Air France still blighted by pilot strike
Air France is expecting to operate 46% of flights Wednesday and 47% of flights Thursday, as it comes under increasedpressure to ditch itsTransavia Europe plans.
On Wednesday, Air France anticipated that 52% of pilots would join the strike, building to 62% on Thursday. It is urging all passengers with reservations before Sept. 30 to postpone travel plans or change bookings at no extra cost.
“Air France regrets this situation and is making every effort to minimize the inconvenience this strike action may cause to its customers,” it said in a statement.
The strike, which started Sept. 15, is over Air France-KLM’s plans to set up Transavia Europe as a new airline—alongside its existing Transavia Netherlands and Transavia France units—with its own air operator’s certificate (AOC) and pay scales.
French Prime Minister Manuel Valls has urged Air France to find a solution to end the deadlock, even if it means abandoning the Transavia Europe plan altogether. An Air France spokeswoman said senior management was scheduled to return to union negotiations Wednesday afternoon.
Speaking at the release of Perform 2020 on Sept. 11, Air France-KLM chairman and CEO Alexandre de Juniac said the group is facing intense low-cost competition at Amsterdam, Paris Charles de Gaulle and Paris Orly, which needs to be addressed. “It is a defensive tool, but first and foremost it is offensive,” he said.
De Juniac said Transavia has a “very decent” cost base, compared with rivals like Ryanair, easyJet and Norwegian. “There are probably too many of us. I believe Air France-KLM can truly participate in the consolidation of the market. We want to be in the top five European low-cost carriers by 2017 and we have set ourselves an ambitious profit margin target of 5%.”
At the time, he said Transavia Europe was planning to start operations in five to 10 markets outside France and the Netherlands over that period, and was aiming to rank as number two or three in those countries.
Bram Graber, who will head the three Transavia airlines, said Transavia Europe will be more competitive than Transavia France or Transavia Netherlands. It would not operate to and from the existing Transavia hubs, but would instead link, for example, Madrid with Rome, Rome with Munich, or Berlin with Malaga.
He also confirmed the total Transavia fleet will double to 100 Boeing 737-800s by 2017, split evenly between the three Transavia operations. The additional aircraft will have the same specification and layout as the existing Transavia fleet. “Over the coming weeks and months, we will announce how we will get them from the market. They will be partly purchased and partly leased. It will be a smart mix [of new and used aircraft],” he said during the Sept. 11 briefing.
However, Graber would not be drawn on where Transavia Europe will seek its AOC. He also declined to comment on the locations of Transavia’s five to 10 European bases, which it plans to establish over the next three years. Currently, Transavia Netherlands has bases in Amsterdam, Eindhoven and Rotterdam, while Transavia France’s are located at Paris Orly, Lyon and Nantes.
“This is sensitive information. We will start selling [Transavia Europe] seats in two months. We have to be quite selective about what we do and we are looking at routes where we can evolve to be one of the top three. Yes, there are some very formidable, respectable players in the market, but when you look at the total supply in the European market, there are some areas which are not spoken for yet. Some players are getting out and shrinking, but we don’t want to shrink. We want to take part in the growth,” Graber said.
To gain market share, Graber said the enlarged Transavia will offer a “pleasant low-fare plus” service, aimed only at tourists and leisure travelers. “Business travelers will not be forbidden. If they enter the aircraft in a suit, we won’t ask what they’re doing there, but with Transavia the frequencies will hardly ever be more than daily,” he said.
When pressed, he acknowledged Transavia’s seat-pitch is the same as Ryanair’s, but said the new airline will differentiate itself based on customer service and digital innovations.
In 2013, Transavia France and Netherlands generated €900 million ($1.2 billion) in revenue, but posted a €23 million operating loss. “Transavia is pretty much at breakeven with very slightly negative figures. We know that return on capital employed tends to take a bit of time to mature,” Air France-KLM CFO Pierre-Francois Riolacci said at the Sept. 11 briefing.
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Air France is expecting to operate 46% of flights Wednesday and 47% of flights Thursday, as it comes under increasedpressure to ditch itsTransavia Europe plans.
On Wednesday, Air France anticipated that 52% of pilots would join the strike, building to 62% on Thursday. It is urging all passengers with reservations before Sept. 30 to postpone travel plans or change bookings at no extra cost.
“Air France regrets this situation and is making every effort to minimize the inconvenience this strike action may cause to its customers,” it said in a statement.
The strike, which started Sept. 15, is over Air France-KLM’s plans to set up Transavia Europe as a new airline—alongside its existing Transavia Netherlands and Transavia France units—with its own air operator’s certificate (AOC) and pay scales.
French Prime Minister Manuel Valls has urged Air France to find a solution to end the deadlock, even if it means abandoning the Transavia Europe plan altogether. An Air France spokeswoman said senior management was scheduled to return to union negotiations Wednesday afternoon.
Speaking at the release of Perform 2020 on Sept. 11, Air France-KLM chairman and CEO Alexandre de Juniac said the group is facing intense low-cost competition at Amsterdam, Paris Charles de Gaulle and Paris Orly, which needs to be addressed. “It is a defensive tool, but first and foremost it is offensive,” he said.
De Juniac said Transavia has a “very decent” cost base, compared with rivals like Ryanair, easyJet and Norwegian. “There are probably too many of us. I believe Air France-KLM can truly participate in the consolidation of the market. We want to be in the top five European low-cost carriers by 2017 and we have set ourselves an ambitious profit margin target of 5%.”
At the time, he said Transavia Europe was planning to start operations in five to 10 markets outside France and the Netherlands over that period, and was aiming to rank as number two or three in those countries.
Bram Graber, who will head the three Transavia airlines, said Transavia Europe will be more competitive than Transavia France or Transavia Netherlands. It would not operate to and from the existing Transavia hubs, but would instead link, for example, Madrid with Rome, Rome with Munich, or Berlin with Malaga.
He also confirmed the total Transavia fleet will double to 100 Boeing 737-800s by 2017, split evenly between the three Transavia operations. The additional aircraft will have the same specification and layout as the existing Transavia fleet. “Over the coming weeks and months, we will announce how we will get them from the market. They will be partly purchased and partly leased. It will be a smart mix [of new and used aircraft],” he said during the Sept. 11 briefing.
However, Graber would not be drawn on where Transavia Europe will seek its AOC. He also declined to comment on the locations of Transavia’s five to 10 European bases, which it plans to establish over the next three years. Currently, Transavia Netherlands has bases in Amsterdam, Eindhoven and Rotterdam, while Transavia France’s are located at Paris Orly, Lyon and Nantes.
“This is sensitive information. We will start selling [Transavia Europe] seats in two months. We have to be quite selective about what we do and we are looking at routes where we can evolve to be one of the top three. Yes, there are some very formidable, respectable players in the market, but when you look at the total supply in the European market, there are some areas which are not spoken for yet. Some players are getting out and shrinking, but we don’t want to shrink. We want to take part in the growth,” Graber said.
To gain market share, Graber said the enlarged Transavia will offer a “pleasant low-fare plus” service, aimed only at tourists and leisure travelers. “Business travelers will not be forbidden. If they enter the aircraft in a suit, we won’t ask what they’re doing there, but with Transavia the frequencies will hardly ever be more than daily,” he said.
When pressed, he acknowledged Transavia’s seat-pitch is the same as Ryanair’s, but said the new airline will differentiate itself based on customer service and digital innovations.
In 2013, Transavia France and Netherlands generated €900 million ($1.2 billion) in revenue, but posted a €23 million operating loss. “Transavia is pretty much at breakeven with very slightly negative figures. We know that return on capital employed tends to take a bit of time to mature,” Air France-KLM CFO Pierre-Francois Riolacci said at the Sept. 11 briefing.
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