Written by Richard Schuurman, a Guest Contributor.
AMSTERDAM — Did you notice KLM Royal Dutch Airlines’ summer of turmoil? Probably not, unless you traveled through Amsterdam Schiphol Airport on one of those days in August, when ground staff was taking it very easy and you almost missed your flight.
Yet the summer of 2016 has been an unsettling one, with social unrest within the airline never so high. And it’s not over yet.
Koninklijke Luchtvaart Maatschappij (KLM), the world’s oldest airline still operating under her original name, has branded herself for years as ‘The Reliable Airline’. But unions and a fair number of staff are doubtful. In their opinion, the board has behaved unreliably in negotiations over social contracts.
Half of KLM’s 32.000 workforce is ground staff. After a few years of austerity measures, the unions in this spring wanted their share: the worst of the crisis is over, the Dutch carrier is in good financial health, isn’t it? Workers demanded a pay rise, better contracts and an end to the trend of downwards spiraling wages.
The airline reached an agreement with four unions, but not with the biggest: FNV. When KLM didn’t move, FNV, put on the pressure. “Ground staff is really fed up and wants to make it clear once more what it means to feel uncertainty over work and being subject to ever worsening conditions. We don’t want this race to the bottom, we want proper contracts,” FNV’s Director Zakaria Boufangacha said in July.
After baggage handlers, truck drivers and ground staff continued their actions late July, the airline went to court. And it was successful: no strike was allowed until September 4, as, during the summer peak amidst security tensions at Schiphol, it would unacceptably hurt passengers’ and the airline’s interests.
The verdict didn’t stop the union from doing a few ‘take it easy’-days, causing moderate delays in August. Two days after the ban on striking had ended, FNV and KLM finally reached an agreement on September 6.
“We have a breakthrough: KLM wants to end the race to the bottom, wages will no longer be going down all the time and together with Schiphol, the government and European Union we will be pleading for fair competition”, FNV’s Jan van den Brink said. Further unrest was averted…For the ground staff that is.
Bring on the cabin crew. Their rift with the airline’s board became public on September 19, the day Schiphol celebrated its 100th birthday. KLM and cabin crew unions VNC and FNV Cabin have been in talks over a new contract since March. Having failed to reach an agreement, the airline unilaterally announced it would reduce crew on A330, 777 and 787 long-haul flights from six to five from October 30.
To raise crew productivity by four percent and save costs, the purser would no longer be just supervising, but have to be a full member of the service team. It’s common practice at many airlines, but not at KLM.
After fruitless talks, FNV Cabine angrily walked away from negotiations on September 29. “From the many reactions our helpdesk has received it is clear people have the feeling they are treated with disdain.
More and more members are losing their ‘blue heart’, motivation has dropped below zero. KLM is risking their relationship with staff”, the union said on October 3. Both unions are considering further action, so don’t be surprised KLM cabin crew to go on strike.
The mood is also grumpy In the cockpits. Pilot’s union VNV is furious over the agreement with ground staff, saying KLM is spending money on them while pilots agreed in 2015 to a three year austerity course. Its pensions they really are at loggerheads. Back in 2001 and 2007, KLM agreed to make an annual allowance to the pension fund to compensate for inflation.
As the fund has performed badly over the economic crisis, KLM says it is due to make a allowance by the end of the year 600 million euros, although VNV says it is only 115 million. That’s money the board rather spends on more urgent investments.
“At a moment when KLM wants to invest in its customer and product a dotation this scale from a business point of view is irresponsible”, KLM wrote to VNV in July, adding the agreement would end on December 1.
VNV went to court, which on September 27 ruled in favor of the airline. “KLM’s board of directors is dancing on a volcano by taking up this fight and I can only guess what their motives are”, VNV president Steven Verhagen said in a newspaper interview. He is expecting a long legal battle, now that the relationship has hit rock bottom.
If you look only skin deep you would think these are just three separate social conflicts. Look further and you see unrest has a lot to do with the future of KLM, which against a backdrop of uncertainty hopes to celebrate her centenary in 2019.
Be it ground staff, cabin crew or pilots, all fear KLM’s strong position is being eroded, despite healthy financial results and growth. The one to blame in the opinion of many is Air France, KLM’s partner since 2004. Or as one cabin crew member puts it on the VNC website: “It’s their strikes and losses that are forcing us to cut investments, so they can solve their shortages”.
The Air France-KLM alliance will be tried and tested again next November 2, when the new group CEO Jean-Marc Janaillac will present his revised strategy ‘Trust Together’.
It is a supplement to the much discussed ‘Perform 2020’ plan, aimed at cutting costs and raising productivity. Will the new strategy favor the French, the Dutch or benefit both?
Will there be a low cost long-haul subsidiary? It is feared Janaillac will do too much to please the French unions, which with long and frequent strikes try to strengthen Air France’s position.
In stead of growth in Amsterdam they want growth in Paris, with routes and aircraft transferred from KLM to AF. When the idea was put forward that AF should tap into KLM’s financial reserves, it caused strong opposition with the Dutch secretary of Finance.
With only four of fifteen members on the board of directors being Dutch, the feeling with various members of parliament is that KLM’s position within the alliance has weakened.
CEO Pieter Elbers is doing his best to protect the Dutch interests, but not everyone is convinced he is the tough cookie required for this job.
There’s more. The blue birds feel the flak at their own home base Schiphol. The airport used to do everything in favor of their home carrier KLM, but things have changed. Low cost entrants Easyjet and Ryanair have based a mini-fleet in Amsterdam and become a serious threat to KLM’s European business. Intercontinental traffic has seen new competition from Emirates, Qatar Airways and Etihad.
Pilot’s union VNV doesn’t miss an occasion to point at the huge financial support the ME3 get from their governments. Early this year KLM workers unsuccessfully even tried to stop Emirates second daily A380-flight to Schiphol.
VNV was hard on the secretary for aviation, accusing her of not doing enough to get a level playing field in Europe.
FNV echoes this feeling: “To safeguard the future of KLM and Dutch aviation, together we must fight unfair competition. Schiphol, despite saying it is fully aware of KLM’s needs, should take responsibility and stop unfair competition”, FNV’s Boufangacha says.
The latest worries come from Lufthansa’s take over of Brussels Airlines, as it might threaten Air France-KLM.
There is a lot at stake in a quickly changing aviation landscape. KLM staff is aware of this and wants to support their airline as much as possible. But not unconditionally.
That makes it so difficult to predict if this summer of unrest will be followed by a winter of conflicts at KLM. It doesn’t bode well.