Thursday, November 3, 2016

Air France is a new company at reduced costs to resume growth – The Echoes

A project ” offensive “, intended to resume growth : such is the slogan of the project ” Trust Together “, which will be unveiled this Thursday by Jean-Marc Janaillac at the enterprise committee this morning, and then the analysts and the press. Four months after his arrival at the controls, the CEO of Air France-KLM will now have to convince of its ability to start from the front, after months of disputes and the status-quo. With, at the centre of the project, a novelty of size : the launch of a new company’s short-and long-haul low cost, which will be charged to resume the lines of the more onerous and to reopen those that Air France has had to give up.

A new company at reduced costs at Air France

The new company, designated provisionally under the code name of ” project Boost “, will be the spearhead of the growth. Fully integrated to Air France, it will retain the trademark Air France with an appellation complementary. Its pilots will be pilots of Air France posted with rules of use specific to the way of practice already in Transavia .

On the other hand, its hostesses and stewards (cabin crew) will be recruited from outside, with a specific work contract, less advantageous than that of their counterparts at Air France. In the long term, the company will also use the appliances more efficient : Airbus A350.

A dozen aircraft to the horizon 2020

However, if the costs will be reduced, the rates and the onboard service will be comparable to those of Air France, with an economy class and a business class offering a level of comfort comparable to long-haul flights for KLM. What to say to the management that it will not be a low-cost offers.

The objective of this new company, whose first long-haul flights could be launched in the summer of 2018, will be to derive a differential cost of about 20% with Air France. In order to be able to withstand the competition of the companies in the Gulf and asian, considered the actual adversaries on the long-haul.

30% of new lines

In total, the new company should be in 2020 about 10% of the offering long-haul Air France, with a fleet that would have to wait ten devices in the year 2020 and a network comprised of 30% of new lines and for the rest, of lines times to Air France, that would have had to be discontinued without this solution. Lines primarily asian, such as the servicing of Kuala Lumpur, recently suspended.

Serve Roissy-CDG at lower costs

The new company at reduced costs will also be positioned on the short and medium-haul, serving the hub of Roissy-CDG, become a source of significant losses due to the competition of low cost companies in europe. Again, it will use its own cabin crew, pilots and the Airbus A320 of Air France. It is expected to be, in the long term, 20% of the supply short and medium-haul Air France.

As for the long-haul, this new activity will be the subject of an agreement with the union organisations, for a start-up to the summer of 2017. However, in order to facilitate its acceptance, the executive agrees that the flight crew commercial Air France will not be impacted by the new regulations, and to ensure that business transfers are made without any impact on employment in Air France, over to retirement.

Transavia on the inner lines

at the same time, Air France will also continue the development of its low-cost subsidiary Transavia on its two domestic markets, France and Holland. Today confined to connections in Europe and in tourist destinations, Transavia France will be able in particular to operate domestic routes, departing from Paris or between cities of province. This should also be the subject of a renegotiation of the agreement with the pilots ‘ unions.

On the other hand, Air France will suspend the deployment of Transavia in Europe, outside of its two domestic markets, by lack of means. Moreover, for the sake of clarity, all the flights from Orly will in the future be operated by Transavia, or by Hop! Air France.

New effort productivity

This redistribution of the cards will also be accompanied by a strengthening of commercial partnerships, on the model of the joint venture it has developed with Delta, in order to reinforce the positions of Air France, as well as by a new effort of productivity that will be required of crews of Air France. The objective is to make further use of the devices to Air France, before generating the growth on the traditional offerings, without increasing costs.

As many points that will need to be negotiated with pilot unions and flight attendant, in order to reach agreements in the course of the first half of 2017, so as to be able to launch the new services from next winter. The more hard work remains to be done for Jean-Marc Janaillac, and the new director general of Air France , Franck Terner.


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