Thomas Klühr, CEO of SWISS, says the toughest challenges for his airline are still to come
How is the airline performing?
SWISS is performing quite well. We won’t have a record year like we did in 2015 but it will nevertheless be one of the best years the airline has ever had. We’re expecting an EBIT margin of around 8%.
This is despite a very challenging market. There is still a huge pressure on yields, the Swiss Franc is strong and there have been terrorist incidents throughout Europe.
Overall, though, the industry has achieved a degree of stability and at SWISS we have been very determined to lower costs. We have lots of cost-cutting measures in place and the new aircraft in our fleet are also providing benefits.
What is the thinking behind the re-branding?
It is getting harder and harder to distinguish your brand in the market. That is why we decided to concentrate on our Swissness. We are the only airline that can really take advantage of that. It is the little things that make the difference because the customer picks up on those things, so concentrating on that and incorporating Swissness is our focus.
How closely do you work with Lufthansa and Star Alliance?
The collaboration with the Lufthansa group is important and very close because SWISS competes against global brands. So, it is vital to find synergies within the group airlines, to harmonize and to use common standards. If you take our networks, for example, we found that there were cases of SWISS and Lufthansa flights leaving to the same destination within 10 minutes. It makes sense to manage that better. It is also much smarter when buying new aircraft to follow many of the same specifications because it is cost-efficient both initially and in the long run.
But it’s also necessary for SWISS to remain Swiss. We need to maintain our brand and serve our market. So, our new long-haul aircraft will continue to offer our customers a
First Class [cabin]. Lufthansa isn’t offering that option on all aircraft but we felt it was important for the Swiss market.
As for Star Alliance, we continue to collaborate although, naturally, it isn’t as close a relationship as we have within the Lufthansa Group.
What difference will the Bombardier C series make to your operations?
The C Series is crucial to our operations. It is the perfect aircraft for us for many reasons. For a start, the 120-250-seat market from Geneva and Zurich is huge.
Also, the C Series is a really quiet aircraft, about 50% less noisy to the human ear compared with similar aircraft. Fuel consumption and unit costs are up to 25% lower. So we will certainly increase our competitiveness. But it’s about more than that. It’s also about comfort and the passenger experience. The feedback we have been getting from our customers so far is very positive.
Of course, it’s a challenge to introduce a new aircraft to the fleet and it is something SWISS will concentrate on for the rest of 2016 and into 2017.
What is SWISS doing to encourage diversity?
Diversity is important to SWISS and the Lufthansa Group, and we have several initiatives that encourage diversity. But this an area where there is always room for improvement.
At SWISS, about 50% of our employees are flight attendants. As you can imagine, there’s huge diversity already among that group but we want to expand it. It can’t be done overnight, however, it is a step-by-step process.
We’re introducing new working models, supporting childcare facilities and so forth to ensure everybody has an opportunity. I’m proud to say we have equal pay but, as I say, there is always more to be done.
How important is cargo to your bottom line and is e-freight important to a sustainable future?
SWISS WorldCargo makes a strong contribution to the SWISS bottom line and, without it, we wouldn’t achieve an 8% EBIT margin.
Digitalization will increase that contribution. It is a major topic. We are making progress with the e-air waybill and other initiatives. But, as with diversity and many of the other areas, this is just a start. There is still a lot of work to be done.
The Single European Sky seems as elusive as ever. How damaging is this to your airline and the environment?
We cannot be satisfied with the speed of progress of the Single European Sky. We know that it is a long political process and to achieve SES will take time. But what I don’t understand is why we aren’t getting support from other interested parties. SES would mean huge savings for the environment, for example. The industry must carry on lobbying politicians to achieve SES, even if it must do it alone. And, speaking for SWISS, it would mean huge cost savings for us too.
What are you looking for from a European aviation policy?
I think it’s vital that European airlines receive support from the European Union. Other airlines are supported by their governments. So, we need an aviation policy that supports the airlines and enables fair competition with airlines from other regions.
The infrastructure issue in Europe is particularly challenging. There is a risk that Europe won’t be able to participate in the growth of the industry because of the lack of capacity at its airports. There are very few development projects in Europe, especially at key hubs, and we’re still not sure if we are going to get some of the developments that are planned like the third runways at Munich and Heathrow. And even if they do go ahead, how long will they take? I think people are underestimating this issue.
Looking at the industry in general, what trends do you see and what will be vital to success?
Consolidation and digitalization are equally vital. The airlines that properly serve their customers through the analysis and use of big data will be the winners. Personalized services will become more and more important.
These two areas will be important drivers for the industry looking ahead.
2016 – today Chief Executive Officer, Swiss International Air Lines
2013 – 2015 Member of the Board Finance & Hub Munich, Lufthansa German Airlines
2011 – 2013 Member of the Board Munich & Direct Services, Lufthansa German Airlines
2007 – 2011 Group Representative & Head of Hub Management Munich, Lufthansa German Airlines
2001 – 2007 Head of Controlling, Lufthansa Passenger Airlines
1998 – 2001 Head of Planning and Reporting at Sales Controlling, Lufthansa Passenger Airlines
1996 – 1998 Business Manager & Controller, Lufthansa City Center GmbH
1990 – 1996 Various positions at Lufthansa, Lufthansa German Airlines