AF unions seek protection from Gulf and low-cost airlines
Published: 04/09/2013 - Filed under: News »
Air France's trade unions have appealed to French Prime Minister Jean-Marc Ayrault for government support as their airline goes through a "crisis of exceptional gravity... which is presenting the carrier with serious, economic and financial problems".
In a letter sent to the PM last June and made public yesterday, union representatives on the Air France board mainly blame the Gulf carriers and the growing number of low-cost carriers (LCCs) for their employer's financial predicament.
According to La Tribune, they claim the three main Gulf airlines — namely Emirates, Etihad and Qatar Airways — have taken away market share on routes to Asia, Africa and the Middle East.
The letter reads: "Whenever additional traffic rights are granted to those companies it results in a loss of activity and related employment in Europe."
The unions of Air France and the Air France-KLM Group want the French government to "freeze any new allocation of traffic rights until a fairer competition is finally established".
By "fairer competition" they cite the fact that Gulf carriers benefit from more benign operating conditions in the Gulf compared to Europe (see our New World Order special report, December 2010).
However, they note that as the government is seeking to sell its Dassault Rafale high-performance fighter jet to Qatar and the UAE then its request may fall on deaf ears. It is important to note here that trade deals can be won or lost over issues as simple as airline traffic rights.
Competition from LCCs is also blamed for Air France's worsening financial plight.
These airlines "have headquarters in the most accommodating European countries in terms of tax and social security contributions. The most effective LCCs are English or Irish. None of them is French. Therefore it deprives our country of these jobs."
Air France faces higher wage costs than its European rivals which places it at a competitive disadvantage. This is partly because of high payroll taxes.
The letter reveals that staff costs account for 32.4 per cent of Air France's operating costs, as against 28 per cent for KLM, 24 per cent for IAG (BA and Iberia) and 23.4 per cent for Lufthansa.
Finally, the issue of high fees at ADP (Aeroports de Paris) also disadvantages Air France.
"ADP is a monopoly and airlines are captive customers," concludes the letter.
It remains to be seen whether or not the French government will pay attention.
Prakton - 04/09/2013 14:37
I have been drawing everyones attention through the media including Business Traveller that many established airlines are in jeporday. Traffic rights should be given on reciprocal basis and not OPEN SKY to the Gulf airlines.These arab airlines buy Airbus and Boeing aircrafts and they are able to negotiate with the respective governments and make a deal behind the scenes with many fringe benefits so that they secure traffiic rights much beyond their reach. In recent times I have only seen Air Canada managed to influence its government not to extend more traffic rights to both Emirates and Etihad they are both from UAE and 85% of their passengers at Dubai and Abu Dhabi are transfer passengers. In Asia TG,SQ,MH,CX all are feeling the heat....!! Are we going to protect our airlines and jobs ?
dutchyankee - 04/09/2013 18:09
Another way the French unions might protect their jobs might just be to have their members work a bit harder, demand less, and be more realistic. There's a reason employee costs are so high at AF, and the unions have only themselves to blame. A number of historic airlines have fallen victim to intransigent unions, could AF be next? It's about time union leadership learned a lesson!
Schaible - 05/09/2013 11:21
Middle Eastern airlines expand aggressively. They have the full (financial) support and tax benefits of their countries. In the medium term European airlines can only survive if they provide the little "extra" and patriotism in order to convince the locals.
At least in the case of Emirates I can see they compromise the service on ground and on board: their standards are going down quite fast. If they don't wake up Emirates will get the reputation of mass shuttle for the working class. European airlines have to be realistic and find their own way.
PierreAntoine - 06/09/2013 13:46
A very interesting thread.
True that some of the AF unions dream about a 'way o flife' gone for a long time; however the main issue is related to the 'Gulf state operated ' airlines. As properly mentioned by Schaible, some of these airlines will become glittering low cost shuttles.
One cannot forget that their customer base is very volatile: when Asian (Indian & Chinese) airlines will take their share of the market between Asia and Europe, the Gulf airlines will bitterly feel it.
Regarding the Low Costs competing with 'majors' I think AF found a way, offering very diverse prices AND services on board their short/medium flights. Seems working.
canucklad - 11/09/2013 14:36
I remember years ago gasping in astonishment when reading the " Flying Dutchman" magazine.....
In the triad profile of Nw-AF & KL , guess who had the most employees...
and then guess who had 1/2 the employess double the aircraft and millions more passengers ?
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