Koninklijke Luchtvaart Maatschappij (Royal Aviation Society), better known to the world as the Royal Dutch Airlines, or simply KLM, is the official flag carrier airline of the Netherlands. It was founded in 1919, and is the world’s oldest operating airline still using its original name. It forms part of the Air France-KLM alliance and has scheduled flights to 145 destinations.
KLM is one of the most profitable airlines in the world. Last year, it earned 681 million euros, 300 million more than in 2015, thus out-earning its larger partner’s contribution of 372 million euros, despite having a fleet half of its size. How does KLM remain a leader in an industry subject to fluctuating oil prices, rapid growth, changing passenger expectations, high operating costs, changes in the world economy (recessions) and cut-throat competition? In an industry littered with bankruptcies, (over 200 in the last 20 odd years), KLM continues to thrive despite operating from its hub at Amsterdam Airport Schiphol, a location that is below sea level, and serving only two domestic locations.
Its distinctive mono-coloured logo of a crown, represented by four circles, a solid line, and a plus sign, above the letters KLM supplies a clue. The light blue colour represents integrity and the ability to continue growing in all situations and circumstances. KLM relies on good Old Dutch innovation and resourcefulness in its approach to managing and finding solutions, as it leads the way in stimulating and achieving more sustainable air transport.
In an interview two weeks ago at the 73rd International Air Transport Association AGM in Cancun, Mexico, KLM CEO Pieter Elbers was quoted as saying, “We have cherished innovation through the company all these years. It’s deeply rooted in the company, and my view is also that this really differentiates us from the competition.”
As 1999 drew to a close, the business world awaited with all kinds of expensive emergency plans for the arrival of midnight of the 31st December, the Y2K bug, and for the potential shut down of computer systems worldwide. KLM simply grounded its entire fleet of 125 aircraft, save for three which touched down early in the New Millennium. With the hoax out of the way, KLM resumed its full service the next day, having avoided all the hassle at a minimum cost.
As the world (at least parts of it) starts to come to grips with the reality of global warming, KLM is again an industry trailblazer. It aims to reduce CO2 emissions per passenger by 20% in 2020 (compared to 2011 levels) by focusing on all aspects of its operations. In addition to supporting the usage and development of sustainable biofuel, the area of weight reduction on board has become a major point of focus. Less weight means less fuel which means less CO2 emissions.
Every item carried on board has been examined for alternative lighter versions, including cargo nets, trolleys, blankets, meal trays and tableware. One surprising area of load-shedding is to reduce the amount of paint applied to an aircraft. Quite simply, 15% less paint is needed, if it is applied in more but thinner layers. KLM’s choice of chrome free paint is easily washable, leading to cheaper washes of just soap and water, instead of hazardous solvents, which in turn leads to longer lasting gloss and colour, thus, less frequent paint jobs per aircraft. All in all, these measures have enabled KLM to reduce the weight from between 500 kg and 1,800 kg per flight. Every kilogramme less, saves its weight in CO2 emissions.
KLM’s other innovations over the years include, the Flying Dutchman introduced in December 1991, the first frequent flyer loyalty programme initiated by a European airline, and a transatlantic joint venture with Northwest Airlines commencing in September 1993. In September 1994, KLM merged with Air France to form the largest airline in the world, with each partner operating independently and retaining its own culture. This was expected to lead to an estimated cost-savings of between €400 million to 500 million per annum.
In response to how KLM weighed innovativeness and cost cutting, Elbers observed, “We’re going to do two things. We’re going to do cost-cutting on the one hand and investment on the other. And the investments are in our product, in digital, in equipment, in stuff on board.”
KLM has embraced the social media platforms employing user friendly customer services as Meet & Seat and Trip Planner to enhance their clientele’s customer service experience. Earlier, in October 2010, the airline had developed a public social media website named the Social Media Hub, once it realized the burgeoning popularity of the medium.
In the words of the CEO Elbers, “I think the next step… is technology will disrupt our industry much more than it did in the last decade.” Chances are that KLM will be leading the pack. KLM was the first airline to offer self-service transfer kiosks for passengers using its Amsterdam hub. It has already started testing facial recognition for boarding at its Amsterdam and Aruba terminals.
At the end of the day KLM still considers itself Dutch at heart and is constantly surprising its passengers. Just recently it became the first airline to serve beer from a keg in flight, along with the free meals and alcohol (almost unheard of in North America and disappearing in Europe) it continues to offer to its passengers on all flights.
At home here, there is a permeating mentality that all is going to be well with the soon to be had new found oil wealth. As resource rich as we are, we continue to struggle with issues of administration, effective planning and execution, foresight and innovation. Why are we seemingly more interested in sticking with the status quo, instead of getting the job done? We have an almost religious-like adherence to sticking with tradition. Successful navigation of today’s world requires more often than not, new and innovative thinking. Tradition can no longer be relied on as a passport to success.
Perhaps we can emulate the KLM innovative approach to conducting business, as we gear to take off as an oil producing nation.