Loading

Air France's modest Boost looks pale against KLM's lower unit cost & better productivity

Air France remains the poor relation of the Air France-KLM Group. Although bigger than KLM, it has had a lower operating profit margin every year since the 2004 creation of the group. Crucially, and in spite of improvements, Air France continues to be burdened with lower labour productivity and higher unit costs than KLM and other peers. Moreover, its margin is one of the lowest for a European airline.

Air France's growth has been constrained by its poor financial performance, but this has also helped to ensure its survival. Even in a group where political considerations can influence strategic developments, the logic of committing resources where they generate the best returns has surfaced. KLM has outpaced Air France's growth both in capacity and in revenue – particularly in the past five years. It is increasingly difficult to envisage the group approving a meaningful return to growth for Air France without significant labour productivity improvements.

Against this background, plans for a new airline based in Paris with lower costs and higher labour productivity are vital to Air France. However, ambitions for the so-called Boost project are limited while Air France-KLM already has a lower cost airline with higher productivity.

It's called KLM.

This CAPA Premium Analysis article is 3,874 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com