It’s been a tough few months for Alexandre de Juniac. Just two days into his strategy to restructure short-haul, the Air France-KLM boss had to make a mid-air turnback – perhaps after instructions from the French government.
And then mid-October saw the shock replacement of KLM chief executive Camiel Eurlings by his deputy, chief operating officer Pieter Elbers, just a year after he had taken the helm at the Dutch carrier.
The termination of Eurlings’ contract, which was due to run until April next year, occurred as chiefs from Europe’s network carriers were gathering in Istanbul for this year’s Aviation Strategy Summit, organised by the Association of European Airlines. The city on the banks of the Bosphorus was the venue this year as AEA president and Turkish Airlines boss Temel Kotil was playing host.
And the location only served to magnify the pain that Europe’s legacy carriers are suffering at the moment, as their CEOs were given a tutorial into how airlines can run their businesses in countries where all the stakeholders are pointing in the same direction.
Kotil outlined his ambitious growth plans for Turkish Airlines, while the country’s transport minister stated the government’s commitment to support him with infrastructure investment as he paid the industry the sort of glowing tribute that is unheard of within the European Union’s corridors of power in Brussels.
Lufthansa group chief Carsten Spohr summed up the mood when he said he would much rather be running an airline under a government with Turkey’s attitude to commercial aviation than Germany’s.
But while the pain of over-regulation and the ongoing failure to harmonise Europe’s air traffic management remain key issues for AEA members, it is the labour force that is creating the industry’s biggest headache. And the one that needs curing most urgently. In the face of crippling strikes by its pilots, which cost €500 million ($641 million) in lost business, de Juniac was forced to abort his initial efforts to turn the Transavia arm into Air France-KLM’s pan-European short-haul airline with a cost structure to match low-cost rivals.
Spohr is suffering similar pain as he tries to force through cost reductions among Lufthansa’s flightcrew. He clearly has empathy with his pilots’ position – as he often reminds us, he used to be one of them. But he is frank in his intent that this is a battle that Lufthansa’s customers must endure and the airline must win for the business to be sustainable.
“I think there is no room for wrong compromises,” says Spohr, who has battles raging with pilots on several fronts. “We have 14 pilot corps [in the group] and I will only be happy when I see them all with a structure with a sustainable future,” he adds.
IAG, the third member of Europe’s legacy triumvirate, has of course already been through the labour pain and come out the other side. Chairman Antonio Vazquez admits that the battle with Iberia’s pilots was longer and harder than he expected, but ultimately successful.
De Juniac and his pilots now look to be moving forward after Air France’s flightcrew union SNPL tentatively accepted the revised plan around employment at Transavia France. But the big question is whether terms and conditions that are acceptable to the pilots will deliver the structural cost reductions needed for long-term survival. Perhaps the decision to change the guard at KLM at such a critical time indicates an intent to take a more robust view in any future labour battles that could be brewing.
But however the current disputes are resolved, they are only the initial blows in what will surely be a long-running bout between unions and Europe’s airline management if they are to remain competitive with the likes of Turkish, the Gulf carriers and the low-cost brigade.
Source: Airline Business