Air France-KLM CEO Jean-Cyril Spinetta, as quoted by Die Welt, said the carrier is planning its own LCC amid increased competition from LCCs on short and medium-haul routes. The LCC could be operated under the umbrella brand of KLM subsidiary, Transavia. The carrier has yet to decide whether the Transavia brand would be maintained for the carrier.
Air France-KLM could establish LCC under Transavia brand
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Ryanair's 117million pax in 2016 tops European airline groups. The first time an LCC topped rankings
For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
The big five can be expanded into a big seven to include Turkish Airlines and the Aeroflot Group, although these two had contrasting growth rates in 2016. A chasing pack of middle sized airline groups includes three LCCs (Norwegian, Pegasus and Wizz Air) and three legacy airlines with varying challenges to establishing sustainable profitability (SAS, Air Berlin Group and Alitalia).
Most of the faster growing airline groups in the top 20 are LCCs and the main growth drivers for Europe's big three legacy groups are their LCC subsidiaries. Just outside the top 20 are some fast growing legacy airlines in Eastern Europe, demonstrating the potential there. Nevertheless, unless there is a big merger or acquisition, Ryanair looks set to remain at number one for some time.
Air France-KLM: long haul low cost airline could be part of new CEO's vision as French Blue enters
Air France-KLM chairman and CEO, Jean-Marc Janaillac, who took charge in Jul-2016, has talked about the possibility of launching long haul low cost operations (Bloomberg/luchtvaartnieuws.nl, 20-Sep-2016).
If Air France-KLM were to enter this segment it would be the second of Europe's big three legacy airline groups to do so, after the Lufthansa Group. Ironically, there is no long haul low cost competition to Lufthansa in Germany. By contrast, IAG faces more such competitors in the UK than either of its two major rival groups in their largest home market, but currently has no plan for such an operator.
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.