Big Interview: Dnata boss Iain Andrew on the Travel Republic buyout

by Lee Hayhurst
by Lee Hayhurst
January 6, 2012 01:37 PM GMT

The identity of the new owner of UK leading online travel agent Travel Republic might have come as a surprise to many in the trade, but it is a firm with a long heritage in the industry.

Emirates Group subsidiary Dnata is a Dubai firm with 40 years history and consists of three divisions in cargo, ground handling and travel agency, operational in 38 countries employing 20,000 staff.

This means it is one of the longer-established companies in the fast-growing Emirate and it is its existing relations with suppliers that it hopes it can exploit to fuel future growth at Travel Republic.

From a UK perspective it’s not hard to see why Travel Republic was attractive to a company like Dnata with ambitions in the online leisure travel market to add to its corporate travel interests.

Leading technology, stable management, seven years of sustained growth and an emerging pan-European footprint prompted speculation the deal will see sister airline Emirates make a concerted bid to establish a leading up-market European tour operation.

Through Dnata Travel (UK) Emirates already has Emirates Tours with an office in London, but this remains relatively small and all airlines are seeking to ramp up tour operating capabilities in the search for profit by increasing transaction values.

While outsiders are prone to seeing the Emirates Group as a single entity with each division working to support the activities of the others Iain Andrew, Dnata divisional senior vice president, said this was not the reality.

He said Dnata is run entirely separately and its presence in markets in the Middle East, India and beyond means it has strong relationships with all manner of airlines and hotel operators.

And he said this is what it brings to the table while Travel Republic gives Dnata an online presence it previously did not have, enabling it to be ready for when its core markets migrate online.

“We are well-placed to help Travel Republic with growth in the UK and in Europe. We have deep relationships going back 40 years with a whole host of airlines, not just Emirates.

“We are the GSA (General Sales Agent) for the likes of BA and for Air India and we look to nurture those relationships on a continuous basis.

“If Travel Republic helps our partner airlines including Emirates I would be delighted with that. We would look to develop the whole region and to promote Dubai and the United Arab Emirates.

“We are keen to work with carriers and hotels to get more traffic to the region. You have to offer to your customers what’s right for them, if that’s Emirates great, if it’s Etihad or BA that’s great too.

“We may be able to help Travel Republic move into new destinations which may be an opportunity to add to their portfolio. If they believe it is right for their customers we will move ahead with that.”

Andrew said while technology was a key factor that attracted Dnata to Travel Republic it was not the be all and end all.

“We are very pleased with Travel Republic because of its skills and a massive part of that is its people. There is always a risk you look at an OTA and say this is all about having the fanciest website.

“What Kane (Pirie, managing director) and his team have done is very successfully put a business and a website in place that’s the very best for the customer generally.

“That does not always mean you have all the bells and whistles but that you need to market it in the right way and have the right products, it’s not just about technology.”

About Dnata

  • Dnata was established in 1959 with just five employees and today has 20,000 employees, 60% of which are based outside of Dubai, and turns over £4 billion
  • It has over 200 travel retail outlets in Saudi Arabia, Bahrain, UAE, Qatar, Oman, India and Afghanistan and claims to be the largest travel services provider in the Middle East
  • The firm is the fourth largest air services provider and one of two key divisions in the Emirates Group, the other being the airline Emirates
  • The company owns 24% of global travel management company HRG for which it works as managing partner for Asia, the Middle East and West Africa
  • It also has a substantial share in Mindpearl that operates telephone contact centres for airlines including Delta, American Airlines, Singapore Airlines and Air Pacific


However, the fact that Dnata looked to the UK to make a key acquisition that will give it a significant head start in establishing its online presence in leisure travel was not mere coincidence.

“As always with a deal like this there is an element of good fortune in that one side wants to sell at the same time as another wants to buy,” Andrew added.

“We regard the UK as a mature market and we have got a lot to learn from organisations there, as we do from other feeder markets to our area like Russia and Germany.”

That cross-fertilisation of ideas and experience will be important as the new partners settle down to life together because there is likely to come a time when Travel Republic’s three directors move on.

Managing director Kane Pirie and co-founders Paul Furner and Chris Waite have struck five-year earn-out deals so will be around for the foreseeable future to steer the company into new waters.

Andrew said it seemed far too early to think about succession planning, but he expects Dnata management to become embedded in the business.

“We have to be responsible to make sure we have a suitable succession plan in place which we will do with the current team,” Andrew said.

“We do not know the personal aspirations of the current management team but we will look at it appropriately.

“We have also got a lot of good professionals in Dubai and in a lot of our businesses across the world. We have plenty of time to get them up to speed.”

It has been suggested that Dnata might have naively walked into a relationship with Travel Republic just as it faces a potentially challenging, and costly, requirement to adhere to new Atol regulations.

However, Andrew was relaxed about how the firm will react to the imposition of Flight-Plus Atol arrangements in April, a change designed specifically to catch firms like Travel Republic.

He said: “As a group we have an excellent relationship with the CAA through the airline as an obvious link. We have constant communication and would look to co-operate where we can.

“This is a business decision that will be managed by Kane and his team and we would look to continue with our positive relationship with the CAA.”

Andrew said it was still too early to determine how Travel Republic will react to the proposed changes and he was awaiting the final announcement on the plans by the government.

Travel Republic famously fought and won a prolonged court battle with the CAA which accused it of breaching Atol laws.

And Pirie has since been an outspoken critic of the latest Atol reform proposals using his position on the trade association’s board to help the association forge its response to the changes.

 

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