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Fortune
Fortune
Phil Wahba

How KLM plans to grow despite government curbs

It's true in the airline business—and in any business. Sometimes the wind is at your back, sometimes it's all headwinds. And it's the latter weather pattern where KLM CEO Marjan Rintel finds herself these days. Like many companies, KLM had been banking on strong macroeconomic factors to power it through this year, but instead the company faces an uncertain global environment, a darkening outlook for global travel, and the added challenge of sometimes tense relations with regulators.

It's something of a feat that the tiny nation of the Netherlands birthed such a huge airline. With a population of only 18 million people, and virtually no need for domestic air travel, the Netherlands wasn't naturally the home of one of the busiest airports in the world. But KLM has played a role in making Schipol a global hub for people traveling elsewhere Europe, and the fourth largest in Europe after London Heathrow, Istanbul and Paris Charles-de-Gaulle. Formed in 1919, KLM had revenues of 12.7 billion euros last year, and flew 34 million passengers. It is now part of Air France-KLM, which last year ranked No. 7 globally among largest airlines. (KLM generates about 40% of total company revenue.)

For the Dutch government, that growth has proved to be too much of a good thing. Last year, under pressure from locals in densely populated Amsterdam to reduce noise caused by air traffic in and out of Schipol, the government lowered the total of flights allowed at the hub by 4% in 2025 to 478,000. (That brings back down to 2023 levels.)

With typical Dutch directness, KLM called the move "incomprehensible," arguing at the time that the move was unnecessary given its growing use of quieter planes and warned the government it could be hurting the country's overall economic development and place as a business hub. KLM has also slammed the Dutch government raising Schipol's airport fees by 41%, with Rintel saying it made Schipol a much more expensive airport from which to operate than most others.

"If you install all these kinds of local measures, it will kill the business, because people will go somewhere else," she tells Fortune in an interview at KLM's headquarters in Amstelveen, right outside Amsterdam. "Once it's gone, it's gone," she said. That somewhere else includes hubs like Frankfurt, which is nipping at Schipol's heels in terms of passenger volume, and Brussels, which has only a fraction of Schipol's long haul destinations.

Of course, Rintel has a vested interested in Schipol remaining a leading airport, with the airport and the airline's fates completely intertwined. KLM, whose initials stand for "Royal Airline Company" in Dutch, is struggling to improve its profitability, and in October the airline announced a plan to take out 450 million euros a year from its cost structure. It recently slashed hundreds of jobs.

To mollify the government, and to "future-proof" KLM, Rintel touts KLM's efforts to modernize itself, including investing 7 billion euros in refreshing its fleet with many new airplanes that make less noise, and which will cut carbon emissions. She also sees a future in electric planes to help European airlines hits their mandated green goals.

What she doesn't want to see is KLM missing out on the air travel boom she says will be long lasting beyond the current turbulence. She took note of Delta Air Lines warning in March that weakening consumer confidence could hurt business. But she sees the appetite for air travel as insatiable. She also considers travel an innate need for the people of her small country, one that has a long tradition of globetrotting, going back to the 1600's when the Dutch East Indies company was founded.

"We still see people want to fly. The flights are full, high load factors, and there are still solid revenues," she says. Rintel points as an example to the 1 million Indian citizens per months getting passports and to expansions at airports like London Heathrow and Copenhagen.

KLM's strategy to lure premium passengers

Like Delta, a partner airline, KLM has been working on the "premiumization" of its offering, or trying to generate more revenue with tantalizing perks to lure the better heeled traveler. Delta has trained its customers to pay up for top class seats, rather than giving them away as perks as it did for years, and to pay top dollar for lounge access, creating a bonanza for the airline. [Read Fortune's current cover story on Delta here.]

For KLM that means touches like a high-end lounge at Schipol with features such as massages, sleep cabins and quiet work areas. On board, that takes the form of business class seats that have lightweight doors to create a private compartment. (Rintel notes that Delta CEO Ed Bastian recently texted her say he'd recently flown on KLM for the first time in years and was impressed with its premium service.)

Despite the friction with the government over the number of flights allowed at Schipol, KLM has added a bunch of routes this year including San Diego, Hyderabad in India and more flights on existing routes such as Las Vegas and Edmonton, Canada.

Another tool for growth for Air France-KLM, considering potential limits to growth at home, is consolidation as it looks to keep up with rivals like British Airways, Emirates and new ones emerging like Saudi. Air France-KLM took a 19.9% stake in Scandinavian Airlines last year, and in March, Air France-KLM made a 300 million euro offer for a majority stake in the Spanish airline Air Europa. "You have no choice but to look around the world, right? The competition comes for you otherwise," she says.

But the cornerstone for KLM's growth will remain anchored in Schipol's importance. Before becoming CEO in 2022, she had led the national Dutch NS rail system, and early in her career, had worked at Schipol until 1999 in operational roles, where she developed an in-depth knowledge of how the airport works. She then joined KLM for 15 years in her first stint at the airline. It was precisely for that mix of backgrounds that she was ultimately hired to run KLM, experience that would make it easier to understand how to interact with the Dutch government and other stakeholders.

"If you know both companies from inside, it always helps you to understand the working relationships, understand the pain points, understand the need of working together, understand the basic of operations," she says.

And this, she says, is key to helping KLM remain a strong airline and fulfill its role in connecting the Netherlands to the rest of the world, all while addressing environmental concerns.

"We need to be proud in the Netherlands of who we are and what we did in the past and to preserve it for the future," she says.

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