Transavia: Munich to be first base outside home markets, but Air France-KLM's LCC still lacks scale

Air France-KLM's low cost subsidiary Transavia will open its first base outside the group's home markets of France and the Netherlands. From Mar-2016, it will base four Boeing 737-800 aircraft in Bavarian state capital Munich. The airport will be Transavia's seventh base, after Dutch airports Amsterdam, Rotterdam/The Hague and Eindhoven and the French airports Paris Orly, Nantes and Lyon.

Flights from Munich will operate under Transavia's Dutch AOC, thereby presumably avoiding the need for agreement with Air France pilots, using mainly German pilots and cabin crew. However, Munich is by no means a low cost airport and Transavia will need to increase its initial fares, typically starting at EUR29 on many routes. The relative lack of LCC competition at Munich may be an attraction, but Lufthansa may eventually respond with its LCC Eurowings.

In addition to analysing Transavia's plans in Munich, this report also reviews Transavia's track record and compares it with the LCC subsidiaries of IAG and the Lufthansa Group. Judging by the size of its fleet, network and profitability, Transavia currently trails the other two. All three trail behind Europe's leading LCCs Ryanair and easyJet.