A380: the countdown is on - Orient Aviation

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EXECUTIVE PROFILE JOHN LEAHY, Airbus executive vice-president customer affairs and chief commercial officer: <strong>the</strong> man charged with selling <strong>the</strong> <strong>A380</strong>. He’s driven, hard-nosed and certainly not <strong>the</strong> ‘Quiet American’. But <strong>the</strong> man who spends much of h<strong>is</strong> time in <strong>the</strong> air has proved himself to be one of <strong>the</strong> world’s foremost sales people. CHARLES ANDERSON spoke to him about h<strong>is</strong> career. John Leahy <strong>is</strong> not quite an American in Par<strong>is</strong>, unless he <strong>is</strong> transiting through Charles de Gaulle Airport on one of h<strong>is</strong> many sales trips. Ra<strong>the</strong>r, he’s an American in Toulouse. But <strong>the</strong> irony of h<strong>is</strong> position in France <strong>is</strong> <strong>the</strong>re, just <strong>the</strong> same. Leahy has a curriculum vitae that sounds typical of many an American business executive: born and brought up in New York state, a BA from Fordham, MBA from Syracuse, seven years selling Piper aircraft. Check on h<strong>is</strong> references – if he still needs any – and you will hear that he <strong>is</strong> an unabashed workaholic, hard-nosed, keenly focused and intellectually gifted. A qualified multi-engine pilot and former flying instructor with more than 3,700 hours flying time under h<strong>is</strong> belt, he has three children currently studying at U.S. universities. Just <strong>the</strong> man, perhaps, to be heading <strong>the</strong> marketing push for Boeing. On an off day, <strong>the</strong>y may even think that in Seattle or Chicago. But, ironically, as <strong>the</strong> two giant aircraft makers tussle for market dominance, Leahy <strong>is</strong> using h<strong>is</strong> American drive to propel European Airbus forward. Clearly, he <strong>is</strong> enjoying every moment of it. And so he should, for Leahy as much as anybody, <strong>is</strong> responsible for Airbus’s current success. A lengthy conversation with <strong>the</strong> man tagged “aviation’s super salesman” <strong>is</strong> peppered with compar<strong>is</strong>ons with Boeing: its products, its organ<strong>is</strong>ation, its attitudes. That <strong>is</strong> unavoidable. And Leahy <strong>is</strong> no Quiet American, ei<strong>the</strong>r. SUPER SALESMAN ‘ The guy who tends to wait and see in a very competitive industry <strong>is</strong> <strong>the</strong> one who tends to be left behind’ John Leahy Airbus executive vice- president customer affairs and chief commercial officer For <strong>the</strong> 20 years since he first joined <strong>the</strong> European company as a member of its U.S. sales organ<strong>is</strong>ation, he has been pitting h<strong>is</strong> wits against Airbus’s great rival: once as <strong>the</strong> underdog, now on an equal footing. With <strong>the</strong> <strong>A380</strong>, however, <strong>the</strong>re <strong>is</strong> a difference. Until its arrival, Airbus’s current executive vice-president customer affairs and chief commercial officer compared aircraft with similar capabilities to potential customers. He now has, in reality, <strong>the</strong> only product of its type on h<strong>is</strong> books. Boeing’s 12 ORIENT AVIATION / <strong>A380</strong> Quarterly Update DECEMBER 2004-FEBRUARY 2005 famous B747-400 carries fewer people and has less range. A B747 Advanced <strong>is</strong> on <strong>the</strong> drawing board and <strong>is</strong> being d<strong>is</strong>cussed with airlines, but it <strong>is</strong> not firmed up yet. The argument instead <strong>is</strong> over whe<strong>the</strong>r Airbus <strong>is</strong> right in saying <strong>the</strong> market wants a 550-seat jumbo, about whe<strong>the</strong>r it makes economic sense to put that many bums on that many seats. With 139 orders and commitments, Leahy’s team appear to have done <strong>the</strong>ir job so far, and that has much to do with <strong>the</strong>ir
leader’s absolute conviction that Airbus <strong>is</strong> right. He’s a man you want on your side in a fight. You certainly don’t want him on <strong>the</strong> o<strong>the</strong>r team. Leahy put h<strong>is</strong> case for <strong>the</strong> <strong>A380</strong>’s acceptance while fixing <strong>the</strong> l<strong>is</strong>tener in <strong>the</strong> eye and keeping that gaze throughout. First, he offered a little h<strong>is</strong>tory to drive home h<strong>is</strong> main argument. “Every 30 years, <strong>the</strong>re <strong>is</strong> a sea change in th<strong>is</strong> industry: propellers to p<strong>is</strong>tons, p<strong>is</strong>tons to turboprops, turboprops to jets, jets to jumbo jets and jumbo jets to super jumbos. Passengers have been in <strong>the</strong> forefront of that demand,” he said. “What’s very interesting to note <strong>is</strong> that back about 30 years ago when <strong>the</strong> B747 entered service, you can go to <strong>the</strong> key airports around <strong>the</strong> world and look at <strong>the</strong> competition of <strong>the</strong> five or so mega carriers flying in and out of an airport. “At every one of <strong>the</strong>m, and we’ve got <strong>the</strong> charts, you had everybody flying <strong>the</strong> B707 or DC8. These were four-engine intercontinental jets that, in some cases like <strong>the</strong> DC8, had only just been recently introduced. Some airlines had placed <strong>the</strong>ir orders and hadn’t even accepted delivery. “And <strong>the</strong>n here comes a new way of flying called <strong>the</strong> 747. After one airline in every one of <strong>the</strong>se key airports introduced <strong>the</strong> 747, every o<strong>the</strong>r major airline switched ei<strong>the</strong>r three months, six months, nine months later and some as long as 15 months later. But within two-and-a-half years, every major competitor operating out of that airport had switched from <strong>the</strong> older generation aircraft to <strong>the</strong> new generation aircraft. “Why would that happen? Two reasons ... <strong>the</strong> passengers preferred it, but you also had an economic advantage to <strong>the</strong> airline as well. You had that unique combination of being in a very competitive industry with a product that has a clear passenger preference and also has <strong>the</strong> unique status of having lower seat mile costs at <strong>the</strong> same time, which makes it an overwhelming case for <strong>the</strong> product.” Leahy sees <strong>the</strong> same happening with <strong>the</strong> <strong>A380</strong>. “The knowledgeable passenger will ask for <strong>the</strong> airplane and <strong>the</strong> airlines will be able to offer a 15% to 20% lower seat mile cost. The combination of better economics combined with passenger preference will make it a hands-down winner,” he said. Later, <strong>the</strong> Airbus marketing man can’t res<strong>is</strong>t giving a nudge to carriers in Japan and Hong Kong who have yet to sign up for h<strong>is</strong> airplane. “Inevitably, <strong>the</strong>y [<strong>the</strong> Japanese] will have to have it. It’s unfortunate that <strong>the</strong>y don’t understand as much about Airbus as perhaps <strong>the</strong>y should,” he said. “You can have a [Boeing] 7E7 and still end up with an <strong>A380</strong>. I think it’s going to be very awkward for <strong>the</strong>m when a lot of <strong>the</strong> world’s major airlines are flying into Narita with <strong>A380</strong>s, up to 10 flights a day by 2008. Leahy on <strong>the</strong> buzz and ‘<strong>the</strong> heroes’ Does John Leahy still get <strong>the</strong> buzz from a sale today? “Oh, yes. It <strong>is</strong> still thrilling, still exciting. You get airline executives, <strong>the</strong> leaders in <strong>the</strong> industry. You watch <strong>the</strong>m study a product, start negotiating <strong>the</strong> terms. Wondering, ‘should I do it, should I not?’ “And watch <strong>the</strong>m go from <strong>the</strong> doubting Thomases to <strong>the</strong> unsure, to <strong>the</strong> ‘wow, th<strong>is</strong> <strong>is</strong> exactly what I want to do.’ Shake <strong>the</strong> hand, you’ve got <strong>the</strong> deal and you see how excited <strong>the</strong>y are. “But I’m just building and selling <strong>the</strong>se planes. These are <strong>the</strong> guys who are actually going to be using <strong>the</strong>m for <strong>the</strong> next 25 to 30 years, changing <strong>the</strong> way we are all going to fly. They are <strong>the</strong> heroes of th<strong>is</strong> industry. “They have a hell of a lot tougher job than we do. There’s only Airbus and Boeing to beat up on each o<strong>the</strong>r. They’ve got 200 airlines to fight it out with. They are <strong>the</strong>re, on <strong>the</strong> really competitive side of th<strong>is</strong> business.” “Given <strong>the</strong> chance, you would fly on it, I would fly on it. I’m sure <strong>the</strong> Japanese travelling public going to Europe, going to America, will want to do that. “A little known fact <strong>is</strong> some operators have fifth freedom and beyond rights out of Japan. Korean Air [an <strong>A380</strong> customer] for example flies out of Los Angeles to Tokyo and has <strong>the</strong> ability to sell tickets in Los Angeles to Tokyo. If you want to go to <strong>the</strong> U.S. from Japan, Korean Air will be able to sell you a ticket. You don’t have to go to Seoul. “Singapore [Airlines] has rights to go into Hong Kong and pick up traffic to <strong>the</strong> U.S., whereas Cathay Pacific will look over <strong>the</strong>ir shoulder and see what <strong>the</strong>y are doing. “You’ll d<strong>is</strong>cover with a lot of <strong>the</strong>se airlines that say ‘well, it’s been a difficult life and why don’t we just sit back and wait and see?’ ... <strong>the</strong> guy who tends to wait and see in a very competitive industry <strong>is</strong> <strong>the</strong> one who tends to be left behind.” John Leahy, at 54 still trim and fit, hardly fits into that category. Known for h<strong>is</strong> long working days and no-nonsense manner, he <strong>is</strong> said to drive h<strong>is</strong> staff as hard as he drives himself. On <strong>the</strong> week he met Orient Aviation, h<strong>is</strong> itinerary read: Toulouse, London, Toulouse, <strong>the</strong> United States and <strong>the</strong> start of a trip to Asia. Last year he spent 220 days out of France, a fact he knows for tax reasons. Leahy will, basically, fly anywhere, any time, for a worthwhile sale. “You’ve got to do <strong>the</strong> planning, <strong>the</strong> strateg<strong>is</strong>ing and <strong>the</strong> rest, but <strong>the</strong> one thing that’s still important <strong>is</strong> when an airline <strong>is</strong> coming down to <strong>the</strong> wire, trying to make up <strong>the</strong>ir mind. Should <strong>the</strong>y go with <strong>the</strong> <strong>A380</strong>; should <strong>the</strong>y go with a Boeing alternative?” he said. “It wavers back and forth at <strong>the</strong> end. Most of <strong>the</strong>se deals are a lot closer than most people think. It could go one way, it could go <strong>the</strong> o<strong>the</strong>r way. What you need to do <strong>is</strong> to be <strong>the</strong>re. Most of <strong>the</strong> time it makes a difference.” But not all <strong>the</strong> time. “In fact once th<strong>is</strong> summer, I was a little bit d<strong>is</strong>appointed to d<strong>is</strong>cover having flown halfway around <strong>the</strong> world to see if I couldn’t help close <strong>the</strong> deal, that when I arrived <strong>the</strong> CEO of <strong>the</strong> airline said `well John, you got here about one day too late. I just decided last night to go with your competitor. I already told him that, and <strong>the</strong> deal <strong>is</strong> done.’ “That <strong>is</strong> probably about <strong>the</strong> biggest waste of your time that you can imagine. That almost never happens. Most of <strong>the</strong> time you can make a difference if you are <strong>the</strong>re.” Leahy, you feel, has wasted little of h<strong>is</strong> own time in an Airbus career that started in 1985 in <strong>the</strong> U.S. after he worked in marketing for Piper. He became head of sales at Airbus’s U.S. operation three years later and president of Airbus North America in 1992. At first, he found h<strong>is</strong> salesmen were DECEMBER 2004-FEBRUARY 2005 ORIENT AVIATION / <strong>A380</strong> Quarterly Update 13
Page 3 and 4: COMMENT A380: <str
Page 5 and 6: Airbus and its ris
Page 7 and 8: process at sites across Europe. Equ
Page 9 and 10: CUSTOMER PROFILE By Tom Ballantyne
Page 11: airport authorities worldwide on <s
Page 15 and 16: A380 ASSEMBLY By C
Page 17 and 18: the the</s
Page 19 and 20: AIRPORTS Singapore Changi Internati
Page 21 and 22: against a super jumbo of its own. G
Page 23: MAJOR A380 INDUSTR

A380: the countdown is on - Orient Aviation

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