Tyler spreads wings for his next challenge

PUBLISHED : Monday, 28 March, 2011, 12:00am
UPDATED : Monday, 28 March, 2011, 12:00am

This CEO's corner office on the top floor was always more functionally furnished than a power play for the command centre of one of the world's top airlines. But now it looks forlorn, with empty spaces and scattered brown packing boxes.

Only a long row of model aircraft remains to show that this is still the office for the next four days for Tony Tyler before he flies away from Cathay Pacific Airways and Hong Kong to become chief executive of the International Air Transport Association (Iata), the pressure group trying to make the world a safer place for international airlines.

Tyler has had a hectic round of farewell parties, culminating in the long weekend jamboree of the Rugby Sevens, but he still looks bright-eyed, with a tall, slim figure that makes you question why leading foreign businesses force top executives to retire 20 years before a Chinese would contemplate stepping down.

He explains: 'Although I am apparently nearly 56 [next month], I don't feel like that. Retirement age is 57, so I only had another year to go, and this Iata job is an interesting, worthwhile job. If I had just waited until retirement age, the job was not going to wait for me.'

Tyler says the Iata job 'keeps me in the industry, but not running another airline. When you have run an airline like Cathay Pacific, going to run another airline would be quite difficult. It is a CEO position, working with other airline CEOs.'

Before air-conditioning, expatriates in suits sweating in the summer 35-degree heat and downing gin and tonics to ward off malaria and other ailments were probably grateful to survive to 57.

'We probably work harder now. It's pretty unrelenting, with 24-hour, seven-days-a-week information bombardment, long, intensive hours,' Tyler reflects. 'But people are much more aware of health and how to manage it, and it's also a healthier place.'

He leaves Cathay Pacific on a distinct high after something of a roller-coaster ride during four years as CEO that saw the airline suffer record losses of HK$8.69 billion in 2008, followed by a record profit of HK$14.01 billion last year.

Cathay is now the world's 10th-biggest airline in terms of passengers, the world's biggest in freight apart from dedicated freight carriers such as FedEx and UPS, and one of only six airlines with the coveted Skytrax five stars for quality.

Along with the record results, Cathay announced new aircraft orders so that it has 91 new aircraft on order to supplement its existing fleet of 127.

The new aircraft, Tyler says, will ensure that 'the Cathay Pacific passenger fleet will basically be all efficient, very modern twin-engine aircraft, Boeing 777s, A350s, A330s and some A320s, which will give us some inoculation against high fuel prices to a great extent.'

The 777-ER (extended range) is 25 per cent more efficient than the four-engine 747 jumbo jet.

'Some airlines have gone the four-engine route, and if fuel prices go up, they are going to have a pretty miserable time,' Tyler notes. He winces at suggestions of oil going to US$200 a barrel, which 'means the world changes. There is no way that the industry is profitable at that level without very heavy fuel surcharges. Fuel charges rise, prices also go up, and then you stifle demand'.

The other advantage of the 777-300ER is a word not often mentioned in relation to passenger traffic - freight.

'The 777 is a very good freight carrier, so you can fill it up with passengers and still carry up to 20 tonnes of freight depending on how far you are flying, and that is not seen by anybody and it does not come out in the fuel-burn-per-seat cost.'

Cathay gets 30 per cent of its revenue from freight, just over half of which is carried on freighters, the rest in the bellies of passenger aircraft. The dedicated Boeing 747-8 freighters carry 120-125 tonnes and other 747s take about100 tonnes each.

'Out of here they are going full,' adds a smiling Tyler. 'We carry apples to the United States, and we carry cherries back.' What, apples from Hong Kong? No. 'Apples, Guangdong-made Apples. We love the iPad too. We love it when Apple does a product launch.'

Tyler admits to a few mistakes: 'The whole fuel-hedging problem happened on my watch, and I regret that. It was difficult, and most airlines got burned. I waived my bonus as a penance. It has got to go down as a black mark. Some airlines did not hedge at all because they could not afford to and they ended up doing rather better, but that's life, isn't it?'

Some critics say that Tyler has mellowed over the years. They note the brutal way he brought highly paid pilots to heel in the late 1990s, in contrast to his emphasis during the savage 2008 financial crunch on keeping the team together.

'I believed strongly in keeping the network intact and keeping the team together,' he says, 'because fundamentally I felt that the Asian traffic market was going to bounce back - and it did - and the premium market came back and cargo came back, and if we had done radical surgery to the airline, we would not have been in a position to capitalise on the recovery as well as we did.

'If we had laid off staff, we would have had morale and trust issues for a long time. Staff took unpaid leave and later on we paid them back.'

But to prove he has not gone soft, he adds that repayment of the unpaid leave 'we looked on as a down payment on the next time ...'

Cathay used the device of unpaid leave once before when severe acute respiratory syndrome struck.

'Institutional memory is long and strong, and if the airline runs into problems again, I hope that the staff will remember.'

He has no regrets about the tough actions on pilot pay: 'We had some very difficult times in the late 1990s and early 2000s, and you had to be quite firm and tough, bloody, even. If we had difficult times again, I would take those same decisions without any hesitation at all. They have helped to keep us competitive.'

Tyler comments that the biggest difference in taking over as CEO was 'that the buck stops here. Particularly on safety issues, as the CEO of an airline you feel that 24 hours a day.

'Every time your phone rings you want to know that everything is all right. And you never forget that. I have only three people who report to me, the chief operating officer, the finance director and the head of safety. That reflects the priorities of the job. That is something that until you get your feet under the desk you don't fully grasp - yes, it's me now.'

Although only three people report directly to him, Tyler's 33 years with Cathay have given him a special network.

'In this management office are all the directors, and although they don't report to me directly I have known them all for years and years and talk to them all the time. So it is not as if I operate in a bubble.

'I know lots of people in less elevated parts of the company who have become good colleagues and trusted friends, and they will tell me what is going on in the engine room, so I don't have to depend on the filtered stuff. I have enough friends all around the place who trust me enough to tell me what is happening,' he says.

So, in four days it will be farewell, but Tyler says it will not be goodbye to Hong Kong. Apart from visits, he plans to buy a property in Hong Kong, so that when he has done his stint in Europe, he will come back to the city to spend the more pleasant parts of the year.

He expects to miss Hong Kong.

'Hong Kong has all the best attributes of a big city and all of the best attributes of a small village. Everywhere you go, you are going to bump into people you know and you like.

'While I have been here I have played rugby at - I put it in inverted commas - international level, represented Hong Kong [10 times plus one Sevens appearance], which I would never have done if this was a big place,' Tyler says.

'Also with my relatively limited musical talent, I have been able to have a lot of good fun by playing in public with good friends and for good friends, which I would never have done elsewhere.

'And yet Hong Kong is a leading world city. It is a leading world financial centre, a leading world transport centre. We are a world city and yet we are a small place where you can quickly get to know lots of great people and do things at a sort of village level.'

He prefers Hong Kong now to before 1997, 'because before 1997 you had to put up with the stupid question of 'what's going to happen after 1997? I do business here and I am worried' - to which the answer was: 'Nothing. What's going to happen in your country in 10 years time? How do you know?'

'Working for the airline, we were aware of the political arrangements being put in place. We also had exposure to the way that the mainland operated and the way that they negotiated the civil-aviation arrangements,' Tyler says.

'And of course seeing the new airport about to open and the great opportunities it would provide for aviation, I was confident that the prospects for business were good.

'Hong Kong did not go through the post-colonial backlash that a lot of colonies went through. Hong Kong people did not say: 'Right, you British bastards, we are in charge; now it's our turn. Hong Kong people, being very pragmatic and sensible, said: 'Let's get on with it.' And that's what happened.

'I think the British did a fantastic job in Hong Kong and the Brits don't need to apologise. If rule had changed 30 years before the handover, Hong Kong wouldn't have been the place it has become today.

'It was right that the British should hand over the reins, and the way that it has been managed since has shown that Hong Kong people may be pragmatic, but so is the mainland,' he says.

So all that's required now is to deal with the boxes and the model aircraft. Tyler says the boxes contain airline memorabilia, some of it possibly valuable, so he plans to sell it and most of the aircraft and give the proceeds to the Japan disaster fund.