Yao on Zest Air


March 20, 2011

MANILA, Philippines - In a highly competitive industry where flight attendants entertain passengers with dance numbers and online seat sales take on the frenetic energy of holiday bazaars, one airline chooses to go about its business quietly.

This isn’t to say Zest Air isn’t giving its competitors a run for their money. They hit the 1.4 million passenger-mark in 2010, and are looking to almost double this in 2011. Zest Airways, Inc. Vice-Chair, President, and CEO Alfredo Macam-Yao is confident about these figures, despite the current challenge of increasing prices of fuel due to the escalating Middle East crisis.

Maybe it’s his 40-plus years as a hardworking entrepreneur, one who didn’t have an easy start but who didn’t give up and had the knack for recognizing opportunities, that gives Ambassador Yao (he was Special Envoy to China for Tourism Cooperation under Gloria Macapagal-Arroyo’s term) his optimism. “I believe air travel will continue to grow in the next 10 years,” he says.

“The development of biofuels for aircraft use is already a reality and it is just a matter of time when the rest of the world catches up with it through American leadership in this technology. There is a healthy and growing demand for low cost
carriers and we intend to be part of this demand.”

Yao shares thoughts on the industry, transforming a company,and Zest Air’s plans for the summer season in this one-on-one with Business Agenda.

BA: Zest Air took over an old airline in 2008. What opportunities in the industry and in the market did you see that made you want to take over?

Alfredo M. Yao: More and more people are realizing and enjoying the convenience of air travel. Flying, like in developed countries, has become an integral part of people's daily lives and continues to do so. Gone were the days when air travel was considered a luxury. The predominance and growth of low cost carriers in the last decade have given everyone the chance to fly with affordable fares. Aside from the business opportunities that come with a robust industry passenger growth, there is a need to further develop Philippine tourism. Tourism brings jobs and opportunities to our country which is rich in natural resources and beauty. These economic and social opportunities in turn, will improve Filipino lives.

BA: Can you give us a brief rundown of what changes and/or improvements Zest Air infused in the old company in terms of service, acquisitions, and management practices?

AMY: We discarded all the old planes from the old airline and acquired a series of brand new Airbuses and MA60s to revitalize and improve the fleet plan. It is part of our vision and mission to satisfy our customers through product and service innovations. It is our desire to provide a satisfying experience for each and every one of our passengers and gradually obtain their loyalty to our brand. In terms of management practice, we introduced best practices to change the status quo and improve organizational functioning.

BA: What among these changes do you think made the most impact with your employees and the customers?

AMY : The implementation of best practices, which is an organization’s commitment to maintaining the highest standards and bringing effective change within the company, will inevitably reflect on how we serve and value our customers.

BA: What were your biggest challenges when you took over the old company?

AMY : Entering into the aviation industry with no prior background was in itself a challenge, butchanging mindsets and transforming organizational culture is a more formidable task. And of course, for me to be able to turn this venture into a profitable one without necessarily diluting the interest of the various stakeholders, is also one of my biggest challenges. But I believe that with hard work, perseverance and foresight, plus having the right people work with me to develop and sustain the business, we will make a distinctive mark in the airline industry.

BA: How much has Zest Air grown since you took over? Can you name figures?

AMY: We flew around 800,000 passengers in 2009 and this grew to 1.4M passengers in 2010. We are projecting this to increase to 2.6M passengers in 2011 as a result of more aircraft acquisitions planned for this year and adding more frequencies to our existing destinations plus introducing new domestic and international routes.

BA: Considering how affordable air travel has become, and that other airlines are resorting aggressively to gimmicks to attract passengers, how is Zest Air holding up? What is its edge, its most significant contribut ion to the cur rent landscape?

AMY : Despite stiff competition, we are doing pretty well. We do not intend to fight head on with our competitors but instead to differentiate ourselves from them.

We have recently introduced new products such as the Voyager Pass, a booklet composed of 10 one-way sectors with 1 one-way sector free.

The Voyager Pass makes it very easy and convenient for a passenger to travel by writing his or her own ticket. All they have to do is call our reservations hotline. We also have the popular Voyager Card, a privilege card that provides card members discounts, freebies and other perks by mere presentation of the privilege card to member establishments.

These two distinct products enhance the customer experience and helps us fortify our branding efforts.

BA: What other areas of growth are you seeing in the industry in the next 10 years, and how will Zest Air fill in those areas?

AMY: There is a bright future in this industry. Things may look dismal now because of the recent Middle East turmoil, which of course affects our largest cost component: fuel. I believe air travel will continue to grow in the next 10 years. The development of bio-fuels for aircraft use is already a reality and it is just a matter of time when the rest of the world catches up with it through American leadership in this technology. There is a healthy and growing demand for low cost carriers and we intend to be part of this demand.

BA: You’re called the “juice magnate”, having built the name Zest-O. You also lead several other companies in diverse fields. Do you “lead” them in different ways? Do you follow a general “leadership rule” or do you tailor-fit the way you manage companies depending on the nature of their business?

AMY: My father passed away when I was a teenager, leaving me to fill in his shoes and my mother, Soledad Macam, to make many sacrifices for our family. I’m led by her example and by faith in God. Those are my leading principles in leading companies, no matter what they may be. Helping, giving back, and providing people with sustainable solutions so that their lives can be bettered, even when they leave the company and venture out on their own. I believe strongly in social entrepreneurship and in having meaningful CSR programs, like our partnership with Gawad Kalinga, where we have communities make products out of old Zest-O packaging—doilies and bags—which we in turn sell in Zest Air ticketing offices.

BA: You’re also part of many other affiliations. How do you make sure you fulfill your role in each one, and not spread yourself too thin?

AMY: It’s simply a matter of time management. I always believe that when you do something, you have to do it well, to the best of your ability. Half-hearted efforts are a waste of time and resources.

BA: What do you do for work-life balance? How does Ambassador Yao relax and unwind when he’s not in the office?

AMY: I do take breaks every now and then, spend time with my family and close friends. When time permits, I also play golf and tennis. Going to church and having my private moments with God relaxes me, I have always anchored my faith in God.

BA: Summer’s coming. Any special promos or new routes for Zest Air for this season?

AMY: We have the Voyager Pass which we are aggressively promoting plus promo fares during paydays.

We also have a wide range of tour packages (Zestful Getaways) to choose from at very affordable prices for those who want to travel during the summer holidays and beyond. Passengers may also avail of these packages at 0% in partnership with BDO. For our passengers’ peace of mind, we will soon be offering travel insurance to passengers in partnership with ACE Insurance.

We will be starting our Beijing-Kalibo route in June 26, 2011 in addition to our Shanghai-Kalibo, Incheon- Kalibo, Busan-Cebu routes. We intend to add more international destinations in the latter half of this year. Recently, we have added more frequencies to our domestic destinations such as Cebu, Davao, Bohol, Iloilo, Puerto Princesa, and Tagbilaran, to name a few.

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