Saudi Ground Services Company (SGS) is facing a rapidly expanding air transportation sector and new competition in providing its ground-handling services to the kingdom’s airports. CEO Qaid Khalaf Al-Otaibi reveals how the respected Saudi brand’s competitive advantages are preparing it for both domestic and regional expansion.
Saudi Arabia is now at a crossroads where they have to decide to become a diversified economy or stay as an oil-based economy. How important do you think diversification would be for Saudi’s future growth?
Our government is working and moving towards a diversified economy. We are not depending on oil only. The private sector has been proactive now for quite some time and not depending on government contracts only. Investments are being made in good projects adding value to the country’s economy. The regional situation is quite complicated yet we are trying hard to be self-sufficient and be able to stand against any challenges.
Which sectors do you think are key for the effective diversification of the economy?
The education sector is very important; it should be reformed and upgraded with a clear direction. The population needs to be educated and reach G20 countries’ standards. We need to move towards an education model that really adds value to the people; it’s not enough to have a diploma, you need to have the practical skills needed for the workplace. We need to analyze what fields of knowledge will be required for our diversification journey and adapt the education programs accordingly. I call it directing education towards our national strategy. I’ve had situations where people come to me for a job interview with a Master’s diploma and once you talk to them you realize they are not ready to fill the position. Let’s match the education to meet our needs; if we do so, we will see a great difference in our country and its private sector. Growth will only come through knowledge.
According to analysts the number of “movements” is expected to grow at an annual rate of 10% and to reach a total number of 486,700 movements in 2018. Saudi Arabia’s strategic location positions KSA as one of the world’s leading transport and logistics hubs. What would you attribute these strong improvements to and what are the main growth drivers for the aviation industry in the next coming years?
We enjoy a strategic location and we definitely have the potential to become one of the most important logistic hubs of the world. One of the main drivers for the sector is the religious tourism. The number of pilgrims is expected to increase greatly in the coming years and we need to adapt to it. We are working as a country on new airports and we need better regulation to accommodate the Umrah and Hajj for people from all over the world.
Another driver for the sector would be conventional tourism. We are a bit behind regarding this matter, but I believe we have a rich heritage and very interesting places for tourists to visit. We need to look at and analyze examples such as Morocco, Egypt, Jordan or Turkey. They have found a rich source of income in tourism and for our diversification journey it could be very beneficial as well.
I feel nobody really knows Saudi Arabia. They believe that it is an Arab country where women have no rights and are not educated. It’s not true at all, These are stereotypes that need to be changed. I invite everybody to come and see it, meet the Saudi ladies; they are educated, they are professional, they have jobs, and they are productive. Women want to and are playing an important role in our society and are achieving that objective slowly but surely.
The General Authority for Civil Aviation (GACA) announced that the Swissport Corporation was awarded the second license to provide ground-handling services at airports in Saudi Arabia. How can SGS maintain and increase its market share in an increasingly competitive market?
Swissport is a strong competitor to us I admit that. I know them very well and they are doing all right worldwide, but I don’t consider them as a threat. Competition is healthy for everybody, and as I mentioned the sector will experience exponential growth and there could be room for another player.
The airline industry is expected to grow 9% to 10% yearly. Some of the local airlines have made solid investments and are expanding rapidly. Saudi Airlines for instance is adding more than 100 aircraft by 2020, which means they will double their fleet. NAS is going even faster, growing by 19% last year, and carriers such as Air Arabia and Fly Dubai are increasing their services to most of the airports in the kingdom.
Thanks to this new scenario, people have changed the way they travel. They used to do it mostly by car but now it is possible to find plane tickets at reasonable prices. Consequently, there is a lot of potential in the air travel industry and the numbers confirm this reality. We will not opt for cutthroat competition; we will compete on quality and efficiency focusing always on our customers, which are the airlines. Most of the airlines working with us are very happy and ready to continue our business relationship. I used to be Vice President of Ground Operations at Saudi Airlines so I perfectly understand the needs and expectations of our clients, and at SGS we strive hard and we deliver.
What are SGS’s competitive advantages?
There are several aspects that I would consider as our competitive advantages, but I would summarize them in three key points. The first one is our human talent. I’m very proud of the new generation in our company – they are educated and well trained; they are vital for our quality service. Secondly our state-of-the-art equipment – we are very advanced technologically, using always the latest trends. And thirdly our performance. I am charging a fair and competitive price to the airlines. Customer satisfaction is our prime target and we endeavor to keep our clients happy. Therefore I invest in our personnel, I invest in new technology, and I offer a quality service with a reasonable price.
Of course not everything is perfect. I face many challenges and one of them is a facility problem. Because of this I can’t say that our services are excellent. The environment in which I operate, the airports, are out-dated. The government knows about this issue and is investing heavily in new airports and expansions, such as the ones taking place in Jeddah, Riyadh and Medina. We are already in the process of upgrading ourselves to be ready in order to meet the requirements and be in line with the facilities that would be made available.
How challenging has it been to seek out local candidates for available positions? How successful is your company in terms of Saudization?
It is not a challenge. I can select the right people because our requirement is not high education but rather high skills. I have a great training academy where I can train my people. Through our different programs I can raise them to the level needed to perform their assigned job.
For me it is vital and mandatory to invest not only in education but also in extensive training to develop high skills. The way we are investing in our human capital we will have no trouble to meet our Saudization targets.
Our retention rates are very good as well; people are happy at SGS and we just experience a normal rotation like in any other company. As I said I am very happy with the new generation at SGS and I will do my best to offer them growth opportunities within the company.
When people step out of a plane they experience your services straight away: you are the first contact they have with the country. To some extent we could say SGS acts as an ambassador for the kingdom. Do you feel that way?
It is true that most of the customers don’t identify SGS as the sole service provider in all airports of the kingdom. But we take care of them throughout their travel experience, from the moment they step into the airport until they get their luggage and vice versa. It puts a lot of responsibility on our company because their traveling experience and first perception of the country depends on us. We therefore train our people to meet the highest standards. We have great trainers and great programs for our staff from the very first day they join our company and the trainings continue irrespective of what level they reach during their carriers. We provide the right training unabated.
Before our employees start facing the clients, we provide them with the skills and the attitude needed to help the client to finish their formalities. On the ramp side we train them about safety, security, traffic control and equipment management. In our company we always strive for internal excellence and the passenger definitely feels it when using our services. It is always challenging to reach zero incidences but we have the know-how and we strive hard to deliver better than other competitors. I can safely say nothing is left to chance.
Besides, before we promote our staff to any managerial position we give them the required training in terms of supervision, monitoring activities, communication skills and conflict management. Human capital is the core of our company and through our evaluation programs we can detect which areas of improvement each employee has and we help him, which serves both the staff and the company.
You have more than 35 years of experience in the sector and have performed in several executive positions in Saudi Airlines since 1989. How do you think these previous experiences are helping you as CEO at SGS?
I started as an agent then I got my bachelor’s degree and my Masters. I got promotions to higher levels and worked in various departments of the airline industry. Most importantly I headed the Training Department for 17 years. I was lucky to have worked in so many departments and achieve a high level of related experience. Of course I think all these experiences and my career path help me in my role as CEO of SGS. This company is a service provider but if you don’t have experience within the aviation sector you might succeed as a CEO only for a certain time and not as a leader. However, if you have both management skills and aviation experience besides a good understanding of training requirements, that gives you an advantage, since you are able to truly understand the needs of your clients and the manner in which they can be taken care of.
What is your personal vision for the company in the years to come?
My vision of the company is that it will continue to grow and reach great heights. I have moral and professional obligations and responsibilities towards our both external and internal customers. I owe it to them. I shall make sure that I leave no stone unturned to fulfill my contractual obligations, thereby establishing our organization amongst the best ground-handling agents globally.
We’ll accomplish more efficiency with the new facilities and new airports, providing always a better service for the client. We are striving hard and in 3-4 years we want to be the number one ground-handling services company in the region, in all the countries of the Gulf. The region has the correct drivers to experience great growth and we will capitalize on this opportunity when the right time comes.
I have to balance the shareholders’ expectations and our expansion strategy, so I have to be very careful and correctly choose where to expand our operations. I see opportunities in India and Egypt because I have two guaranteed businesses, NAS and Saudi Airlines, operating heavily in these countries. This is for me a guarantee because they’re involved in our company; they are part of our shareholding structure and they would definitely use my services there.
But there is still much to do first in the kingdom. We will keep building our brand name here, catering for the immense market we are operating in. We are a Saudi brand, a strong and respected one. Many foreign investors and operators have proposed me to go into joint ventures, they respect the way we do things, so I see a bright future for the company with growth opportunities within and outside the boundaries of the kingdom.