Air France launched (07-Jan-2013) its new economy class fare structure on its short and medium-haul network including 58 destinations. The product is on sale from 07-Jan-2013 for travel from 06-Feb-2013 and will allow customers to choose between the all-inclusive Classic product or the MiNi product which does not include checked baggage or mileage accrual. Air France chairman and CEO Alexandre de Juniac said, "With this new fare range that makes the Air France quality of service accessible to all, Air France is continuing to implement its Transform 2015 plan, which aims to put the customer at the heart of its development strategy. This initiative is in addition to the renewal of the commercial offer launched in October 2012 with the strategy of moving upmarket on the medium-haul network." The new base fare for the MiNi product will be EUR49 with checked baggage able to be purchased online for EUR15 or at the airport for EUR30, according to reports from Voyages d'Affaires, Air Journal and Journal de L'Aviation. Classic fares begin at EUR70. [more - original PR]
Air France launches new economy class fare structure on short/medium-haul network
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Air France-KLM management told analysts on a conference call in May-2016 that it was sceptical about the sustainability of year-round profits for long haul low cost. However, new competition has prompted Mr Janaillac to look more closely at this market segment. Since Jul-2016 Norwegian has commenced trans-Atlantic long haul operations from Paris CDG. In addition, since Sep-2016, the new-start long haul LCC French Blue now flies on routes to the Caribbean. Mr Janaillac is expected to report on his strategic vision for Air France-KLM in early Nov-2016. Labour relations will be crucial to the group's development – not least in the area of long haul low cost.
Air France-KLM: margin grows, but performance and profit below IAG & Lufthansa airline groups.
The first of Europe's big three legacy airline groups to report results for 2Q2016, Air France-KLM improved its operating margin and still expects higher operating free cash flow for FY2016. However, it remains less profitable than the other two big legacy groups, IAG and Lufthansa, and is still reluctant to give a profit target for FY2016.
Air France-KLM's commentary on the outlook implies that it now expects to make a lower profit this year than previously anticipated, even if this is likely to be higher than in 2015. In effect, this completes a full set of profit warnings from the big three legacy groups, since IAG and Lufthansa have already signalled a lowering of their profit outlook for 2016.
By contrast, LCCs have generally been more positive in their 2Q reporting and outlook (with the notable exception of easyJet). All European airlines have highlighted a weakening outlook for unit revenue, due to industry capacity growth plus geopolitical and macroeconomic risks, but low cost airlines such as Ryanair and Wizz Air appear better placed to cope with this outlook, given their lower unit costs. At this point in the cycle, new Air France-KLM CEO Jean-Marc Janaillac will need to balance growth against productivity.