Enough is enough

At the end of 2014, Finnair CEO Pekka Vauramo told his staff they had done enough towards the airline’s turnaround. Is this a lesson other European airlines can learn from, or a fantasy in today’s hyper-competitive market?

When Vauramo joined Finnair, the airline was midway through a €200 million ($217 million) restructuring plan. He knew he wasn’t going to get a simple agreement from his staff, so he controversially extended the timelines to make sure he had labor buy-in.

“To build trust, you need credibility. I thought it was not going to end nicely. At the end of 2014, we achieved what we needed to achieve. I made a key, simple statement: “It’s over now.” People still ask what happens if we don’t succeed; I can’t give guarantees [but it is enough for now].”

Vauramo said this simple phrase – “it’s over now” - completely changed the atmosphere of the airline. “More than half of our personnel are customer facing. Our cabin crew each have 20,000 passenger encounters a year. If we want to succeed in all 20,000 encounters, we have to make sure they are motivated to come to work every day. The smile is back, the service is different, but we didn’t change the product.”

I heard this story just after visiting Paris for the launch of Air France-KLM’s third major turnaround strategy over recent years. This is a plan aimed at bridging Air France-KLM’s labor rift, yet Air France-KLM chairman and CEO Jean-Marc Janaillac’s comments seemed a little flippant for an airline trying to make peace with its staff: “I would say [the response] was ‘not negative,’ rather than ‘positive.’ These are French unions; it would be a bit worrying if their response was positive,” he said.

The difficulty is that those people who are responsible for thousands of customer interactions are constantly being asked to give more. They then protest fiercely at those demands in equal measure. This deters the very passengers that the airline is trying to keep, handing over business to rivals and kicking off a new lap of the vicious circle that will only end in self destruction.

Air France-KLM is not alone. Just days after I spoke with Vauramo, one of Lufthansa’s unions threatened strike action. “Lufthansa has not been able to adjust its salary for more than five years, while Lufthansa has made a profit of over €5 billion ($5.6 billion) over the same period. In addition, inflation has led to a significant drop in purchasing power during this period,” the union said.

It is easy to understand why labor groups get sick of being asked for more. Yet competitive pressures are fierce. Airlines with outdated structures have to become more efficient to survive. When labor demands more, it could ultimately cost them – and all their colleagues - their jobs.

The sad truth is that some of European network airlines are sitting at the wrong end of every labor-productivity graph, giving rise to fierce ultimatums between productivity agreements and job cuts. There is an us and them mentality. It’s a battle, rather than a partnership. Management are trying to win back power from their unions, who have held the upper hand for a long time and are not giving up without a fight.

The critical part in the Finnair story is that absent guarantee. It may not be possible to say “enough is enough”, but “enough for now” might be the words that airline staff are waiting to hear.

Victoria Moores [email protected]