Pieter Elbers: Will KLM’s overachiever fit into IndiGo?
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Such is his popularity that in April 2019, around the expiry of his first term when there were rumours that he would quit, about 25,000 employees–71% of the Dutch carrier’s workforce—signed a petition demanding that he stay on.
“The loyalty to him from his employees is great, even after the tough decisions he had to take during the pandemic. That is an extremely important point about him,” said Kurt Hofmann, a global aviation expert and long-time acquaintance of Elbers.
Hofmann spoke about Elbers’ popularity and affability in the same breath as his achievements at the helm of the Dutch carrier: keeping the airline more profitable than its bigger, more famous partner Air France and less loss-making during the pandemic; quick, sharp decisions such as the one in December 2021 to buy 100 Airbus A320neo planes for KLM, primarily a flyer of Boeing planes, due to uncertainties around the American plane maker’s 737 Max planes; and most importantly the tough balancing of the tumultuous relationship between the two airline partners.
“It has always been a difficult relationship, rooted in basic differences in the Dutch and French ways of business,” said Hofmann.
The partnership has been marked with tussles between employees, demands from strong pilot unions at Air France and major differences of opinion between the top management groups of the two airlines, he added. Calming it all and pulling the airline steadily forward was Elbers.
In a letter accompanying the petition in 2019, the employees wrote:
“There would be a very real risk of unrest among the employees and unclear and potentially unstable management if Pieter Elbers were to be forced to step down.”
But the differences between the two airline partners ultimately led to Elbers’ exit in January, after 30 years at the airline, including 11 years at its board of management and more than 8 years (two consecutive terms) as its CEO, said Hofmann. In a statement that announced Elbers wouldn’t transition to a third term, KLM spoke of his “enormous track record and significance…” for the airline. Elbers called his career with “the Blue KLM family” an “unimaginably beautiful journey”.
When asked if the differences between Air France and KLM was a reason for his exit, a spokesperson at Air France-KLM referred to the official statement and didn’t offer any further comment.
Hofmann and other experts ET spoke to lauded Elbers’ handling of the airline during the pandemic which battered air travel across the world, leading to massive layoffs and losses. In 2020, KLM announced it would reduce its workforce by at least 20% in two years. In the same period, Air France would cut 6,500 jobs or 16% of its workforce.
In July 2020, the peak of the pandemic, Elbers said demand would only recover by 2023 or 2024.
But recovery happened sooner. At the operating level, KLM posted a profit of EUR127 million, more than double of Air France in October-December. That fell to EUR3 million in the traditionally weak and Omicron-impacted Jan-March quarter. But KLM’s earnings were better than Air France’s operational loss of EUR363 million in the same period. Air France-KLM posted a net loss of EUR552 million.
Elbers’ decision to join an Indian low fare carrier took many by surprise. Many said he would have been a better fit as the CEO of Air India. The erstwhile national carrier, now owned by the Tata group, recently appointed Scoot CEO Campbell Wilson as its chief. Scoot is the low fare arm of Singapore Airlines, Tata’s partner in Vistara. A senior executive at Egon Zehnder, the head hunter in charge of finding Air India’s CEO, didn’t comment whether Elbers had been approached for the post.
“Its ironic that the chief of Scoot is heading a full service carrier Air India, likely to be an integrated airline group shorly, while the head of KLM is going to IndiGo,” said a senior executive at an Indian carrier.
To be sure, Wilson has been a veteran at Singapore Airlines while Elbers oversaw the operations of KLM’s low fare subsidiary Transavia.
Elbers and Wilson’s appointments at India’s biggest and its most challenging airline projects respectively, also expose a dearth of capable Indian airline leaders, said experts.
“Indian aviation continues to be of interest and fascination to foreign executive talent. Executives are drawn to its hyper growth market dynamics and evolving maturity in operating models that are unique to India,” said Manish Raniga, a former senior executive at
and South African Airways.
“Indian airlines has more room for improvement in succession planning by focusing on developing the local talent pool and grooming executives for future leadership roles,” he added.
There is also acute skepticism given almost no expatriate has remained for long in an Indian carrier, let alone successfully led one. One of the few exceptions is Wolfgang Prock-Schauer, who will be Elbers’ colleague in IndiGo as its president and chief operating officer.
Hand picked by founder Rahul Bhatia-there was no head hunter involved-Elbers as IndiGo’s CEO, will have the onerous task of solving the airline’s internal issues and giving wings to his new boss’ global ambitions.
“IndiGo has controlled more than half India’s domestic aviation market for more than a year. The gravy train has trundled on for a long time. But things are not so smooth anymore. It’s yet to shake off the woes of Covid as a likely loss in the fourth quarter (after it swung to net profit of Rs 129.8 crore in the October-December quarter) will show. There are internal squabbles and a churn at the top management. Rivals such as
and GoAir have survived Covid19 leaving it with little room to expand its market share,” said the senior executive cited above.
Elbers, 52, will replace Rono Dutta, IndiGo’s CEO since 2019 who steered it through the pandemic. Dutta, 71, will retire.
In March, IndiGo said its chief commercial officer Willy Boulter will leave the airline in July, marking the second top level exit this year after its CFO Jiten Chopra was replaced by Gaurav Negi in the same month. The airline has also hired Vinay Malhotra, former group chief operating officer of VFS Global as head of international sales. Earlier, Bhatia, usually a hands-off promoter, took on the active role of managing director. His partner Rakesh Gangwal, IndiGo’s brain and driving force for the longest time, quit its board. This happened after a long legal battle with Bhatia primarly over clauses the airline’s articles of association and shareholders’ agreement.
IndiGo, already a leader in some of the short haul international routes, is now looking further out. A large chunk of the excitement within the company is centered on the Airbus A321 XLR, the stretched longer-range version of the most popular airliner in the world, to be delivered from 2024, which will take the airline to European destinations.
The experience of Elbers, who oversaw KLM’s operations in the Mediterranean, Japan and Korea and headed its global network and alliances, will be critical.
“Sure it will. But as a CEO, he needs to do much, much more.It will include setting IndiGo’s house in order, bringing stability to the team, shoring up the airline’s finances and charting out a vision for its future. It won’t be easy. And it will be interesting to see,” said an IndiGo executive.
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