Mark Arxhoek has been with KLM since 1988. He came to China two years ago as the regional commercial director for Air France-KLM, and was recently appointed as regional sales director for the country. He spoke to CHINA ECONOMIC REVIEW about the early recovery of passenger demand in China, tailoring services for Chinese passengers, and getting more kilometers per liter of aviation fuel.
Q: Things have been grim for a while, but the IATA released a report in June saying that we may have hit bottom. Have you seen any signs of flattening out or recovery?
A: Yes. The domestic market was not so much affected by the economic crisis. Demand had already picked back up in the first quarter. Slowly but surely we were starting to see some improvement in international traffic, but then we were confronted by the H1N1 virus, which has affected the Chinese market significantly. Halfway through the month of July, we saw a somewhat more relaxed approach from the government, and that has resulted in some demand recovery.
Q: Do you expect China to lead the way when it comes to recovering from the downturn in commercial air travel?
A: Yes. Last month our flights from China were fuller than we expected back in March. Globally, our passenger bookings picked up 0.7% in July. In China, both on the KLM and Air France sides, we slightly decreased our capacity but we significantly improved our passenger loads. That was the first sign we are headed out of the downturn.
Q: At present it looks like a lot of airlines are in a price war, or cutting routes. What are you doing to differentiate yourselves besides competing on price?
A: Even before the economic crisis, we were trying to get better service to the Chinese customers. We now have Chinese cabin crews on board KLM flights, and on the Air France side we have Chinese interpreters. We have full Chinese meals on board, in cooperation with the South Beauty restaurant chain. We just launched Chinese-language in-flight magazines. Those services have been accelerated as they fit into our strategic focus on attracting local customers at an earlier stage.
Q: Aviation fuel is pretty carbon-intensive, and now governments are considering applying emissions caps to it. What developments are going on to make airplanes more fuel-efficient?
A: The biggest thing is to get the most efficient aircraft. That is easy to say, but tough to implement. Still, we are doing a lot of fleet renewal, getting more efficient aircraft. Secondly, we try to change the way we do things. For example, by using a new kind of paint, we can reduce the weight of the aircraft. This paint also enables us to use more sustainable methods to clean the aircraft. Then there are improvements to things like trolleys, cutlery and so on. You can also make them lighter And we offer our passengers the chance to offset the carbon emissions of their trip by contributing to our renewable energy investment program.
Q: A lot of people have pretty high expectations for the Chinese aviation market. Do you think the expectations are unrealistic? Can it continue to grow like this?
A: If you look at the last couple of years, there has been 20% growth per year. I think there is no reason to expect that to stop. The question is whether the Chinese market will develop the same way as the US, where you see a few major international hubs, or whether it will feature more direct flights from different parts of China to the rest of the world.
Q: At present the Chinese airline market is pretty protected from foreign competition. Do you see any opportunities for greater participation by foreign players?
A: The Chinese market is no different from the US or the EU. Within the EU and US, you don’t see outside parties playing a role. I don’t think China will be different in that area. In terms of international travel, I think the opening up will most likely continue. However, "open sky" agreements like those between the US and India and Europe will probably take some time.