COMMENT: KLM ” a dilemma
Speculation in the media has been rife last week that Air France is to get much closer to KLM, perhaps with a share swap that could leave KLM investors with a minority, maybe 20%, holding in the French airline. Never mind that AF is still 54% state-owned and might have some political problems by involving itself in a competing airline within the EU.
For at least the last ten years airline pundits have been saying that Europe only has room for three major international clusters dominated by British Airways, Lufthansa and Air France. Whilst airlines have joined various camps (or marketing groups) from a practical point of view we still have, more or less, the same number of carriers as a decade ago. SWISS is the latest name for an emaciated Swissair and SN Brussels has replaced Sabena, again in a rather withered form. Nothing else has changed.
KLM is struggling. The dream of Amsterdam as the aviation gateway of Europe has just not taken off. Limited flights and restricted destinations have meant big losses. Fine airport as it is, in the end what matters most is the passengers final destination. Clearly not Amsterdam. Heathrow for all its faults continues as Europe”s (and the world”s) number one international airport. Passengers want to come to London and the airport offers by far the best in terms of frequencies and connecting flights. Charles de Gaulle suffers in much the same way as Schiphol. Splendid airport but traffic diluted by continental rivalry.
Take away Amsterdam in terms of competition and divert some of the business into CDG and you have a very good economic reason for the takeover. It could be argued that Amsterdam would become but a satellite of Paris and that KLM as part of Air France would be emancipated. Why duplicate half empty flights to the far east? Perhaps the Dutch got it wrong in the first place by selecting Amsterdam as its major gateway. Rotterdam, one of the world”s great ports, in some ways makes more sense. Too late now!
Over the years the UK has provided Amsterdam with excellent feeder traffic both point to point and long haul connecting passengers. This has been particularly so with the east coast cities from where travellers could miss out all the horrors of Heathrow and make their international links Air France has tried the same thing and whilst the new CDG T2 arrangements are in some ways even better than Schiphol the services have never really caught on in the same way. Maybe it is something to do with the British attitude to the French, or more probably, just better marketing over the years. At one time Schiphol promoted itself as London”s third airport.
The possible Royal Dutch Airlines ” Air France partnership leaves British Airways in a difficult position. It has been documented that BA and KLM have spoken. The United Kingdom”s relationship with the Netherlands go back many hundreds of years and in the 20th century Unilever and Royal Dutch Shell have demonstrated that the two countries can work together commercially. The Dutch speak English (well more than they speak French) and are even known to tune into our radio and TV stations. A British Airways association could make real sense for them and even more for BA. Schiphol might really become London”s third (or now fourth) airport and the same marketing philosophy that bypassed Heathrow could be strengthened, but this time within the British Airways Plc camp. KLM reaches to certain places that BA does not touch.
The Air France ” KLM discussions come about at a time when British Airways is at its weakest. One assumes that BA is more interested in putting its own house in order than worrying about others. For the Dutch any association with Air France asks a number of serious questions. If AF gains de facto control of KLM will it stretch itself too far and would any integration work in terms of the travelling public, the staffing and finally at the bottom line? A number of questions need to be answered in the months ahead. top