they get here as long as they come’.
“That motivated Qantas to bite the bullet, control its costs and create an airline that is much more effective and competitive in terms of customer service, and is able to deliver in the face of competition from other airlines. As a result, you have record visitor numbers, the maximum possible contribution to the Australian GDP from overseas sources and a strong, vibrant and competitive aviation industry.
“That’s a great model. Look what they’ve done in Canada. There, in order to maintain a viable government-owned aviation entity – in Air Canada – the government has deliberately restricted the availability of capacity to serve the Canadian market. What has happened? Well, you try getting a flight to Toronto.
“Emirates is only allowed to fly three services a week when the market clearly can sustain a far higher level of service. So airfares are higher and more people are deterred from going to Canada when they can go to America or other parts of the world far more cheaply. The Canadian consumer is also paying a lot more in airfares. It means the Canadian economy is suffering and consumers are suffering. The only real beneficiary seems to be a very small number of employees at a government-subsidised airline. That, to me, is wrong.
“I think the position is they are now trying to find ways of accusing UAE carriers of unfair competition. My view and Tim Clark’s (Emirates Airline CEO) view is ‘bring it on’. There is no case to answer. There is no evidence that either Emirates or Dubai Airports is trading unprofitably or in need for subsidisation from external sources. We are a self- sustaining business as is Emirates, which was started with a tiny proportion of seed capital. Our revenues cover and justify our investments in infrastructure.
“If the competitiveness of the product that other airlines were able to offer was as good as the service they receive on board some of the Gulf carriers, you would see consumers voting with their feet. The service is just much better.”
As a supplementary, the upward trajectory towards a larger part of the international market for the Gulf ‘big three’ airlines is clear. How far can this go, do you see a point further down the line where they are truly the dominant global power in aviation?
“Look at our statistics now. We have about 100 airlines serving around 260 destinations out of Dubai so the choice is impressive. The fastest and most comfortable global journeys by plane are usually now by way of Dubai.
“It’s that global connectivity and the competition in the world markets that the intercontinental hub facilitates that causes the growth. Every time we add a city to that global network, the potential just increases.”
Finally, with Expo 2020 now just a few years away, what can the visitor to Dubai expect to find here five years from now – how much will the city change?
“I’ve been here nearly eight years and the development I’ve seen has been astounding. The quality and choice for shopping, entertainment, lifestyle, accommodation etc. has just improved and diversified enormously. There is no suggestion that the pace will slacken.
“By 2020, this will either be the world’s most vibrant and progressive city or very close to it. I can’t think of another place that will have everything going for it. A vibrant economy, communications infrastructure, the best possible choice of accommodation, the potential to host other global spectaculars as we touched upon with F1 earlier, the Opera House here which will be completed next year. That will give Dubai the opportunity to be at the crossroads of the cultural richness of east and west as well as the commercial, leisure and other goals here.
“There are simply massive opportunities with our geocentric location. Look at the number of exhibitions and events that take place now. There is something on every single week you know. Contemporaneously with the Arabian Travel Market recently there was the Leather Show, the Airport Show and all sorts of other things. And, of course, the Business Traveller Middle East Awards (a Motivate Publishing production) at which we were a successful winner.
“So many things are happening and, as the diversity grows, more and more people will want to come here. When we first arrived, there were very few choices if you wanted a decent meal and those that there were existed only in hotels. With shopping, there was only The Mall of the Emirates but that was about it.
“Now look what you’ve got: Dubai Mall, the city centre, Dubai Opera, the literary festival and so on. There are so many ways for the city to show the world how it can be done if you get everything aligned.”
By Dean Carroll
Paul Ebeling, Editor
HeffX-LTN
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