Since the deregulation of airlines in the United States in the 1970’s, we have witnessed countless mergers, take-overs, and joint ventures form. From TWA and American Airlines to United and Continental, airlines seem to continuously fold into one another. However, one airline continues to be a true inspiration of endurance and stability. Across the pond, we will analyze the success of KLM Royal Dutch Airlines. Learn how the airline uses Six Sigma principles to continue its famous title as the “World’s Oldest Airline”.
Introduction to KLM
KLM Royal Dutch Airlines is the national airline for The Netherlands. Beginning operations in 1919, KLM founded itself in the province of Noord-Holland near the city of Amsterdam. At the time, Amsterdam’s Schiphol Airport was a fraction of the size it is today. Likewise, the airline’s focus was on transporting passengers and freight to nearby cities, such as Brussels, London, and Paris. However, it wasn’t until after World War 2 did the airline really take off.
Hub-Focused Business Model
When you think of airlines, you first thought is, of course, the airplanes. Yet, for KLM, it’s the airport. Amsterdam Schiphol Airport is now one of the largest and busiest airports in the world thanks to the guidance of KLM’s business model. Most airlines in the United States operate numerous hubs, fly to hundreds of destinations, and have upwards of 1,000 airplanes. KLM, on the other hand, focuses on one specific hub; Amsterdam. By maintaining one hub city, the airline operates what is known as a hub-spoke model. That is, instead of operating numerous flights from various cities, most all flights originate and depart from Amsterdam. This business model follows the idea of constant improvements towards efficiency which Six Sigma promotes.
Next, instead of focusing strictly on passengers, KLM looks towards cargo. While all airlines to an extent ship cargo to their destinations, most do not offer separate cargo services. The Royal Dutch Airline, on the other hand, took this opportunity to do so. In order to offer affordable and profitable cargo services, KLM revised their long-haul operations with the Boeing 747-400 combi. This modified Boeing aircraft uses nearly half the fuselage to ship cargo. Typically, all cargo rides underneath the main deck of aircraft. However, with the 747-400 combi, airlines can store more, larger cargo near the back of the airplane. This decision to invest in a new aircraft follows the DMAIC process. The airline wants to ship more cargo but does not have the space to do so. What is the most economic decision? For KLM, it’s to invest in a new aircraft that focuses on both cargo and passengers.
Although there are numerous variables that have led to the success of KLM, all revert to the principles of Six Sigma. When you focus on providing a superior service that works within your limitations, your organization can flourish and grow naturally. As the Dutch national airline continues to operate, it will face new challenges with each achievement. However, by sticking to the methods of Six Sigma, KLM can continue to be the oldest airline in the world!