Air France (AF, Paris CDG) Chief Executive Officer (CEO) Jean-Marc Janaillac has confirmed the Air France-KLM Royal Dutch Airlines Group is looking at setting up a long haul, low-cost venture as part of its plans to claw back lost international market share.
“The issue is we have new competitors, so how do we address this situation?” he told Bloomberg TV in an interview. “We’re not going to discuss it publicly because we have many possibilities we’re studying, and we’ve not yet decided what options to put together in order to cope with the arrival of new, long-haul, low-cost carriers.”
Air France is currently grappling with the arrival of new low-cost, long haul carriers such as Norwegian and Groupe Dubreuil's French Blue not to mention existing pressure from the likes of Emirates, Etihad Airways, Qatar Airways, and Turkish Airlines.
The move to long haul budget operations, one of three options the Franco-Dutch group is considering, was first mentioned during the tenure of Janaillac's predecessor, Alexandre de Juniac, and came after the carrier revealed that only 50% of its long haul routes were currently profitable. At the time, the plan entailed operating an undisclosed number of B787-9s under an undisclosed brand using a cost base akin to that of Lufthansa Group's Eurowings (EW, Düsseldorf) long haul budget subsidiary.
Any such project would, however, depend on the carrier's workforce approving new labour contracts, a feat that has proven extremely difficult to achieve in the past. It is recalled that in late 2014, a two week-long pilot strike over plans to reposition Transavia France (TO, Paris Orly) into a regional European LCC using foreign subsidiaries, cost Air France EUR500 million in lost revenue.
In a bid to placate combative unions, Janaillac is due to present a revised business plan in November, 'Trust Together', which the French press says will try to engender a greater sense of trust between management and the workforce.
