Suffering from low-cost carrier competition, Air France-KLM is to speed up its move into that sector.
Europe’s second-largest traditional airline in terms of revenue plans to beef up its Transavia low-cost brand.
It already runs Transavia in France and the Netherlands but will expand it into other countries – reportedly Portugal and Germany – from the middle of next year.
The potential is there as demonstrated by Ryanair, the number one European no-frills carrier, which is reportedly currently in talks to buy at least 100 new planes.
While easyJet just announced record passenger figures for August.
Those two dominate the market and the passenger totals for last year show the steep climb ahead for Transavia. Its 6.5 million was dwarfed by Ryanair’s 81.4 million and easyJet’s 61.4 million.
And Transavia’s scope for price cutting is limited by the fact that although its operating costs per seat are 40 percent less than Air France, they are still 20 percent higher than easyJet.
By expanding its low-cost operations, Air France-KLM is following the example of German rival Lufthansa which is doing the same with its Eurowings and also is considering a budget long-haul unit.
Both have issued profit warnings in recent months, and both are hampered in their efforts to lower costs by powerful unions.
Indeed Air France pilots are threatening strike action over variations in pay and conditions.
The company wants separate contracts for the main airline, Transavia and its region carrier HOP!. The unions want the same pay and conditions for all the pilots.
with Reuters
