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Air Austral is an airline based at Roland Garros Airport in Sainte-Marie, Réunion, a French territory located in the Indian Ocean. Until 2012, the airline offered a highly ambitious set of scheduled and charter services to destinations in Africa, Europe, the Indian Ocean, Asia, and Australasia.
Air Austral announced in 2009 an order for two 840-seat Airbus A380s, to operate on its high-density route between Réunion and Paris, with talk also of services to the Asia Pacific region, including Australia, where it then operated with 777 equipment.
After suffering substantial losses and a partial bailout by the government, new CEO Marie-Joseph Male initiated a major restructuring programme in 2012 which involves selling the airline's two Boeing 777s, reducing the network and reportedly cancelling the A380 orders.
Location of Air Austral main hub (Saint Denis de la Reunion Gillot Airport)
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Air Mauritius is well on the road to recovery, a year into a five-year plan that aims to implement a new business model that restructures its operations to become less dependent on traditional, but flagging, European markets and instead turn the airline’s focus to the growth markets around the Indian Ocean Rim and Asia.
A seven step recovery plan launched in Feb-2012 as profits crumbled into losses saw Air Mauritius undertake a major network consolidation which involved withdrawing its services to Germany, Italy and Switzerland as well as service reductions to China, Australia and Africa. But, with its network brought back into balance, and profitability restored, Air Mauritius has resumed a growth path with plans to launch a direct service to Beijing and reinstating some suspended routes and capacity in key markets.
Reunion-based Air Austral and French carrier Corsair International are at loggerheads, with Corsair claiming Air Austral received state aid when the local government of Reunion subscribed to the recapitalisation of the airline in Jul-2012. Regional authorities injected EUR63.5 million in the financially struggling airline, increasing their indirect shareholding in the company from 47% to 95%.
Air Austral gained worldwide notoriety in Jan-2009 when it signed a MoU with Airbus for the purchase of two A380s in a “low-cost” single-class configuration with around 840 seats. The airline so far is the only operator to have ordered the A380 with such a high seat density. However, the fate of the two Air Austral aircraft is uncertain with reports claiming the order has been cancelled. Air Austral’s A380 were scheduled for delivery in 2014.
Hardest hit from the European economic situation, aside from the carriers that have collapsed, are far away from continental Europe in the Indian Ocean, which contains the self-proclaimed Vanilla Islands grouping of countries: La Reunion, Madagascar, Mauritius and Seychelles. These nations' carriers are largely dependent on European leisure traffic, which has evaporated in the dual threat of weakening economies and high fuel prices that provide no stimulation to whatever demand is left.
The starkness of the situation has been demonstrated most recently by Air Austral, which over the northern winter will reduce its long-haul network to a single destination and will postpone – or possibly cancel – its order for two Airbus A380s, following it being unable to pay for a new Boeing 777 awaiting delivery. Air Austral is also looking to partner with Air Mauritius to maintain a connection to Australia, a further sign that the situation in Europe is forcing the Vanilla Island carriers to make medium/long-term strategy changes that will finally strengthen them. Etihad Airways earlier this year acquired a stake in Air Seychelles and is now lending management oversight to the Seychelles flag carrier while the region's other carriers have conducted overdue network reviews.
When the latest A380 delivery to China Southern occurs at the beginning of March, there will be 70 Airbus A380s criss-crossing the globe. With close to 30 more expected to be delivered over the year, the in-service fleet will approach 100 by the end of 2012.
This year, two new operators – Thai Airways and Malaysian Airlines – will join the existing seven airlines family of A380 operators. Airlines are still finding the sweet spot in terms of A380 seating but more and more configurations are edging above 500 seats, after much experimentation.
Air Austral’s decision to reverse its suspension of Bangkok, Sydney and Noumea services comes shortly after Etihad Airways and Air Seychelles signed a strategic partnership, including Etihad taking a 40% stake and injecting USD45 million into the cash-strapped national carrier of the Seychelles. Prior to the Etihad agreement, Air Seychelles had reached an agreement with Air Austral for the La Reunion-based carrier to operate twice-weekly service from the Seychelles to Paris CDG.
That capacity deployment was due to commence on 27-Mar-2012, right after the 26-Mar-2012 suspension of twice-weekly Reunion-Sydney-Noumea service and shortly after the 20-Mar-2012 suspension of the weekly Bangkok frequency. Air Austral cited high fuel prices and unfavourable economic conditions.
Under what has been dubbed a “restructuring effort”, Air Seychelles has cut 77% of its total seat capacity. Between Nov-2011 and Mar-2012, the airline will cut all routes except for its domestic services, which includes one scheduled service to Praslin Island and a handful of chartered services operated on behalf of hotels, and its twice weekly service to Mauritius. The carrier in Oct-2011 had a restructuring plan, CEO changes and corporate re-branding, which were intended to result in a renewed focus on high-end tourism, as CAPA wrote at the time. Just two months later, the carrier announced deep capacity cuts, suggesting more drastic measures were needed.
Fellow Vanilla Islands Group (an affiliation of the island nations Seychelles, Madagascar, La Reunion, Mauritius and Comoros that are supposed to work together to promote tourism and investment) carrier Air Austral, based in La Reunion, will also make capacity cuts to its long-haul network although it is looking to Asia Pacific and remains intent on keeping its European services operating. Meanwhile, Air Mauritius recently reported an unexpected net loss in its 2QFY2011 results, Air Madagascar can only operate to the European Union through a charter agreement with EuroAtlantic Airways due to its presence on the EU Airspace blacklist, and Comores Aviation only operates a handful of destinations around the Vanilla Islands Group and Eastern Africa. Overall, future prospects for the group look bleak unless collaboration efforts are taken more seriously.
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