By Courtney Trenwith
The veteran CEO of air services company dnata, Gary Chapman, reveals why Emirates Airline is his most difficult customer, how he won the Rugby Sevens World Cup for Dubai and his boss Sheikh Ahmed Bin Saeed Al Maktoum’s surprising list of priorities
Having a member of the Dubai royal family as your boss would be daunting for many, not to mention being in charge of multiple divisions of the city’s golden child, the Emirates Group. Not so, according to Gary Chapman.
The veteran CEO of air services company dnata and Emirates Group executive reckons he has “one of the best jobs in Dubai”.
“Although we’re owned by ICD [Investment Corporation of Dubai], they don’t get involved in the running of the company. It’s a very uncomplicated way of running a business,” Chapman says during a rare public speech.
“Our governance involves, if I come along with a project I want to invest in, I go to Sheikh Ahmed Bin Saeed Al Maktoum [CEO and chairman of Emirates Group and uncle to Ruler of Dubai HH Sheikh Mohammed Bin Rashid Al Maktoum], I normally give him a little briefing beforehand and he says ‘okay’. I go away to keep our internal audit and our legal department happy, I drop him a little note and say, ‘as discussed I’ll go ahead and do this’ and he’ll say ‘okay’. And that is the way it works.
“I’ve been there over 25 years now. It’s been a heck of a journey but the freedom to act is phenomenal; the motivation, the can-do attitude that we have across the group has just been amazing.”
Chapman has been at the helm of dnata, the multi-disciplined business that was the backbone of Emirates Airline when it launched in 1983, since 1989. He has overseen its enormous growth from the tiny emirate to become the fourth-largest air services company in the world, including the largest single inflight catering business and a rapidly expanding travel services profile.
Formed in 1959 with five employees and five bicycles, dnata expects to turnover AED9.5bn ($2.6bn) in the 2015-16 financial year, ending 31 March 2016.
Chapman says the 30 percent increase in revenues is due to annualised earnings of acquisitions made last year, plus earnings from acquisitions made this year and general growth in the business.
“Last year’s profit was just over AED800m, so it’s not too shabby,” Chapman reveals. “We certainly have one of the best, not the best, but one of the best margins [of air services businesses] across the globe.”
The company now operates in 38 countries and employs 25,000 people across 74 airports. Its core business, ground handling, deals with 1.6 million tonnes of cargo for 250 airlines each year, while its catering division provides 50 million meals annually and 1 million people book with its travel platforms.
Amazingly, dnata is presently working to double the size of its catering facility in Dubai, to produce more than 300,000 meals a day, as well as double its laundry service to 1 million items daily.
Its new state-of-the-art air cargo facility, dnata city, at Heathrow Airport in London opened last year, significantly improving its capabilities and placing it in a dominant position to take over other firms’ business.
Dnata’s first private aviation spin-off also was launched last year, targeting Gulf royal families travelling to Singapore or London. And the firm has also been on a buying spree, expanding its travel services arm with significant investments, particularly in British travel agencies, making it one of the largest travel service providers out of the UK.
In October, dnata received regulatory approval to purchase London-based Stella Travel Services, which includes the brands TravelBag, Travel2, Sunmaster, Global Travel Group and Triton Rooms. In February, it bought a significant stake in the 173-year-old Thomas Cook travel company, taking over Gold Medal Travel Group, online travel agent netflights.com and high-end travel brand Pure Luxury in a $74m deal.
It also owns Travel Republic and has stakes in Hogg Robinson Group (HRG) and Mindpearl Group.
“The fact there are so many brands makes it challenging in terms of [creating] an identity,” Chapman says. “It’s become even more complex with the recent acquisitions we’ve made in the UK on the travel side.”
This confusing identity led to the ‘one dnata’ campaign launched in 2011 to “lift and elevate our position globally”, as well as boost morale among staff, who by now are more likely to be based abroad than in Dubai.
Chapman says the company has significantly evolved since then.
“We’ve come from [being] a very Dubai-centric business, one where the unkind people will say we’re a monopoly, the more realistic people, or certainly me, will say ‘no, we’re a sole provider’,” Chapman says. “I say that on the basis that a monopoly would generally apply high prices and poor service and I can tell you now that if we were guilty of either of those we’d have our customers knocking on Sheikh Ahmed’s door and I’d be out of a job. We do neither of those.
“But… we needed to find a way of linking all [of our businesses] and creating the DNA of dnata, so we launched one dnata in April, 2011.
“We went through the staff surveys and customers surveys to understand how they see us at dnata. We were seen as being solid, reliable, maybe a bit boring but you can count on us, we’d get the job done, maybe the VW of the [aviation] industry. We wanted to put a bit more excitement into it.
“I have to say, I have to take some of the blame as to why we were so low profile because by nature I’ve always been the type to keep a low profile and just get on with it. But [I] realised how much the team and the people love to be able to enjoy the success and the pride that goes with that so we’ve had to lift it.
“It did open my eyes; when we did the launch we had several thousand people in the hangars at the airport, it just blew me away, it was just amazing.”
A cleaner, crisper logo was created, while the company’s first vision, mission and values were established, as well as bolder advertising campaigns and corporate promotional material.
But Chapman says a focus on staff engagement, hinged on the simple element of new uniforms, was “phenomenal”.
“[I said], ‘I want the airlines to say for the first time ‘I wish we had a dnata uniform’, rather than the other way around’. Ground handlers are always seen as the poor cousin, [the] grubby little ground handler, and it affects the staff so I said ‘I want something that makes our staff stand up there and feel really good about it’,” Chapman reveals.
“We spent three times as much on the new uniforms as the old ones and boy has it paid dividends; it just brings a smile to the people wearing them with pride. It just makes such a difference.”
The success of ‘one dnata’ led to ‘one safety’, a major safety campaign across dnata’s entire network. The AED600m ($163m) programme has helped improve the company’s record in some of its worst locations, including Australia and the UK, which ironically have the toughest safety regulations.
“The aviation industry is full of regulation, standard operating procedures, rules about what you should do and shouldn’t do, but that doesn’t actually make it safe, and, frankly, every time we bang an aircraft or hurt someone, that has implications, not only on us as an organisation but on our customers,” Chapman says.
“A couple of years ago we damaged a [Singapore Airlines-operated] A380 at Heathrow. [The airline] had been our customer for years and years and years — they’d never gone out to tender, they’d always renewed with us; we banged their aircraft, they went out to tender. We retained [the contract] but we lost about £300,000 a year in margin, so that was an expensive accident for us; it’s built in [to the contract price] now forever.”
Dnata has long been viewed as the poor cousin of Emirates Airline — the glitzy carrier that is now nearly ten times its size. But Chapman is eager to highlight the older business’ leading role.
“Emirates was really formed on the back of dnata, because dnata had all the reservations, the departure control systems, it was operating at the airport, it had the travel agency business, [it was the] general sales agency for 30 odd airlines, it had all the technology and it was on the back of that they were able to pull/resource technology from dnata and form Emirates very quickly,” Chapman says.
“And that’s why we often refer to dnata as the mother of Emirates.
“[But] as any parent knows, as that child grows, in its teenage years it needs the odd slap now and then to remind it who’s really [boss],” he adds jokingly. “It certainly outgrows mum and dad and that’s what Emirates has done and good luck to them.”
Despite the close relationship between the two businesses, Chapman says there are no favours.
“I jokingly refer to families, but frankly it’s true,” he says. “They are probably our most demanding [customer] and you know the customer is always right, [so] it can be quite difficult because they have an incredible specification and business model and responding to that can be quite challenging.
“If I can’t deliver the service at the right price to them, I don’t want to get involved with them because it will come back to bite me.”
Chapman makes another dig at the airline when he suggests that some of its staff have preferred to move to dnata since its ‘one dnata’ campaign.
“I’m not taking anything away from Emirates because it’s incredible, fantastic, but it is the sexy, global [business]; everyone wants to be a part of it, but we now get people from Emirates who want to work for dnata and we get really good professionals from outside who want to work for dnata. So that’s a big change,” he says.
The improved appeal of dnata also has helped it boost its Emiratisation levels.
“[For jobs] at the coalface, we’re never going to get a large number of Emiratis by the very nature of the work, that’s just the way it is,” Chapman says. “But in the management roles we’re probably at about 30 percent [at dnata], and across Emirates Group [we’re at about] 40 percent.”
Alongside his day-to-day role as dnata CEO, Chapman also is responsible for finance, human resources, legal and IT functions across the entire Emirates Group.
Wearing this cap, the New Zealander and passionate rugby fan was instrumental in Dubai gaining the Rugby Sevens World Cup series, which has grown into one of the most popular events each year, with more than 50,000 spectators, originally held at the purpose-built Al Awir stadium.
“We built that [stadium] in the middle of the desert, in a rush,” Chapman says. “The story behind that is interesting. I went to Sheikh Ahmed a number of years ago and said ‘Your Highness, the Rugby Sevens is up for tender, I could probably get it for Dubai but I’ve got so much on I don’t really want to bother doing that’.
“He said, ‘Gary, go get it’.
“It’s interesting because you then travel the world, politicking with the unions to get their votes; it’s a mini Olympic or FIFA exercise.
“But having got it, two months after that they told us the rugby field where they were holding the [Cup would be taken] away to develop. I said, ‘well, geez, we’ve got the Rugby World Cup and nowhere to play it’, so they gave us a plot of land on the road to Al Ain, no roads [and] no infrastructure and that’s where we built the facility.”
During his 25-year tenure, Chapman has proven to be something of an acquisition king and he says he has more potential deals up his sleeve, although they will likely be limited to the travel services and IT fields. Chapman says he has been approached by some travel firms in Italy, while IT acquisitions would aid existing dnata businesses.
“Although I’d love to see us do a lot more [in the ground handling and catering businesses], it’s incredibly competitive and the margins are low and the ability to come across opportunities where you can actually justify what you have to spend is quite challenging,” Chapman says.
“I’d [also] love to see us do more in this region but it’s very political; a lot of it is government controlled so the opportunities are few and far between.”
But there is no doubt Chapman will be finding those opportunities, no matter how rare they may be.
“You can’t stand still, you can’t rest on your laurels; you’ve got to be innovative, you’ve got to improve your productivity and efficiency. If you don’t deliver what the customer wants consistently, all those other things just fall by the wayside,” Chapman says.
“It may surprise you that over 25 years I’ve been in the group, I don’t think ever once has [Sheikh Ahmed] said to me ‘Gary, I want you to make more money’, which is a tremendous position to be in. I want to make more money because that’s what drives us and that’s just the nature of the beast, but for [the royal family], it’s pride, it’s about having a business which they’re proud of, a high quality product and service, that’s what drives them.
“Yes, he wants me to make money, of course he does, but it’s not number one on the hit list. That’s one of the advantages of not being a PLC [public limited company], where the quarterly or half-yearly share price determines what you do and the strategy. We can take a longer term view, and it works.”
Nice informative article , he is right in referring that DNATA as mother of Emirates ,
Me being in Ground Handling business for last 25 years has seen DNATA success story and now is really an international brand name in Ground Handling Industry.
Wish DNATA all the success !!!!!
credit where credit is due and Dnata has done an amazing job over the last 25 years and more and been so much more successful since I left them!!