The Skift Airline Innovation Report is our weekly newsletter on the business of airline innovation. We look closely at the technological, financial, and design trends at airlines and airports.
Brian Sumers writes and curates the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.
In his roughly four-year tenure as top boss, KLM CEO Pieter Elbers has molded his Dutch airline into the top performer in the Air France-KLM Group, leading it to major profits while its French cousin struggled with labor and operational issues.
Yet last week, I suggested new Air France-KLM CEO Ben Smith should have the right to remove Elbers if he wished. Smith, I noted, was brought in to meld cultures and operations at the two airlines, which have maintained mostly separate management structures since the 2004 deal that created Air France-KLM. I argued that Smith, as the ultimate boss, deserved final say on personnel — even if it meant removing a highly respected executive.
Many readers did not agree, writing me to say it made no sense to replace the CEO of the airline that for years propped up the group. It is a compelling argument: How can you punish an executive for good work?
This week we learned Elbers will stay, though his role could change. He’ll remain CEO of KLM, but reports indicate he’ll work more with colleagues in Paris, as Smith seeks to create a more cohesive operation. For the group, he’ll be deputy CEO, with Air France CEO Anne Rigail.
On paper, it is an elegant solution. Elbers, who is respected by Dutch politicians and labor groups, will remain, while Smith can still push for more integrated operations. But will it work? Or will Elbers feel marginalized?
Best of SKift
It’s Time to Let Air France-KLM’s New CEO Take Charge: Last week, reports indicated new Air France-KLM CEO Ben Smith may have been planning to replace Elbers. That didn’t happen, but while it was possible, I wrote a piece recommending stakeholders give Smith the benefit of the doubt. He is the boss, and he deserves to make key decisions.
U.S. Airline Earnings Show Race Between Rising Costs and Higher Revenues: Skift Airline Weekly’s Jay Shabat knows more about airline economics than any journalist I know. Usually, his work is behind a paywall, but this piece — a summary of U.S. airline fourth-quarter earnings — is free. You won’t want to miss his cogent analysis.
AirAsia to Open Fast-Food Restaurant Serving Its Inflight Food: In a dispatch from Singapore, Skift Asia Editor Raini Hamdi endorses Tony Fernandes’ plan to open a restaurant on the ground that will serve the airline’s inflight menu. “The low-cost carrier does serve one of, if not the most, extensive onboard menus featuring comfort food that is to regional passengers what pasta is to Italians,” she writes. I’ve never flown AirAsia, so I’ll defer to Skift’s expert.
UK Regional Airline Flybmi Collapses and Blames Brexit: UK-based regional airline Flybmi has become the latest casualty in Europe’s increasingly challenged aviation sector, writes Patrick Whyte, Skift’s man in London. We never like to see an airline go bust, but Flybmi was tiny. It flew only about a half a million passengers last year. Life will go on.
Delta CEO Learned About Airline’s NRA Discount From the Parkland Students: Delta Air Lines is probably better than any other U.S. airline at playing the public relations game. When it makes a big stand, you can bet it is usually good for business. I’m guessing pulling the NRA discount worked out fine for Delta. Skift’s Dennis Schaal has some details about the issue.
Aeromexico Struggles as Most North American Airlines Report Hefty Profits: Aeromexico blamed its fourth-quarter operating loss on one-off items. To a large extent that’s true. But the airline still has some looming problems, which is probably why it won’t grow at all this year.
Best of the Rest
Vietnam Wins U.S. Approval to Start Flights: Vietnam is far from the West Coast of the United States, and it’s not clear yields would be high enough to make a nonstop flight profitable. But sometimes, in developing countries, yields are not that important. I trust if Vietnam wants a nonstop link to the United States it’ll get one — whether it makes money or not. Bloomberg has details about the latest developments.
Killing the Airbus Superjumbo Was an Act of Kindness: Many average travelers are surprised the iconic Airbus A380 won’t be built after 2021. But you’re not average readers. You know the economics of the airplane stink. Chris Bryant of Bloomberg explains why Airbus had no choice but to kill the program.
American Airlines Passengers Can Take Helicopters to Skip Airport Lines, Traffic: Many travelers are feeling flush now, and they’re spending big money on premium flying experiences. American said this week it’ll try to tempt high-end customers with helicopter transfers to the airport in New York and L.A. and access to a special lounge at Los Angeles. It’s not free, though. Customers will have to pay a small fortune for the new services. USA Today has more information.
I’m heading to Dallas/Forth Worth next week for a 24-hour media blitz with American Airlines. Someone at American thought it might be fun to invite journalists to spend all night — literally all night — with the airline at headquarters. If I survive, I hope to have a report for you soon.
Skift Senior Aviation Business Editor Brian Sumers [firstname.lastname@example.org] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.