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Airlines and the Economic Downturn

Nowhere to go this winter but reduction route for Air France-KLM Group

Luc Citrinot, eTN Staff Writer  Oct 08, 2009

Despite a forecast by that International Air Transport Association (IATA) that world passengers’ air traffic should bounce back by 3.7 percent in 2010 and by 3 percent in Europe, Air France-KLM will continue to reduce capacities over the coming winter season.

The airline has said it airline blames a very difficult economic environment, its reduction move being driven by a net loss of €426 million in the first quarter of 2009-2010 Fiscal Year. After announcing that it is looking to reduce its working force by 2,700 people, the airline will continue to slash capacities by 2 percent.

In precedent winter season, Air France-KLM had already lower capacities by 1.6 percent. The reduction will be effective with the coming winter season, starting October 25. Short- and medium-haul network will be the most affected by capacities’ reduction (-2.9 percent). Compared to winter season 2007, the group offer is down by 2.8 percent for long haul flights and down by 6.4 percent for short and medium hauls traffic.

Long haul traffic will be further rationalized with fewer frequencies proposed to Asia and America. Japan- severely hit by the recession- will see the largest decrease in capacities with the reduction of frequencies from Paris to Tokyo Narita from 20 to 17 weekly flights and the cancellation of the Paris-Nagoya flight, consequently to the decision of code share partner Japan Airlines to withdraw from the route.

Air France will also continue to adjust its program in India. The airline is reducing its weekly frequencies on Paris-Bangalore from 7 to 6. it had already reduced capacities on Paris-Mumbai and stopped serving Chennai in summer.

In America, Mexico takes the beat following the sharp passengers’ reduction after the outbreak of the H1N1 virus over the late spring. Air France will propose 10 weekly flights instead of 12 to Mexico.

Capacities are also down to Brazil from 14 to 12 weekly flights to Sao Paulo and from 14 to 13 in Rio de Janeiro. In North America, the new joint venture with Delta Air Lines will help to rationalize capacities. Delta takes over flights to Pittsburgh and Philadelphia as Air France takes over flights to Detroit. Frequencies will also be cut on Paris-New York JFK.

However, the number of seats will remain constant, as the airline will put its new Airbus A380 on the route from November 23. A similar adjustment in frequencies is performed on Paris-Dubai. Instead of 14 weekly flights, Air France-KLM will put in place a daily frequency with an Airbus A380.

In Africa, Air France will also replace by a daily A380 service its 14 weekly frequencies to Johannesburg performed over the summer season. Only services to Cameroon are improving significantly this winter with six non-stop weekly flights to Douala and two non-stop flights to Yaoundé.

In Europe, Air France-KLM reduces the number of daily flights from Paris to Amsterdam, Barcelona, Birmingham, Dublin, Edinburgh, Geneva, Madrid, Munich, Moscow, Rome and Verona. Air France will also terminate flights between Bordeaux and Brussels, Lyon and Frankfurt, Paris and Shannon as well as from London City to Genea, Paris CDG, Nice and Strasbourg. The airline will meanwhile inaugurate two daily flights from Nantes to London City Airport. Most frequencies to Clermont-Ferrand are suspended and further cuts in frequencies performed out of Paris Orly airport.

From April to August 2009, Air France-KLM transported 32.13 million passengers down by 5.3 percent. Traffic from and to Europe –including France- was down by 6.1 percent at 22.11 million passengers.

However, the worst performing market for the airline is Asia, down by 7.4 percent for the first five months of the year with 2.23 million passengers and the best market was Africa and the Middle East with total passengers being up by 2.2 percent at 2.38 million passengers.

Nowhere to go this winter but reduction route for Air France-KLM Group
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