Graham Newton talks to airBaltic President and CEO, Martin Gauss, about the need to hand over a better industry to the next generation.
Why have you put diversity at the forefront of your strategy?
In late 2011, when airBaltic had to restructure, I had to decide on the best team possible. In Latvia, we have a high proportion of women at work anyway and so it was natural that my team included a number of women. They were among the best people available to me.
Now, about 50% of our managers are women because everything followed from that starting point. It has been a natural development. When you are used to men being in certain positions, it is difficult to break the habit of thinking that only a man can do that job. At airBaltic, we’ve never really had to encounter that.
It is so much easier when you have that natural progression. If you have 499 men and one woman in a department and the head of department job becomes available, then the woman has a 1 in 500 chance. That’s the challenge for the industry but fortunately not for us.
We are a signatory to IATA’s 25by2025 diversity initiative because IATA is the perfect platform to promote diversity globally. But diversity for us hasn’t been about dramatic change. I wouldn’t say we have a particular agenda. We are looking to achieve a balance in diversity and inclusion. If you get that then you’ll make better decisions as an airline.
Really, we just have an open and transparent policy. We don’t think in terms of gender, we think in terms of ability. It’s why airBaltic has become a successful airline and why we win diversity awards.
Does sustainability make business sense for airBaltic?
If you look at sustainability in isolation, then you would have to say it doesn’t make business sense. It is expensive, can be difficult to achieve, and the benefits are small in the short term.
But sustainability is not an isolated concept. The world is changing, and sustainability is an integral part of everybody’s life. It has to be a part of every business decision you make.
From a commercial point of view, the value in sustainability is ensuring your organization is in a position to do business in the future. Shareholders see the reason for sustainability initiatives and are happy to invest in this area. If you only pursue profits and let others deal with sustainability, you won’t be around for long.
Consider buying new aircraft. You can delay doing it because the older aircraft still work, but what happens in five years’ time? You will still need new aircraft. And you will have lost a competitive edge and perhaps have damaged your brand. You will certainly have been burning more fuel and emitting more CO2, which will cost you.
It is exactly the same as it is for diversity. You can ignore it if you want, but we all know that it will be intrinsic to the business of the future.
This industry must be forward looking. There has to be zero-emission transport—it is that simple. That is what will sell. Look at all those brands that are promoted as being healthy or organic. They sell at a premium. Passengers won’t be put off travel by the cost of sustainability, but they will be put off by a lack of it.
What is your view of the potential future power sources?
Electric won’t be possible for anything but small regional aircraft flying short haul. However, we will also see it used for drones and air taxis. Hydrogen is looking increasingly possible for medium-haul flights and, as for long haul, ultimately I think we could well see flights go up into space and come down again.
But, for now, long-haul flights will need sustainable aviation fuels (SAF). The demand is there but the supply isn’t. Governments need to change that. But SAF won’t decarbonize the industry, which is why we need to look to other technologies and ideas. It is an incredibly innovative area and in 10 years’ time we might all be talking about something completely new.
Which other technologies will transform aviation?
Aviation has grown organically, and we have too many systems. And regulations, security, and other concerns have complicated matters further.
Compare that with Amazon—one-click, buy. Technically, it is possible. They use data to understand what customers want, they offer it, and they make it easy to make a purchase. I would love to see one-click buy in travel.
Blockchain will be the basis for a lot of developments and there are companies looking to bring this technology into ticketing. Blockchain creates non-fungible tokens or unique digital identifiers. Nothing can be copied so you don’t have to prove anything. There is automatic trust. The issue is more regulatory than technical, but you also need to change the airline mindset. Airlines are used to having everything centralized but Blockchain’s decentralized nature could solve a lot of airline problems.
What are the major challenges for European aviation?
Ukraine is obviously the major challenge, particularly for airBaltic. We are probably the most affected airline. But everybody is suffering from supply chain issues and an energy crisis because of the war.
Our network was strong in Russia and Ukraine and, because we can’t even overfly, some destinations in former Soviet countries are no longer viable for us.
Inflation is also a concern. It really does affect spending power and so a lot of discretionary spending power will be lost. And companies that have to absorb price rises in supply and are not able to pass them on to the customer will look to save in other areas, such as travel.
And let’s not forget the Single European Sky. That has been a disaster for Europe. It is just stubbornness from governments. But how do we break through that?
The point with all these challenges, including sustainability and diversity, is that our aim must be to at least not do any damage. Hand over the industry and this world to the next generation without having made things worse, and ideally having made things better. Too often, though, there is short-term thinking and that can cause damage. That can make things a lot worse.
But, overall, I am positive about the prospects for aviation in Europe. I think the hardest part is over and the industry will start to grow. It won’t be steep growth for a few years yet, but it will be growth.
If you could change one thing about aviation, what would it be and why?
The dream must be to make buying a ticket and getting on an aircraft as simple as possible. Today, that is so difficult to do that it is amazing that airlines can operate an efficient service and that people want to travel.
I have a boarding pass on my phone from 2012. And yet we still have paper boarding passes in the industry. Things can move fast in this industry, but they can move very slow too. We need to do more and change the things we can change.
And it doesn’t stop there. The block time from Frankfurt to New York is 10 minutes longer today than it was before 9/11. How is that possible? How is that not doing damage and handing over to the next generation the same or a better industry?
We need to be wiser, we need to think longer term.