Digital Transformation Project team 26: KLM
The “Koninklijke Luchtvaart Maatschappij” (Royal Dutch Airlines) was founded in 1919. It is the oldest airline company in the world, still operating under its original name and is focusing on three core activities: passenger transport, aircraft maintenance and cargo. With the company’s vision they aim to be at the front of the industry. KLM wants to be a company that grows profitably for its shareholders, to be an attractive employer for its staff, and wants to be the customers’ first choice (KLM, 2013). We also see customer service as an import part of a business model since service range does not cover this part of the business entirely. Customers with questions or problems, regardless of their service range, should be treated equally and fair. Furthermore, we think the most important parts of the aviation business model, are the network structure – with Schiphol as their main hub – and the services they offer to distinguish themselves from the competition.
KLM stresses the importance of Information and Technology in their 2007/2008 Smart Leadership Annual Report by stating:
“Information and communication technology is essential for an airline that aims to offer safety and reliability on a 24/7 basis.” (KLM, 2008)
Two of the most important objectives that KLM tries to achieve through its IT goals is operational reliability and security, because “without advanced ICT systems, our company would be unable to operate”, according to Boet Kreiken, Executive VP of Information Services and Chief Information Officer. (KLM, 2008) Next to cost-reducing innovations such as electronic check-in, the annual report mentions the importance of its customer relationship management systems that are vital in ensuring the best possible response to our customers’ wishes (KLM, 2008). This is translated in one of KLM’s core strength, namely interaction with their customers via social media. Recently, KLM stated that the company earns €25 million per year through its social media activities (Leeuwen, 2014).
Because of KLM’s strong focus on service we believe that we can add value by introducing a new technology in this area. There are many technologies emerging or potentially disruptive right now. We decided to hold on to their social aspect and their incredibly high service level when looking into the potential role of a new technology for KLM. Therefore, we choose the Virtual Reality experience as disruptive technology because it fits KLM’s existing business model. The Virtual Reality experience fits in because it can help improve the overall travel experience by making the idle time more useful for passengers. Air travel is considered to be a commodity. KLM differentiates itself by focusing on offering a better service range. By offering a better experience and service than its competitors that are competing on price, KLM will be able to maintain a higher ticket price. Unique experiences such as the proposed virtual reality experience will help realize this goal.
As a first mover in the area of virtual reality technology, KLM will be able to reap the benefits from their first mover advantage while this technology will evolve over time, having the potential to create even more value than projected at this moment.
Air France KLM, (2013) ‘Our achievements’, Annual Report 2013, pp.10-14
KLM, (2008). Annual Review Smart Leadership 07/08. Retrieved October 6, 2014 from KLM: http://www.klm.com/corporate/en/images/annualreport07-08_tcm729-335892.pdf
Leeuwen, R. V. (2014, September 8). KLM VERDIENT JAARLIJKS 25 MILJOEN VIA SOCIALE MEDIA. Retrieved October 6, 2014 from MT: http://www.mt.nl/591/87177/innovatie-in-2014/klm-verdient-jaarlijks-25-miljoen-via-sociale-media.html