KLM warns of more flight cancellations due to high fuel costs

Dutch airlines are feeling the effects of rising fuel prices. KLM has warned that more flight cancellations are possible after the summer and Transavia is set to make major budget cuts, not ruling out layoffs, due to high kerosene costs.

KLM could cut flights to reduce expenses

KLM CEO Marjan Rintel has warned that if fuel prices remain high, more European flights could be scrapped after the summer. The Dutch flag carrier already cancelled 160 flights in the lead-up to the busy May holidays. 

“We are being hit hard by fuel prices this year. Therefore, we must temporarily take extra measures to quickly reduce our expenses. But the question is, of course, how long the situation in the Middle East will last,” Rintel told De Telegraaf. Rintel aims to bring KLM’s margin to 8 percent over the next four years

Fuel prices aren’t the only concern, as the new aviation tax also has airline executives worried. The government plans to introduce a long-haul aviation tax from January 1, which would see travellers paying 48 euros per person for medium-haul flights and 72 euros for long-haul flights. 

“With the aviation tax, the Netherlands will soon be eight times more expensive than the European average. A family flying to Morocco will soon spend well over 190 euros in taxes alone,” explains Rintel. There are concerns that this will drive more travellers to fly from Germany or Belgium. 

Düsseldorf Airport, for example, has seen the number of Dutch travellers grow by 85 percent between 2019 and 2025 due to the introduction of the aviation tax in the Netherlands.

Transavia to make major budget cuts

Transavia, a subsidiary of KLM, is also facing problems due to fuel prices. With the newly appointed CEO Paul Terstegge planning to raise the airline’s gross margin from 1 percent to 8 percent to pay for new Airbus aircraft, budget cuts need to be made elsewhere.

“We need to try to compensate for the more expensive kerosene elsewhere. The new Airbus aircraft have 23 percent more seats, so that will generate more revenue, in addition to a general cost reduction,” Terstegge told De Telegraaf. 10 million euros in indirect costs will be cut, such as those for headquarters.

Over 3.500 people work at Transavia in the Netherlands. "I cannot rule out that jobs will be lost. We are trying to absorb this as much as possible through natural attrition," says Terstegge. "In a number of places, this could mean reorganisations, but we are not there yet."

While the airline could make cuts to its staff, there are no plans as of yet to cut more flights. Transavia recently scrapped flights in May and June, mostly to and from France. However, Terstegge believed that in the Netherlands, there shouldn’t be a fuel shortage and that the airline is “fully executing our summer schedule”.