Jet-fuelled growth

Even as it invests across the world, regionalises its travel agency and opens an events arm, uniquely, Dnata faces the problem of zero commissions just like as everyone else, Gary Chapman tells JONNA SIMON
Chapman: exploring travel peripherals

GROUND handlers, flight caterers, travel agents, tour operators, aviation software experts, Dnata is all that and more.

Established in 1959 with a staff of five to provide ground handling services at Dubai International Airport, it is one of the largest travel organisations in the Middle East now, with a staff of over 6,200.
Even as Middle Eastern airlines are set to double capacity over the next five years, and Emirates Airline in particular aims for a spot at the top, Dnata, which is wholly owned by the government of Dubai, isn’t simply aboard the Dubai carrier for the ride, but is pursuing an independent expansion and investment strategy. Excerpts from an interview with Dnata president Gary Chapman:

As president of the Emirates Group Services and Dnata Agencies you have an extremely broad area of responsibilities focussing on the airlines, what would you say are the main challenges in the years ahead? Is it the rising cost of jet fuel? The rate of expansion? Or something else?
Our main challenge in the future will be to continue running the business with our present standards and efficiency. Managing business growth effectively opens up other areas such as maintaining standards and quality, how to sustain the efficiency of the operation, so we can continue to compete effectively. At the moment, Dubai is experiencing a boom period, but even if a downturn occurs, we’re well placed to retain our market share.

Can you briefly touch on the future paths of the departments under your jurisdiction such as finance, IT and human resources?
These are all group departments supporting the airline and all our other services, primarily Dnata. With the airline, we have a long-term plan in place, that will probably change over time. We are fully aware of this and everyone and everything in the group is geared to support the businesses we operate. We have looked at what the plan means in terms of the support for the airline, such as resources, process reviews, adapting and operational changes, and this is a constant, ongoing process of evolution.

As Emirates has grown, Dnata is probably the largest company outside the airline in the group. What are your plans to expand travel services?
Dnata operates the airport ground handling at Dubai international Airport, the passenger and cargo camps, We already have an overseas expansion plan. We have tended to go where we feel comfortable in terms of the cultural mix and where we feel we can help improve standards of operation. Dnata acquired Changi International Airport Services (CIAS) in October 2004 and we’re looking at using it to expand into China, where a number of initiatives are currently going on.
The travel agency business per se is currently quite a difficult operation, as airlines are very demanding and looking to bypass the traditional services of travel agencies with airline bookings on the internet and so on, with zero commissions being introduced by some European airlines.
At Dnata, we have regionalised our travel agency business, as we see regional business giving us more strength. Our expansions into Kuwait and Saudi Arabia have enabled us to service our customers much better.
Dnata has the BTI franchise and we intend to link in with other relationships within the industry. We are looking at the periphery of the travel industry and we have now added event management to our portfolio.

Is the development of The Bank, the events arm, a one-off or will Dnata enter into more agreements like this?
The Bank is a very innovation organisation with a reputation for thinking outside the box. It is about how to present things differently and exploring new and better ways of doing things. They have a great reputation, they were involved in the Commonwealth Games and are organising the Asian Games in Doha. There is absolutely no reason that we would not have agreements with them and similar companies in the future. We already have a host of commercial agreements with more traditional organisations such as SilverSeas and The Bank is just one more company taking us into another area where there are new opportunities for doing business.

The expansion of Dubai International Airport will presumably mean the expansion of the Dnata workforce?
I believe the real stress on the Dnata workforce is happening now. Taxiways are being closed, all the construction at the airport, rerouting, more new airlines arriving and unable to go on a stand, baggage from remote parking of aircrafts, off-stand bussing leading to other requirements and so on. At present, there is a huge amount of remote activity going on, so we have to employ more people and invest in equipment and resources to cope with this current situation. When the whole project is completed, when there will be a much more pleasant working environment.

Dnata has a joint venture called Gerrys/Dnata, in Pakistan as well as the CIAS operation in Singapore – where else do you have joint ventures? Or run airports?
Dnata’s first overseas expansion was Gerrys/Dnata, which was initiated about 13 years ago and has been very successful, as we are now in four airports in Pakistan and we have about 60 per cent of the market.
We also have a small ground-handling operation in Manila, under Dnata Inc, which is 100 per cent owned by Dnata as is CIAS. At CIAS, we gave the operation the Dnata colouring and branding, but left the name, which has been recognised for its own brand for 25 years. Dnata has an operation in Sudan called Dnata Arabia Limited and more recently Dnata was awarded a management contract for Sana’a Airport in Yemen effective April 1 this year. We have a number of people already working with Yemen Air to streamline ground handling, the passenger and cargo business at the airport. The project is similar to what we did in Doha, where we had a four-year contract to improve airport operations.

In Dubai, the Emirates Group owns most of the shares in the Emirates Inflight Catering  Company. Currently a new flight kitchen expansion is under construction – what will this mean in staff numbers and equipment development?
Yes, Emirates is acquiring an increasing equity in the inflight catering unit. At present the unit is producing 65,000 meals a day. Two years ago we decided to build a new unit dedicated to Emirates’ flights, with a capacity of between 90,000 and 120,000 airline meals a day. The existing flight kitchen will serve other airlines. We currently employ about 3,500 staff in the catering unit and even when the new unit is operational, we will not need too many new employees, because its been designed with a sensible use of technology and human interactions. However, as the catering business grows, we shall have to react to the level of activity with increased staff numbers.
In addition to the flight kitchen at the airport, we also have a unit at Dubai Investment Park capable of providing 20 million meals a year. This unit is already making all the entrées for Emirates’ flights. With the new unit, it will be one of the biggest in the world.

Keeping to the subject of catering, what are your plans for your Costa Coffee franchise?
The Costa Coffee franchise came into being through [consumer and leisure brand marketing company] MMI. We have the franchise for the UAE and see a great future. There are currently 27 outlets in Dubai and 100 in the region and we will have 3-4 openings by the end of the year.

Most people think of MMI as a beverage outlet. What is the range of goods and services it offers?
MMI is a beverage operation, but it also has an FMCG department with a number of representations such as Henkel or Ferrero chocolates. We also operate MMI Travel, which is a niche travel business, catering mainly to corporate clients, but also to individuals and it is a very nice and profitable little business. Other companies include inbound tour operating company gulf Ventures and Downstreaming, covering bars and the Seasons health food outlets in Dubai’s malls.

I believe Dnata is in its 48th year – any celebrations planned?
No, we will have to wait till Dnata is 50 years old with any festivities.