There is turbulence at Air France-KLM and, for once, it is KLM that is shaking things up, with tensions between the Dutch airline and the group.
The reason for the discord: the desire of Ben Smith, the new chairman of Air France KLM to get rid of Pieter Elbers, the chairman of KLM and, incidentally, to sit on the board of directors of the Dutch airline.
Why does Air France KLM want to get rid of someone who has done a good job so far?
This may come as a surprise, as in recent years it is KLM that has been pulling the strings by successfully negotiating with its pilots, raising the quality of its long-haul product and, ultimately, boosting the group’s growth and profitability. This made us notice thatAir France was now a challenger within its own group.
Then after having put Air France back on the right track while carrying out a necessary rationalization of the brand portfolio with the end of Joonand the return of Hop! under the Air France brand, why create a new matter of discord in a group where the turbulent ones have been pacified?
Because the very character of Pieter Elbers and his desire for independence are now a problem.
Air France-KLM: a marriage never really consummated
When the Air-France-KLM group was created in 2004 (a politically correct way of talking about what is nothing more than the takeover of KLM by Air France), it was the world leader in terms of turnover, a good reason not to question anything. As a group, we have two airlines living their lives in their own way. In terms of marriage it is more the separation of goods than the universal community.
In short, whether you call it a take over or a merger, the process was never completed. Few synergies, mismatched fleets without any apparent rationality and of course cultural friction. In contrast, IAG and Lufthansa Group have been much faster in their integration process.
It is the independence of mind of an Elbers that has ensured that in recent years KLM has been pulling this wobbly combination up(or preventing it from sinking) by protecting itself as much as possible from the turpitude of its big sister.
But today it is precisely this independence that poses a problem.
Air France-KLM soon a real group?
After having cleaned up Air France, Ben Smith is now in the process of making Air France-KLM a real group that speaks with one voice. And in this logic, the very thing that made Elbers so successful could cause its downfall.
Is Ben Smith right to open the Pandora’s box?
At TravelGuys we have always advocated a real group strategy without really believing it will happen. This meant the end of Hop! and Joon and, although we hardly dared to hope for it, more synergies between Air France and KLM.
– Speak with one voice.
– Rationalize fleets and cabins.
– Operate long-haul services under a single “Air France-KLM” brand.
– Pooling of support functions.
It is obviously the direction taken by Ben Smith and we are not going to complain about it, even if it will necessarily make people cringe. An efficient and profitable group will be a streamlined group.
Is KLM right to show its teeth? When we compare the results of the two airlines, when we take into account the feeling of superiority often shown by the French and their will to dictate to the group, and the impression that the Dutch may have that they made every effort to transform themselves and remain competitive, while on the other side divas were ready to sink the group to preserve category interests…well, yes, of course.
Ben Smith’s strategy is the only one that is viable in the long term, but the Dutch concerns are more than justified and will remain so until Air France proves its ability to behave like a mature airline. Because if we only look at the business and not the politics,the balance of power within the group has indeed changed.
Air France-KLM facing its old demons?
In the meantime, we are starting to talk about strikes at KLM and at Air France it seems that some unions are not following Ben Smith’s upmarket strategy, refusing “the rich airline”.
It would be a shame to kill a great momentum, as we ourselves are surprised that the new president of the group is addressing all the points on our imaginary roadmap.
The strategy is a good one, but peace will only be achieved if Air France shows lasting signs of exemplarity.
And while we’re on the subject of new faces, Christopher Mueller, the man who made Aer Lingus grow, saved Malaysia and was until recently head of digital at Emirates (frankly we’ve never understood why he didn’t take a new job as CEO) is back on the market and wants to return to Europe….
Photo : KLM by NadyaEugene via Shutterstock
