He joined SWISS as CEO in July 2009 and has been navigating the company through strong headwinds. For inspiration to build a hardy future for SWISS, Hohmeister tells Raini Hamdi he looks to everywhere but the airline industry
SWISS posted a CHF24 million (US$26 million) operating loss in the first quarter. Why?
Yes. Three reasons. One, increased fuel prices and we did not have the hedging we had in 2011. Second, the Swiss franc is a strong currency not just against the US dollar, yen, British pound, etc, but the euro too, so we’re sitting in a high-cost island compared to the rest of Europe and are 20 per cent more expensive than other European carriers just through the currency strength. Third, while central Europe is quite strong, all around us is getting weaker and weaker. We also depend on this traffic and therefore are affected by the structural problem Europe has.
You’ve been implementing future-oriented initiatives as part of SCORE, Lufthansa Group’s Change for Success programme, to strengthen SWISS long-term. Is this helping?
Yes, we have 128 projects – we have more projects than people (laughs) – and by this year, I expect we will already see a turnaround, and by 2015, we will be back on track.
It is not about cost-cutting but about investing in new aircraft and technology, and redesigning processes, especially in areas such as distribution, efficiency management and productivity.
We have to reinvent ourselves because the European industry is in a structural change and if we don’t follow this change, we will not survive. Many airlines already went bankrupt in Europe or had to shrink dramatically. Therefore we have to rebuild ourselves somehow structurally, while guarding our position as a premium airline. So we really have to rethink everything, consider doing things differently or not doing them anymore.
Why aren’t there strikes at SWISS, as there have been at Lufthansa?
Lufthansa is a different company.
But it owns you.
But that does not mean it is the same company. We are a medium-sized airline. We operate close to 100 aircraft, not like Lufthansa with 400 aircraft, Air France with 300 or British Airways with 200 aircraft. These are huge machines and there, process management is important. For SWISS, people management is more important than process management because of the size of our company. So I know many of our captains, co-pilots, flight attendants, etc. And when I am at the shopping centres, for sure I would meet 10 to 15 people (laughs) who would come up to me and say, ‘oh, I have to tell you something’. So it’s very hands-on. This also makes us different in that we can be faster at decision making and implementation.
How do you motivate your staff?
It’s not easy to ask people to work more, but I think we are realistic people. We look around and we see that our competitors are no longer the former state-owned companies but state-supported ones such as Emirates, Etihad Airways, etc, which have lots of money and can undertake many opportunities.
As well, I think our employees are motivated by our commitment. The latest example is the management (board members) forgoing five per cent of their salary (from July 1 to end-2015).
Our people also understand that a restructure takes time; we’re just in the middle of it. But they are seeing a lot of ideas and innovative plans for the future, which is good.
In securing a sustainable future for SWISS, which airline do you benchmark with?
For me it is simple – forget benchmarks; we have to find our own way. An airline is a commodity business; without its own profile, it is not a special product. So we develop our own new first class, new check-in procedures, new pricing concept, etc. Of course we look at what our competitors are doing, but we don’t copy what they do.
In fact, we look outside the airline industry, for example, to the banking sector, to see what we can adapt, or to a country like Japan. We have brought the kaizen (Japanese word for change) attitude into SWISS. We sent a team to Japan for training, then we reviewed how it could be implemented effectively for us.
I’ve always said, we have to learn from other industries, not ours. It’s also more fun. Why should I benchmark with an industry that is in itself bankrupt? In every aspect – financing, balance sheet, cost management, system management – don’t benchmark with airlines, it does not make sense.
What could you possibly learn from banking these days.
(Laughs) Yes, lately, I’m not sure if we could learn a few management lessons from them, or they from us.
But when you see an ATM dispensing cash – that’s a technology we airlines now use for check-in, borrowed from the banking sector. In the future, I believe we don’t need the check-in machines at the airport anymore; with the SWISS app, you can check in with your iPhone or Blackberry. Banks are now copying that from us; in Switzerland, UBS, for example.
So what initiative are you proudest of to date?
Our social media approach is one. In Switzerland, we are the company with the highest social media penetration. And we have only one person behind it, not a huge team! I’m also proud of our customer service, not just through the call centres but our personal care centre which looks after our top 10,000 customers. Our people follow the itineraries of these customers – if he is stuck somewhere, they will help him immediately and automatically; he does not even have to call. Other airlines only have, say, different access times only for their valued customers. I think we’re innovative with our customer service concept and with contact management through social media.
What’s your strategy for Asia?
We’re close to the end of our current strategy in Asia and now we must start to think of the next phase. We’ve been growing to Asia in the last few years, opening up New Delhi in 2007, Shanghai in 2008, Beijing in 2012 and now Singapore (direct daily Zurich-Singapore service took off in May, see TTG Asia e-Daily, May 14, 2013). That’s one new destination between Asia and Switzerland every year or every second year, which is quite aggressive.
Now we need to lean back and think of the next steps. The Asian markets we have entered – Singapore, Beijing, etc – are quite huge for us; everything afterwards will be smaller, which will not fit well with our fleet strategy (SWISS has ordered a fleet of B777-300ERs which will be delivered by 2016 or 2017). The aircraft will bring 50 per cent more seats than the A340-300, so in the future we will have bigger planes, smaller markets.
So what to do? We don’t know yet. Anyhow, there is no pressure now to open a new Asian connection as SWISS is well covered with eight Asian destinations. I believe Asia will grow further, so new opportunities will arise in the next three to four years.
What are your flying habits like on SWISS?
When I enter the aircraft, I say hello to the maitre’d cabin, then I knock on the left-hand door to the cockpit to say hello and sometimes they invite me to stay. Sometimes, we discuss fleet management and pilot salaries in the cockpit. If I’m travelling longhaul, I’ll go to the galley and talk to the crew.
