KLM Royal Dutch Airlines
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- KLM Royal Dutch Airlines
P.O. Box 7700
1117 ZL Schiphol
- Main hub
- Amsterdam Schiphol Airport
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- Full Service Carrier
- Domestic | International
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- Part of Air France-KLM S.A.
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Established in 1920, KLM Royal Dutch Airlines is the national carrier of the Netherlands. KLM operates an extensive network which includes services within Europe and to Asia, Africa, North America, Central and South America and the Middle East. The carrier also operates freight services, and handles all service operations from its hub at Amsterdam Schiphol Airport. KLM is a founding member of the SkyTeam alliance, and is part of Air France-KLM S.A.
Location of KLM Royal Dutch Airlines main hub (Amsterdam Schiphol Airport)
279 total articles
Airline seat growth from Europe in summer 2017 is set to stay at almost 6% for the third successive summer, according to data from OAG. This rate had not previously been reached since 2010, although this will be the fifth straight summer of growth ahead of its 10 year average rate. The summer 2017 season started on 26-Mar-2017 and, although always subject to further change, the data give a fairly clear picture.
Seat capacity on routes from Europe to Africa will grow the fastest, as the region recovers from a terrorism related drop in demand in North Africa. There will also be above trend growth in almost every other region from Europe (including intra Europe). The only exception is Europe-Middle East, where the newly cautious Gulf airlines' growth is slowing this summer.
On the North Atlantic, always important for the profitability of Europe's leading legacy airlines, growth will be faster than its 10 year trend, but it will at least be a little slower than in the past summer. The loss of market share from the immunised North Atlantic JVs to newer and smaller competitors, including LCCs, is set to continue. As ever, the OAG capacity data provide a window into the changing structure of the airline markets from Europe.
In 2016 Air France-KLM's long haul network generated more profit than the group as a whole. Yet the dependence of Air France-KLM's profits on the long haul business is under threat from more cost efficient competitors, in particular the Gulf based super connectors. Moreover, Air France-KLM's main European competitors IAG, and now Lufthansa, have developed a clear lead in developing commercial partnerships with Gulf airlines.
Air France-KLM's 2016 operating margin was its highest since before the global financial crisis, but remained below its pre crisis peaks and well below the rest of the world airline industry in what was almost certainly a new record year for global margins. Within the group, KLM's margin improved and was again higher than that of Air France, whose margin fell.
The planned new lower cost airline to be based at Paris CDG as a subsidiary of Air France, announced in outline in 2016 under the project name 'Boost', will now include medium haul in addition to long haul routes. This will be vital to setting it back on a path to sustainable profitability – if agreement can be reached with pilot unions to launch it. Even then, its scope and low cost ambitions will be limited.
Ryanair's 117million pax in 2016 tops European airline groups. The first time an LCC topped rankings
For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
The big five can be expanded into a big seven to include Turkish Airlines and the Aeroflot Group, although these two had contrasting growth rates in 2016. A chasing pack of middle sized airline groups includes three LCCs (Norwegian, Pegasus and Wizz Air) and three legacy airlines with varying challenges to establishing sustainable profitability (SAS, Air Berlin Group and Alitalia).
Most of the faster growing airline groups in the top 20 are LCCs and the main growth drivers for Europe's big three legacy groups are their LCC subsidiaries. Just outside the top 20 are some fast growing legacy airlines in Eastern Europe, demonstrating the potential there. Nevertheless, unless there is a big merger or acquisition, Ryanair looks set to remain at number one for some time.
Pilot strikes at Lufthansa. Again. A strike ballot among British Airways cabin crew. A guilty verdict for Air France workers who assaulted an executive during a union protest. These were all headlines in late Nov-2016, following Air France pilot and cabin crew strikes in summer 2016. Labour relations at Europe's three biggest legacy airline groups are an ongoing challenge.
A CAPA report in Jun-2016 highlighted the growing number of articles on CAPA's website mentioning the word 'strike'. It raised the possibility that if the rate continued through the year, 2016 could be the biggest year for strike-related articles since before the global financial crisis. With a little under a month still to go, this year has already comfortably passed this milestone.
To a large extent labour unrest grows as airline industry profits increase. However, rather than hoping for an industry downturn to reverse the rise in the cycle of strikes, airline CEOs are talking tough – a line long taken by IAG's Willie Walsh. Lufthansa's Carsten Spohr has said that taking on the pilots is "about the future of Lufthansa", noting that it has “no chance of survival" if it gives in to pay demands (Bloomberg, 24-Nov-2016).
Qatar Airways turns 20 in 2017. The once tiny regional airline has become a global powerhouse and is reshaping oneworld, the alliance to which it belongs. Qatar has stakes in IAG and LATAM, and Qatar Airways CEO H.E. Akbar Al Baker has told CAPA that in the near future he expects Qatar to make acquisitions in two additional airlines, aside from Meridiana. He said the additional airlines would be successful airlines, as "We are not going to collect crap".
Strategic partnerships without equity are important; Mr Al Baker hopes American Airlines will cease its partnership with Etihad Airways and work solely with Qatar Airways, even forging a multilateral JV anchored around American, British Airways/IAG and Qatar. Qatar is heading towards a fleet of 250 aircraft in 2-2.5 years' time. Mr Al Baker expects recently ordered 787-9s to replace 787-8s, while an LoI for 737 MAX 8s will be to replace Qatar's A320s and grow that fleet.
Air France-KLM, Lufthansa & IAG: 3Q2016 results may signal a cyclical peak in Europe airline margins
Air France-KLM, Lufthansa Group and IAG collectively reported a fall in operating profit and operating margin in 3Q2016, after growth in 1H2016. Individually, only IAG avoided a decline in its operating margin. IAG also remained the most profitable, and Air France-KLM the least profitable, in the most important quarter of the year.
The margin contraction in 3Q resulted from a bigger fall in unit revenue relative to 1H, without a matching fall in unit cost (in spite of lower fuel prices). Passenger unit revenue fell by 6% to 7% for all three (adjusted for currency movements), with long haul markets especially weak. Unit revenue was particularly soft on routes to Asia Pacific and on the North Atlantic (and, for Lufthansa Group) on the South Atlantic.
The combined operating margin of the three has been a good indicator for European airlines overall in the past. The outlook for FY2016 for each still suggests that there will be margin improvement for the year as a whole. This could be in line with, or slightly above, the cyclical peak reached in 2007 – before the global financial crisis. Against this backdrop, the decline in margin in 3Q2016 suggests that further improvement may be difficult in 2017.