KLM still growing at Amsterdam; UK and Norwegian markets important; three new routes in 2008

Lead Story: KLM
The Open Skies agreement between the EU and US saw KLM launch an Amsterdam – Dallas Fort Worth service on 30 March. “We are proud to add DFW International Airport to our prestigious list of business partners,” said Peter Hartmann, CEO of KLM Royal Dutch Airlines. “We look forward to providing the people of Dallas and Fort Worth a connection to Europe that gives them great service and freedom of choice.” The first flight was greeted with a windmill cake, while Erik Varwijk, EVP Commercial for KLM received the Texas State Flag from DFW CEO Jeff Fegan.

With almost 55% of all scheduled flights at Amsterdam Schiphol (AMS) airport KLM enjoys a dominant position at its home base. Offering a total of 119 non-stop scheduled destinations to 58 countries ranging from Brussels (just 158 kilometres away) to Lima (slightly further at 10,515 kilometres) the airline has compensated for a lack of domestic feed by focusing on other short-haul markets to create feed for long-haul flights. The second largest airline at AMS, Northwest, is a partner in the SkyTeam alliance and hence not a direct competitor, while Transavia.com is basically KLM’s own low-cost airline operating primarily to leisure destinations in and around the Mediterranean.

Airline Frequency share Capacity share Number of routes
KLM 54.4% 50.4% 119
Northwest 2.8% 5.2% 9
Transavia.com 5.1% 4.7% 42
easyJet 3.3% 3.6% 10
Air France 2.8% 2.5% 5
Lufthansa 3.0% 2.1% 3
Source: OAG Max Online for w/c 8 September 2008

Thus the nearest thing KLM has to a major competitor at AMS is easyJet which operates to just 10 destinations, seven in the UK, two in Switzerland and Milan Malpensa. Apart from easyJet, other foreign LCCs competing at AMS include Aer Lingus, Air Berlin, bmibaby, clickair, Jet2.com, SkyEurope, Sterling and Vueling. LCCs (including Transavia.com) have around 14% of scheduled capacity.

Monopoly on 45% of flights operated

Image: KLM airline
KLM is the only carrier on 61 routes (45% of its total) from Amsterdam. It faces competition from two airlines on 10 routes, or 14% of flights

KLM is the only carrier on 61 of the routes it operates, representing 45% of its ASKs from the airport. On around 14% of flights (10 routes) it faces competition from two other airlines. Seven of these routes are within Europe (Copenhagen, London Heathrow, Milan Malpensa, Oslo, Prague, Stockholm Arlanda and Vienna) the other three being Aruba, Toronto and Tripoli. The only route on which KLM faces three competitors is Barcelona where clickair, Transavia.com and Vueling all provide ‘competition’. Given Transavia’s links to KLM and the imminent merger of clickair and Vueling maybe this route is not as competitive as it at first appears.

Chart: KLM at Amsterdam
Source: Derived from OAG Max Online data for w/c 8 September 2008

On KLM’s monopoly routes, six of the top 14 (as measured by weekly frequency) are in the UK, with Aberdeen, Glasgow, Humberside, Manchester, Newcastle and Norwich all served at least four times daily. KLM also has a monopoly on six routes to Germany (Bremen, Cologne/Bonn, Dűsseldorf, Hanover, Nuremberg and Stuttgart) and five to Norway (Bergen, Kristiansand, Oslo Torp, Stavanger and Trondheim).

Importance of UK and Norwegian market

Measured by frequency, the leading country markets for KLM from AMS are the United Kingdom (465 weekly departures), Germany (321), Norway (141), France (136) and Italy (126). A total of 14 UK airports are served from AMS (British Airways serves just five UK airports from London Heathrow) with the hope of attracting UK passengers to use Amsterdam as their transfer point for more exotic destinations that cannot be served non-stop from their local airport.

Norway is the third biggest country market as measured by frequencies with six destinations served (five without competition). The USA is the leading country market (as measured by ASKs) taking a 17.7% share, well ahead of Canada (6.2%), China (5.8%) and Japan (4.9%).

Dallas, Linkoping and Panama added in 2008

Image: KLM
Among the three new destinations KLM has added from AMS this year is Linkoping in Sweden. It operates the route twice daily with Fokker 70.

Last year, KLM’s scheduled passenger numbers increased by 3.3% to 23.2 million. So far this year passenger growth has been at a similar level. In 2008 so far, three new destinations have been added from Amsterdam, all at the beginning of the summer season. These are Dallas/Fort Worth (daily), Linkoping in Sweden (twice daily with Fokker 70) and Panama City (thrice-weekly with MD11s).

The decision was recently taken to end the last domestic service from Amsterdam to Maastricht. The 170 kilometre, thrice daily service will cease at the end of the current summer period.


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