Air France last week revealed more information on its latest strategic business project to regain competitiveness and reposition products and customer service at a leading global level, part of its Transform 2015 business plan. The airline hopes to achieve a 20 per cent increase in productivity and economic efficiency through revised operational arrangements and new working contracts as it aims to return to profitability.
A key part of the plan revolves around the airline’s network, or more precisely the operations of its subsidiary companies and regional partners. In Air France’s short and medium-haul markets, or domestic and European services as they are perhaps better known, a major restructuring will take place around three core ‘poles’, comprising Air France, French regional services and leisure activities of Transavia France. This, says the airline, will enable it to regain its competiveness in these markets. This will mark an end to its existing franchise arrangement that has seen a number of wholly-owned and independent regional partners fly mainly regional services on its behalf.
Under the revised plan, Air France will retain responsibility for domestic and short-haul flights feeding its medium- and long-haul network from Paris Charles de Gaulle (CDG). The airline’s business model is reliant on transfer traffic in the Parisian capital and it will focus on key routes within France and Europe with strong business traveler flows as well as flights from its new regional bases at Marseille, Nice and Toulouse.
The second ‘pole’ will be centred around regional activities and will include its partner carriers Regional, Britair and Airlinair: no mention is made of Irish carrier CityJet which currently supports the airline’s network in France and operates flights from London City Airport in the UK. These three French carriers will operate lower yield services into Paris CDG on behalf of Air France, as well as point to point flights from Paris Orly and domestic operations, excluding the flights from the national carrier’s regional bases.
The third ‘pole’ will focus around the leisure side of the business and will mean major growth at Transavia France. The carrier will offer flights to destinations in Europe and the Mediterranean from Paris Orly and regional French cities; in the process it will expand its fleet from just eight aircraft today to between 20 and 22 by 2015/2016.
According to Air France, these three ‘poles’ will enable the carrier to highlight the strengths of its offering (frequencies, loyalty program, network), to optimise the organisation of its regional flight operations and make better use of growth in the leisure segment with Transavia France. By introducing the business fundamentals it has adopted at its regional French bases the national carrier hopes to remove 34 aircraft from its fleet by 2014, while maintaining available seat kilometers. This will be partly achieved by increasing daily utilisation by more than one hour per day and assigning crews to more flights per rotation, but perhaps says more about the airline’s current operational efficiency.
With a stronger short-haul model, and efficiencies stretching into the long-haul market, Air France says it will be better placed to expand its international network, particularly in intercontinental markets, adding destinations that can now be served profitably through lower operating costs and improved productivity of aircrew. The airline says it will be developing profitable routes in winter and will be able to quickly modify the configuration of the cabins on its Boeing 777 fleet to support this exercise. However, it warns, loss-making routes will be culled.
“Air France now has a tailored industrial and strategic project. The objectives are ambitious but feasible. The conditions for success are clear: Air France needs to renovate its organisation and increase productivity by 20 per cent. To achieve this, we have underlined the importance of social dialogue. I am confident in the commitment of all our employees in reaching our objective: to place Air France back on the path of profitable growth, optimize customer service and consolidate its future in a context of extremely fierce international competition”, said Alexandre de Juniac, Chairman and Chief Executive Officer, Air France.
There is still a long road ahead for Air France and for this transformation to be a complete success it has to completely change the mindset of the company. Key to achieving its goals will be the talks with ground personnel, flight deck and cabin crew unions to enhance productivity. These have been in place since the end of March, but with the carrier acknowledging it has “excess staff”, negotiations could be difficult.
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