Air France-KLM’s Brilliant & Surprising New CEO Pick

While the major European carriers have generally been doing pretty well the past few years, Air France has been the exception. I can’t think of an airline that has had more labor problems than Air France, to the point that these strikes have cost the carrier hundreds of millions of dollars per year.

Things got so bad that Air France executives were physically attacked by employees, and then earlier this year Air France-KLM’s CEO resigned, after being unable to make any headway with the unions.

Air France-KLM has been searching for a new CEO, and they’ve finally found one. I think they picked the best man for the job, but my gosh, I don’t envy the task he has ahead of him.

Benjamin Smith to become Air France-KLM’s next CEO

The board of directors of Air France-KLM has today appointed Benjamin Smith as Air France-KLM’s new CEO. He will take over the role by September 30, 2018, at the latest.

Currently Smith is the President, Airlines, and Chief Operating Officer at Air Canada, so he’s leaving that role.

He’s probably my favorite airline executive out there for a variety of reasons. For one, he’s the biggest aviation geek you’ll ever meet. Not that this necessarily makes one a good airline executive, but I’ve never met a guy who knows as many random airline and aircraft facts as him.

Much more importantly, he has a knowledge of the industry (and his airline) unlike just about anyone I’ve met. Ask him the seat count of every plane in Air Canada’s fleet, and he’ll be able to rattle it off.

Beyond that, I think Smith has been an incredibly competent leader at Air Canada. He is the guy behind Rouge, which, while not popular with passengers, has been a great success for the airline.

He has also led Air Canada in what I’d consider to be a very positive direction the past few years.

First of all, Air Canada has historically had huge issues with their unions, though he led negotiations with them, and labor relations at Air Canada are as good as they’ve been in quite a while.

Second of all, I tend to think that airline executives often have tunnel vision and take one extreme path or another. You have people like Scott Kirby at United (and formerly American), who can’t lift their head from their spreadsheet long enough to realize that the passenger experience matters, and conversely, you have people like James Hogan (formerly of Etihad — thank goodness he was fired), who spent money like a trust fund baby with a limitless credit card.

There’s a middle ground, yet not many people get that. Smith is one of them.

He hasn’t always done what’s most popular with passengers, but he gets that there’s value in offering a true premium experience, as we’ve seen Air Canada introduce a great new Signature Suite in Toronto, install reverse herringbone seats throughout most of their longhaul fleet quickly, add Gogo 2Ku to longhaul flights, and even offer chauffeur service to select business class passengers in Toronto.

That can be balanced with still offering a high density economy product, given that most people aren’t willing to pay a premium for a better economy experience (and those that are can pay for premium economy).

So I honestly have the utmost respect for him, and I think him leaving Air Canada is a huge loss for the airline, and this is also a huge win for Air France-KLM.

Here’s what Smith had to say about his appointment:

“I am very enthusiastic about this new opportunity. Air France and KLM are both airlines well known for the professionalism and commitment of their teams. I am well aware of the competitive challenges the Air France-KLM Group is currently facing and I am convinced that the airlines’ teams have all the strengths to succeed in the global airline market. I am confident in the Group’s capacity to become one of the world’s leading players. I look forward to earning the trust and respect of all teams, working together to win in this highly competitive and fast-changing customer service industry. I am approaching this new challenge with my passion for the aviation sector and with my deep willingness to listen to all stakeholders so we can work together and win. I have spent my entire career in this industry and I am convinced that the teams of the Air France-KLM Group are its strongest assets for its future success. I believe that over the past two decades I have developed very strong trust-based relations with my colleagues at Air Canada and I am looking forward to meeting the teams at Air France-KLM in September to begin working alongside them. I thank the Board of Directors of Air France-KLM to entrust me with this mandate”.

Air France unions are angry at Smith’s lack of Frenchness

That brings me to the second part of this, which is that I really don’t envy the job he’s taking on. Air France’s unions, and in particular their pilots, have been extremely unhappy for years.

They’ve complained endlessly about the status quo. Now Air France’s board is finally listening and changing things up radically, but the unions aren’t happy about that either.

Financial Times quotes Air France’s pilot union as saying the following:

“Regarding the candidacy of the next CEO at the head of OUR company, The inter-union organisation maintains that it is inconceivable that the company of Air France, French since 1933, falls into the hands of a foreign leader pushed by a rival industrial group”, said the unions in their statement on Thursday morning.

The unions added that “the choice of a candidate must be focused on the defence of the interests of our national company” and that they would be meeting on 27 August to decide how to proceed in September with further strikes already threatened.

I’m not someone who is inherently pro or anti union. I think there are examples of perfectly functional unions, like what Delta has with their pilots and what Southwest has with their flight attendants.

But the Air France unions, at least partly, are completely out of line. They’ve been unhappy and pilot strikes alone have cost the airline hundreds of millions of dollars. Now the board has enough of a vision to bring in an outsider, and the unions are angry that he’s not French enough, and that they’re handing over the controls to a “foreign leader.”

Do the pilots really think that they’ve had the “national interests” in mind for the past several years? Did they have that in mind when they stranded hundreds of thousands of passengers over the course of all of their strikes? And were they pleased by how French the previous CEO was?

Bottom line

Huge congratulations (or maybe condolences?) to Smith for this job, and I’m really excited to see what he can do. I have utmost respect for Smith, and I think it’s great that the Air France-KLM board is taking a leap of faith here in appointing a foreigner for the first time.

If the unions can drop their nationalistic attitude, I think there’s no one better they could ask for to negotiate with. I imagine for him there will be no pride at stake in negotiations, but hopefully rather a realization that both parties are working towards the same goal, which is running the operation as smoothly as possible in a mutually beneficial way.

Comments

  1. Isn’t he a former Flyertalker? One of the Ben S’s were — there were two of them in higher up positions at AC.

  2. The unions aren’t mad about his lack of Frenchness. They are criticizing him because that’s what they’ve got. They are mad about selecting an outsider they don’t suspect will be weak.

  3. I agree with Gary, since the Unions are more concerned with his foreignness than his experience.

    However, imo cultural repour is still very important, esp. in France of all places. Just because he had success with Canadian unions in his native country does not mean he’ll succeed in doing the same in a foreign country with unions who rightfully will view him as a foreigner without any vested interest in their society. Hopefully being Canadian he at least speaks some French. Otherwise, good luck.

  4. Well, it’s France. There are Strikes every week. Mostly we see Air traffic controller strikes but also trains seem to have their part of the problem.

  5. Expect the unions to announce those rumuored September dates for strikes! I do wish him all the best.

  6. This augurs well (I mean “very bad”) for a series of long lasting and repeated strikes which will finish sinking the company. My forecast for the next few months:

    – Complete unrest at AF with more strikes and violence as happened 2 years ago
    – KLM re-taking its independence
    – Collapse of Air France “A la Swissair” within 6 to 9 months.
    – Several weeks of complete confusion, then re-start of operations by JOON (which was only created for this), the way CROSSAIR took over Swissair’s operations. After a while, Joon will become “New Air France” dba “Air France”.

    Sad but long overdue.

  7. Ben, this sounds like you’ve met him personally. How come?

    I’ve read on Bloomberg.com that he speaks fluent french, no doubt an important factor in this decision. I also think he’s a great choice, but french unions are a tough nut to crack.

  8. Ben speaks fluent French – French Canadian that is, which French people from France tend to look down on. They need to get off their she-she-la-la high horse and focus on his credentials.

    It just shows you where their priorities are.

  9. I’m hopeful but also cautiously optimistic. It seems like the unions don’t even respect him and that never bodes well in any company.

  10. Re: FTer

    Ben Smith has an account, but didn’t come from there, he just made an account because he wanted to interact with customers.

    Ben Lipsey (his right hand), came from FT. As did Andrew Yiu, AC’s VP of product.

  11. Am I the only one who finds it interesting in his statement quoted above, every single sentence except the second one starts with ‘I’? Even reading it casually something stuck me as odd. You know what they say about people who write text where every sentence starts with ‘I’, ‘My’ and generous use of ‘me’ and ‘mine’…

  12. @ As — Because the direction he took the airline was completely unsustainable, and let’s keep in mind the major cuts started under him. So he went from one extreme to the other. The current management team is actually adding some services, so hopefully they create an airline that’s better/more sustainable.

  13. I do not share the enthusiasm for Mr. Smith’s appointment. He’s the man who was in large part responsible for the cheapening of the AC “experience”. The introduction of the limited Signature service is for the most part, overblown hype. One solitary lounge at YYZ, providing a fabric cover that goes over the often dirty seats and some new duvets to replace the worn out stock, is nothing to brag about. Signature Service is a partial return to some semblance of business class service that was previously there, and is a late attempt to try and protect its premium business, which better airlines like BR and CX have been siphoning off. Unfortunately, the quality of AC catering is still lacklustre. Yes there is labour peace at the airline, but that is due in large part to the leadership of the current CEO and the abilities of Chief Legal Counsel and his outside legal advisers and a host of other people who worked hard to make things better. There was also an effort by Air Canada personnel to improve. Mr. Smith is located in Montreal, and when he takes his flights on AF during his transition he is going to experience an airline that has some significant personnel attitude issues when it comes to service. However, he will also experience a quality of catering and wines that leaves AC in the dust. Mr. Smith was one of the people responsible for the travesty of AC’s F&B. He will fly on an airline that has healthy on time performance, unlike AC’s awful record. Yes, he was instrumental in forcing Rouge on customers; but he will not be able to do similar in France. the unions will stop him. No pilot will accept the downgrade and no FAs will accept those working conditions. More importantly, Europe is not Canada/USA. One can get away with reduced quality when the competition is United or American. In the EU, such a change would result in a swift loss of business because there are quality alternatives. This is why I say, enjoy your $3MM+ package because your time in Paris will be limited.

  14. @Ryan

    “Reduced quality in the US/Canada”? Sorry, but EU is the place where domestic business class means a economy seat with a blocked middle seat. That screams reduced quality.

  15. “French Canadian that is, which French people from France tend to look down on.”

    It’s not just an issue of snobbery.

    Spoken French Canadian can be difficult for Many French to understand. For instance, French Canadian movies are often subtitled in France

    Ever heard a person with an extremely thick Welsh or Cockney accent? It’s similar

    My guess is that the new CEO speaks French and French Canadian

  16. I worked in a management position in France and I had to engage with our unionized employees every day. Engagement works!
    As for his French Canadian accent, he can learn to adjust his accent so it is not so difficult to understand in France. Being adaptable and able to communicate with with those around you wins most times.

  17. @David. That is true, short-haul business in Europe is pointless. But I would say long-haul, European airlines are leaps and bounds ahead of North American airlines in service and quality…

  18. Some thoughs:

    France is currently on holidays… so few people cares really.

    He has been annouced by the French ministry of economy first before AFKLM: so basically President Macron is ok with him. Not sure if this really helps.
    Macron likes the young ones but when something get wrong (the Benalla case?)…

    He is employed by AFKLM.

    His offices will be in the aérogare des Invalides, 10 meters from the Seine river in Paris and not far from Macron offices over the Seine.
    AFKLM has something like 10 people working.
    Air France is in the city of Roissy-en-France, not in Paris.
    So what is he going to achieve?

    Let see anyway what happens.

  19. @Ryan. Agree with your sentiment here. AC service and on time performance are appalling. Rouge is a national joke in Canada. Plus everyone seems to be forgetting the current debacle surrounding Aeroplan. All of these happened under Smith’s watch. This does not augur well for AFKLM. Time to cash out of Flying Blue perhaps.

  20. I think the statement “He is the guy behind Rouge …” says it all. Why don’t we see any photos of passengers shoehorned into tiny rouge seats with their delightful 29 inches of pitch? Why are there no photos of passengers stuffed sardine-style into Air Canada’s high density 777s …. the 350-seat airplanes that they cram 450 people into by simply removing washrooms? Only someone who has ever been packed into one of those slave ships for a 12 hour flight can truly appreciate how agonizing the experience really is.

    Air Canada’s service and on-time performance are consistently rated among the worst in the industry. Good luck to Mr Smith, and good riddance.

  21. I am generally supportive of unions, and have been ever since I read Upton Sinclair’s “The Jungle” in high school. But opposing a new CEO because of his nationality is ridiculous. The purpose of a union is to secure good working conditions and high wages. The CEO’s national origin has nothing to do with either of those.

  22. Ben Smith was a horrible COO at ACA, you even said yourself that passengers aren’t happy with Rogue. He cut benefits for all unionized employees (except pilots go figure). Just because he knows cute facts about ACA aircraft doesn’t make him a great businessman. But you wouldn’t know because you never worked for ACA, you just fly around the world on loopholes.

    I’m shocked that a German like you would be so anti-union. Your bias for him is disgusting, maybe he gave you a happy ending in the new ACA business lounge during that preview event.

    I just lost all respect for you Lucky and I will never go on onemileatatime

  23. @Muhammad Shakhir.

    Disgusting tirade probably and hopefully worth a (long) suspension. YOU seem to be the one in direst need of a happy ending (*) whichever part of the world you are in (far away, I hope…).

    (*). Robin Williams in “Good Morning Vietnam”.

  24. What Air France needs to survive is a Robert Crandall (AA… very long ago), but they do not make them anymore.

  25. @Ryan,
    I’ve never flown AC, and you seem very familiar with their products so I appreciate your comment. However,

    I don’t really compare North American airlines with Asian ones, just not fair. It’s like comparing HS to pro sports. Different leagues.

    It’s been a race to the bottom for NA carriers in general. I’m flying out to Asia with SG biz and back with UA. If I expected UA to compare I’d end up dissatisfied. I plan on stuffing myself in Tokyo before I board my United flight. For my SG flight I might skip a meal before I fly.

  26. @ Bob Don’t fully understand your comments. AFKLM has 10 people ? And AF HDQ is at Roissypole , within the CDG airport complex and opposite terminal 2 and not Les Invalides

  27. @philipp. The Dutch had a big say in this. A non Frenchman with a ton of Airline industry experience. The board wanted the best man for the job, and one of the best and most respected airline CEO’s in the world: KLM’s Pieter Elbers. Due to the immense pressure on the AF-KLM relationship he chose to refuse the job offer and stay at KLM. In the meanwhile they appointed a KLM and Delta backed candidate, with experience and a non bias relationship to the French. KLM blocked multiple French candidates for the job. Time for change, or KLM will do everything in its power to step out of this marriage.the majority of the voting stakes in KLM within the AFKLM group are still in Dutch hands, due to landing rights. The Dutch will not let their money being flushed down the toilet in France forever.

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