When you meet Steve Smith, the human dynamo who is
piloting ZIP Air, you wonder if the new airline was named after the company’s CEO.
We’ve yet to find out if ZIP has zip. But one thing’s sure – the CEO is full of the stuff.
Smith oozes energy and enthusiasm as he chats about the Air Canada subsidiary that will begin to knock heads with WestJet in Western Canada’s low-cost, short-haul market starting Sept. 22.
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| Larry MacDougal, Business Edge |
| ZIP Inc. CEO Steve Smith is happily fastening his seatbelt as the Alberta-based airline prepares to take off next week. |
“I can’t wait!” gushes Smith, springing out of his chair in his tiny, very ordinary office a few steps away from a hangar near Calgary International Airport.
The loquacious Smith wisely plays down any comparisons to WestJet, the company he once worked for until his departure over a conflict with Clive Beddoe, WestJet’s current CEO.
But the Toronto native certainly leaves the distinct impression he relishes the challenge.
1. As a youngster growing up in Burlington, Ont., did you aspire to a career in business?
“I started to think about it when I was in university. At one point, because my father was a teacher, all I wanted to do was teach. It wasn’t until I got to university to do my MBA that I started to think about a business career.”
2. Who has been the greatest influence in your life?
“Both of my parents had quite an influence on me, but particularly my mother. When I was in Grade 11, she decided to go back to university to get her MLA (master of librarian administration) and to do that she bought herself a car and a dishwasher. She had three young kids and needed some help. She’d bake all evening and then study so she could get that degree and get back into the workforce. My first job was at the library. I was a page, which means that when people returned books, I had the privilege of
putting them back on the shelf using the Dewey decimal
(system). My parents instilled in me a work ethic, a sense of humour, an appreciation of good people and the importance of family.”
3. So what initially drew you to the airline industry?
“There’s a bit of a funny story about that. When I graduated with my MBA, I had offers from three different companies – Xerox, Bell Canada and Air Canada. The jobs were all the same basically, financial analysis and auditor type of positions. The jobs were much the same and the salaries were all the same so I asked myself, ‘what do I want to do in my spare time? Do I want free phone calls, do I want to Xerox my hand or do I want to fly around for free?’ I said: ‘You don’t have to hit me over the head twice. I’ll fly around for free.’ So I went to Montreal to work for Air Canada.”
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| Larry MacDougal, Business Edge |
| ZIP CEO Steve Smith says going after WestJet is not part of his mandate. |
4. How do you reflect on your 18-month stint as CEO of WestJet?
“It was enjoyable working with the people at WestJet. They’re a wonderful group, there was great teamwork and I think we started the road of changing the airline industry in Canada. I have a lot of pride in the accomplishments we achieved at WestJet.”
5. What was the crux of the philosophical differences in
management style that Clive Beddoe (current CEO) referred to after your resignation?
“I can’t talk about that without getting derogatory about other people. I try to look on the good side of things. I would prefer to stay away from the whole personal side about me and the founder of the team (Beddoe).”
6. How would you describe your management style?
“I think it’s one of leadership as opposed to management, determining with others a direction in which to go and holding people accountable and responsible for getting us there in the aspect of the corporation that they’re responsible for. And that goes right from executive vice-presidents to front-line employees. It’s a style of setting a direction for the corporation and getting everybody else to buy into going in that direction.”
7. What’s the key to strong leadership in your mind?
“I think No. 1 is having a vision of where the company needs to be and what your role is or what your department needs to be or, in my case, where the company needs to be. Secondly, it’s communication – being able to communicate that to everybody. Thirdly, it’s getting everybody to buy in as to what their goal is to achieve and working together as a team to achieve that goal. Lastly, I think you need to have relationships with everyone in the company so that everyone knows that you care.”
8. What do you feel you need to learn to become a better leader?
“In this job or any job, you can never stop learning. I constantly read and constantly try to upgrade myself by talking with people and trying to learn from people I work with. I try to learn from the people at Air Canada so I can understand how they do things and sometimes I learn from their mistakes as well. I enjoy (former General Electric CEO) Jack Welch’s books. I think Jack is a visionary.”
9. What values do you look for in employees?
“No. 1 is a team player. No. 2 is a positive attitude. No. 3 is a sense of humour. No. 4 is someone who doesn’t look back all the time – someone who is always looking forward, because things will happen. You have to look at how you fix (problems) rather than trying to blame people. No. 5 is energy.”
10. What sets ZIP Air apart from WestJet?
“I haven’t even thought about what we’re doing to be different from WestJet, to be quite honest. I think we’re trying to take the best-demonstrated practices from a number of airlines. We have people here from Air Canada (ZIP’s parent company), from Canadian Airlines, from Air B.C., from Canadian Regional, from Air Nova and from (pause) WestJet.
"So, what we’re doing is taking the demonstrated practice from every one of those companies.”
11. What’s your strategy in terms of going head to head against WestJet on low-cost, short-haul flights in Western Canada?
“The reality is that we happen to be in markets that WestJet happens to be in. But we don’t feel we’re going head to head with WestJet. We feel that what we’re trying to do is replace Air Canada on their routes in order that Air Canada proper can be profitable on these routes. Going after WestJet or competing with WestJet is not our focus or mandate. Our mandate is to operate with the frequencies we need to feed the Air Canada network as well as serve the local market and to do it profitably.”
12. What’s your vision for ZIP?
“In the next two or three years, we’re looking at increasing our flight from six aircraft to 20 aircraft. Our vision is to be a national carrier right across Canada and potentially offer services from Canada into the United States. That’s the hard side. The soft side is that I want to be considered the best customer-service company in Canada.”
13. How do you achieve that?
“That’s going to take an awful lot of teamwork on behalf of our employees, it’s going to require a lot of training, it’s going to be everybody working together to achieve that end. It isn’t just reservation agents and passenger agents. It isn’t just flight attendants. It’s that whole group all working together along with policy procedures that make sense for the travelling public.”
14. What did you learn at WestJet that you can channel into ZIP?
“There are a lot of wonderful things we did at WestJet in terms of basing all of our decisions on what’s best for the consumer and/or what’s best for the employees and making sure that everyone was a winner. That’s a great model for any company to adopt.”
15. Do you have an agreement with the airline unions and, if not, are you confident one will be in place soon?
“We have an agreement with ACPA (Air Canada Pilots Association) and we’re continuing to negotiate with the other two unions of which we’ll have employees. There’s no doubt in mind that we’ll achieve an agreement with the unions prior to starting (Sept. 22) or shortly thereafter.”
16. WestJet CEO Clive Beddoe told the Edge earlier this year that “Air Canada’s high-cost airline is trying to sell seats at a low fare, which means they’re just going to lose more money (and) the more they grow that model, the more money they’ll lose.” How do you respond to that?
“Well, with all due respect, I’d have to disagree with Clive. What we’ve been able to do at ZIP is to reduce our costs so that we will be profitable at the revenue base that we’d be operating at on the routes that we’re flying and with the fares we’re charging. So the mandate at ZIP has been to come up with a different model than Air Canada and one that’s much simpler, with labour agreements that allow us to operate more efficiently and at less cost. We’ve been able to do that and, as a result, we believe we’ll be profitable on the network we’ve put together.”
17. What’s your outlook for the airline industry and how it will evolve in the next few years?
“I think there’s been a fundamental shift in the marketplace of the airline industry which is much the same as we’ve seen in retailing, whether it’s WalMart or Costco (strong retailers). I think we’re seeing a similar fundamental shift in the airline industry, not because of Sept. 11 but exacerbated by Sept. 11. The full-service carriers across the world are having to adapt. So having movies on board, having food on board and having executive-class seats in the short-haul world aren’t what people are looking for anymore. And Air Canada is really leading the world airlines in their reaction to this new marketplace, with Tango and ZIP.”
18. What were you feeling a year ago when the planes hit the World Trade Center and the Pentagon?
“Other than the obvious horror, I was concerned about our world. I just remember watching those incidents, wondering how many more aircraft there would be. After two or three days when I realized there maybe wasn’t anything else going to happen, I was concerned about our industry, in
particular, because I’ve always felt the world could come back and the world came back wonderfully. Americans have been able to react so positively. It’s obviously a changed world, but I don’t think we’ll be complacent again.”
19. During your time away from the airline industry after WestJet, did you consider working outside the industry?
“Absolutely. I had thought about it but, when time passed, I recognized there was an opportunity for another low-fare carrier affiliated with Air Canada to do something. I leapt at that because I thought there was a bit of a void. Even though my foray into the industry was very light-hearted, once you get into this business, it is so dynamic, so exhilarating, ever-changing, very competitive and very unique.”
20. Ideally, how long would you want to remain as a CEO in the airline industry?
“A long time. I enjoy it, so at this point I’m still too young to be looking at when I would be hanging up the spurs.”
IN PROFILE: Steve Smith
* Born/Raised/Age: Toronto/Burlington, Ont./49.
* Title: President/CEO, Zip Air.
* Family: Wife Karen, children Lindsay, Ryan and Brandon.
* Education: Bachelor of Mathematics, University of Waterloo; MBA, McMaster University.
* Career: Smith launched his career with Air Canada in 1979, working in maintenance, finance, marketing, sales and Air Canada Vacations. He was president of both Air Toronto and Air Ontario before joining WestJet as CEO and president in March 1999. After his departure from WestJet in September 2000, Smith served as an executive in residence in the School of Management at the University of Calgary. He has also served as chairman of the Air Transportation Association of Canada.
* Passions: Sports (golf, water skiing, snow skiing, basketball, hockey), and kicking back at the cottage in Ontario.
THE COMPANY: Zip Air
* Profile: Zip is a wholly owned subsidiary of Air Canada that will begin operations Sept. 22. The airline launches with short-haul routes connecting Calgary, Edmonton, Winnipeg and Vancouver and an emphasis on low-cost fares.
* Fleet: Zip will fly the 200 series of Boeing 737s.
* Web site: www.4321zip.com
* Headquarters: Hangar 101, 8050 22nd St. N.E., Calgary.
* Phone: 1-866-463-6947.
