The ‘blue family' KLM has been on the drip for a century

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The ‘blue family’ KLM has been on the drip for a century

Fresh news is a curse and a blessing for the author of a new journalism book. If you’ve just written a book about KLM – like investigative journalist Ties Joosten – it’s a blessing when the Dutch airline is in the news again. Every bookstore likes to put a current and relevant title on the front table. But it’s also a curse – if you haven’t been able to include the very latest developments in the book.

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Take the much-discussed departure of CEO Pieter Elbers. KLM announced a few weeks ago that it will resign in May 2023. The top of holding Air France-KLM would like to get rid of Elbers. He would stand in the way of closer cooperation between the French and Dutch airlines. Too late for The blue fable by author Joosten.

Or take the discussion of the past few days about the alleged tax avoidance of pilots who live abroad and work in the Netherlands. Can KLM employees fly over for free from Spain or the Antilles to work at Schiphol? As a luxury travel allowance? No, the cabinet already agreed with KLM in 2020. That was even a condition for the emergency loan of 3.4 billion euros to the company.

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The issue became topical again last Friday. State agent Jeroen Kremers, the former top official who supervises the conditions in the support package on behalf of the state, now urged KLM to do something about this “cooperation with or facilitation of tax avoidance by employees” of KLM. In a parliamentary debate on state participations, Minister Sigrid Kaag (Finance, D66) called the situation “totally undesirable” on Wednesday.

The blue fable did not make it to that riot either. But luckily for Joosten (38), investigative journalist for the Dutch website Follow the Money, his book does not have to rely on the latest news. Joosten’s work on the history of KLM, the relationship with the government and the financial difficulties in the ‘blue family’ proves to be an excellent partner in the latest aviation news. An extensive index would make it a real ‘Woudlopers handbook’ for Dutch aviation.

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The author explains in great detail the difficult position Elbers was in in recent years. On the one hand, president and director of the proud, more than a hundred years old KLM, heir to founder Albert Plesman. And on the other hand ‘just’ boss of a French aviation group. Joosten also refutes the popular idea that the French always have it bad for the Dutch. He is particularly positive about the then French CEO Jean-Cyril Spinetta, who effected the merger with KLM boss Leo van Wijk in 2003, which could not be called a takeover.

Joosten also offers a lot of historical information on the issue of tax avoidance. He shows how powerful the pilots and their union of the Dutch Air Traffic Pilots Association (VNV) are at KLM. For example, the trade union is about the promotion of pilots – and not the management of KLM. The pilots succeed time and again in negotiating favorable working conditions for them. That sometimes puts bad blood in the rest of the staff. Joosten calls the mutual relationships a caste system.

No main characters

In The Blue Fable, Joosten shows how you can also look at the airline. Less romantic, more businesslike. Unfortunately in the second part – after the story about the early days with many personal details about Plesman – the human protagonists are missing. Joosten mentions the financial tricks of Sergio Orlandini (KLM boss from 1973 to 1987), the angular, anti-French style of chairman of the supervisory board Hans Smits and Pieter Elbers, beloved by the staff, but does not elaborate on their characters. KLM itself, the swan after the years of advertising campaign, is the only main character.

Subsidies to the company have always been justified by, among other things, pointing out the employment opportunities offered by aviation. But according to Joosten, KLM and Schiphol are not such a gigantic job engine. The number of 370,000 aviation-related jobs comes from just one research agency. “The positive and negative effects of KLM are not described fairly in the Netherlands. For example, the labor market effects of the airline are sometimes stretched to such an extent that even some of the prostitutes in the Red Light District owe their work to the swan.”

The ‘network effect’ is also being pumped up, says Joosten. The suggestion is always created that the Netherlands depends on the hub and spokeKLM model. The company transports passengers from all over Europe to Schiphol, who transfer to other, intercontinental KLM flights. These switchers are of no use to the Netherlands at all, argues Joosten.

Financial drip

But above all, The Blue Fable shows how KLM was almost continuously dependent on the financial infusion of the Dutch government in the past century. There were profitable periods, but every few years the company went to The Hague for another contribution from the state.

On the inside front cover of the book is an overview that the reader can keep at hand. Joosten lists all rescue actions of the Dutch government. There are 25 of them. For example: “1920-1940: Numerous subsidy contracts to cover annual losses”; ‘1928-1957: Amsterdam compensates annual losses at Schiphol’; “1994: Hundreds of millions of state aid after price war on the transatlantic route.”

Each rescue helps KLM move forward, but at the expense of the Dutch government and taxpayers. The financial risk almost never lies with investors, suppliers and banks, according to Joosten. When the then ministers Wopke Hoekstra (Finance, CDA) and Cora van Nieuwenhuizen (Infrastructure and Water Management, VVD) enthusiastically stated in the spring of 2020 that they would never let KLM go bankrupt, KLM’s investors, suppliers and banks knew enough. They could sit back and relax, according to Joosten, and in any case would not pay for the corona problems. According to the author, the government officials could not resist the call of the swan. Like so many before them.

A version of this article also appeared in NRC on the morning of January 29, 2022

The ‘blue family’ KLM has been on the drip for a century
Source link The ‘blue family’ KLM has been on the drip for a century

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