“Everything is built off the schedule,” CEO Benjamin Smith says.
Air France-KLM CEO Benjamin Smith was introduced at the Skift Global Forum as the “consummate aviation geek” and someone who “sleeps and dreams of airplanes, airline schedules.”
Considering the challenges the airline has faced even before Smith stepped into the CEO role in September 2018, that ardor for jet fuel appears to have kept him buoyant – so far.
Smith, who was previously COO and president of airlines for Air Canada, has had to wage battles on several fronts at Air France-KLM: from volatile labor relations with Air France pilots to the January shutdown of Millennial-targeted airline Joon, to sorting out tangled schedules, the overarching goal at this point is just to simplify operations, he told Skift’s Brian Sumers at the conference last week.
“KLM is turning a hundred years old next week,” Smith said. “Air France turned 85 last year. Air France has had a lot of difficulties over the last few years. At KLM our business is running quite well. Having the opportunity to play a part in a transformation and a resurrection of such a great brand. And for me there was really no choice.”
The Passion Of Aviation
Noting he had “never been introduced as a geek before,” Smith said his love of commercial aviation is one of his first memories.
“I don't know where it came from,” he said. “My father is Australian and my mother's from Hong Kong, so we did a lot of traveling when I was young and you know, during the 70s, I mean still today, very exciting to fly. I can remember [being] four or five years old, the smell of jet fuel, the entire experience. If you're a type-A personality, everything being so organized. I was mesmerized. I’ve been passionate about airlines since I was very young and am lucky to have been in this business my whole adult life.”
Certainly, Smith knew what he was getting into when he joined the company.
Before he accepted the CEO role, Sumers asked if it were true that one of Smith’s associates had asked him if he kept himself in good physical condition.
That question was in reference to a time in 2015 when Air France senior management was forced to flee their office and climb over a fence to escape an angry mob of union protestors over the planned layoffs of roughly 2,500 employees.
“This was not a great time in Air France history,” Smith said dryly. “But Air France has about 45,000 employees. And they are unbelievably passionate about the brand.
“I spent many, many years at Air Canada,” he continued. “All of my friends and colleagues and myself, very, very passionate about Air Canada. But at Air France, I don't know if it's in the genes or if it's in the country, the level of passion that they have, you know, it's great to see.”
During this negotiation period, Smith said the passion of the employees erupted in a very negative way.
“I don't think anyone was expecting this type of result, but it was, there were some jokes made to me by my Canadian friends – exactly what you said about working out,” Smith said.
“But the number one opportunity, or challenge, I was looking forward to was seeing if we could stabilize the labor relationship between management and Air France as quickly as possible. We're in a very good spot right now. Of course, the airline has an enormous amount of competition. But on the business side, this is where we're putting our attention today.”
Air France KLM CEO Benjamin Smith and Skift's Brian Sumers
Smith was able to strike some early successes as Air France-KLM’s CEO. In relatively short order, Smith was able to forge an agreement with the Air France pilots to grow the company’s Netherlands-based, low cost carrier Transavia.
“The French operations for Transavia is newer and has had limits on the number of aircraft that it can operate,” Smith said. “It started with 14, then it grew to 40. Recently we've been able to negotiate with our pilots to fully lift this cap. I don’t think it was such a difficult thing for our pilots to accept, once they had trust in management. We put an enormous amount of effort into trying to earn trust from our staff through a respectful, transparent discussion.
Our employees want Air France to win. They want the group to win. They see some of our shortcomings. They know the enormous amount of competition we face. We have a 120 airlines competing with us in Paris alone. So, not having this type of tool with Transavia is necessary in Europe. Here in the U.S., it's not so necessary.”
In essence, Smith said he viewed the expansion of Transavia as key to competing for continental Europe short-haul flights against Ryanair and easyJet, in particular.
Cutting The A380
After securing agreements with unions, Smith then set out to tackle what Smith said was the company’s costly fleet structure.
For example, last November, the company announced Air France would eventually cut its number of A380 aircraft from 10 to 5 and operate 777’s instead, Simple Flying reported at the time.
“Look, it's a great ride,” Smith said. “It's an amazing airplane from a customer's perspective. From the individual airline's view, it's an expensive airplane. The economics that you would expect from such a large airplane aren’t there on a unit cost basis. You don't get any efficiencies there.”
For one thing, the A380 requires extra width in a gate area to be able to accommodate its size. Not every airport and every gate can handle that, Smith noted.
“When you have a small fleet of 10, as Air France did when it came to the A380s, if one of those airplanes has a problem, it’s very hard to back up the airplane,” Smith said. “Then, in Air France's situation, the interiors of the airplanes were dated and the cost of upgrading interiors was prohibitive – an estimated 35 to 40 million euros for each plane. So we made the tough decision and decided we're going to early retire these airplanes. By 2022 there'll be out of the Air France fleet.”
Smith’s passion for scheduling has also served him well in this role. The problem with Air France’s scheduling were most pronounced in Africa. And to hear him tell it, Smith was particularly excited about this reworking project.
In April, Air France said it would "reinforce” its long-haul and medium-haul networks. The carrier began listing more flights to Santiago, Chile; Washington DC; Naples, Italy; Ljubljana, Slovenia; and Marrakech, Morocco. This past summer, it also started flights to Belgrade, Serbia.
“Everything is built off the schedule,” he said. “Many employees – the pilots, cabin crew – their lives are built around the schedule. A lot of our customers decide that they're going to fly with us based on the schedule. So if you get to work in the scheduling department, you're always balancing off all the different components of an airline. When I arrived at Air France, the schedules were quite complicated. Not in North America so much, but to Africa and other parts of the world, very, very complicated.”
For Smith, running an airline is complex enough. And if the schedule doesn’t make sense to passengers, nothing else that follows does either.
“When we can't meet or exceed the expectations of our customers, we're not making it easy on our staff or not making it easy on our customers,” Smith said. “So if the schedule is not straightforward for me, you don't have the base of an airline in a good spot.”