Route profitability: Air France versus KLM

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This topic contains 20 replies, has 13 voices, and was last updated by  AMcWhirter 2 Jan 2017
at 13:13
.

Viewing 15 posts - 1 through 15 (of 24 total)

  • AMcWhirter
    Participant

    Many readers believe that KLM’s network is more profitable than that of its partner Air France.

    And it’s now been confirmed.

    According to French media reports, the CEO of Air France/KLM has this morning addressed a French Senate committee.

    Jean-Marc Janaillac told the committee that 85 per cent of KLM’s routes are profitable compared to 65 per cent at Air France.


    Tom Otley
    Keymaster

    News for later today –

    Air France and KLM are introducing new fare classes in its economy cabin.

    The new fares will be on all international flights within Europe, and to North Africa and Israel. Each has specific services and conditions and will be gradually rolled out in different markets, with the online KLM offer not available until the end of January 2017.

    The names of the new products are the same as exist now – Light, Standard and Flexible – but the new Light, Standard and Flex products have different attributes and apply to all fare classes.
    The new products are:
    Light
    The lowest fare – hand-baggage-only (no checked luggage, though there is the possibility to take hand baggage: 1 baggage item + 1 accessory (total weight: 12 kg / 26 lb) at any time before the flight on airfrance.com or KLM.com for 21GBP.
    Standard
    For an additional fee of €40-50, this offers the option of one item of baggage and the ability to change the ticket for a fee.
    Flex
    For an additional fee of €70-150 this offers no change fees and a refund at no extra charge), as well as the possibility to take advantage of the SkyPriority service at the airport and an inflight meal.
    In all classes, passengers will receive
    A refreshment, snack or meal (depending on your flight’s duration) and beverage will be served;
    Self-service newspapers available in the boarding hall. Free digital media selection available via smartphone, tablet or laptop starting 30 hours before your flight with AF Press or KLM media app…

    More to follow


    canucklad
    Participant

    This doesn’t surprise me at all.
    You just have to look at the ratio of employees to passengers for a start.
    Having said that, doesn’t AF have to fly some pretty thin routes to their overseas departments?

    As for the new propositions, at first glance, and if it’s an overlay over its current pricing structure then to me , first impressions would lead me to say……. Fuddled- A mixture of muddle and fudge.


    Kimi_CDG
    Participant

    AF unions keep saying that KLM is favoured when new long-haul routes are to be created. That was one of the complaints during the pilots strike last summer.
    I’m not taking side here but this would not be surprising from AF/KLM management as it can help justify new cuts.


    TheRealBabushka
    Participant

    This is not surprising.

    Digging deeper, is AF’s cost base similar to KL’s cost base?

    Or is better performance due to KL having better yields, as alluded to by canucklad?


    icenspice
    Participant

    Does anyone know which routes are not profitable at both AF and KL?

    From memory, there are some overlaps.


    Edski777
    Participant

    KLM is further in the process of business process improvement than AF. By no means thanks to the unions if both countries. Increased yield will come from optimizing your processes and adapting your organization accordingly. Something extremely difficult in a country with a union culture like France.

    It will probably take a very long time before both organizations are on the same level, according to the AF/KL management that should be the Dutch/KL level.
    The AF unions will keep fighting for their luxurious, old-school, arrangements with in todays markets oversized organizations. They keep demanding that in case to save jobs in France certain jobs, but also routes, should be transferred from the Netherlands to France. Only to be incorporated in the inefficient French way of organizing things.


    Kimi_CDG
    Participant

    @Edski777
    “Inefficient French way of organizing things.”
    Is there a possibility to have a discussion without this kind of vocabulary aiming at pleasing half of the audience? I know we are in a time where the rulers of the world are named Donald Trump or Boris Johnson but I hoped better from this forum.
    I would advise you to go to the nearest pub if you want to complain about the French 🙂

    AF has many flaws, starting by its unions but it is still a good airline (though not excellent) which has improved a lot during the last few years. If the management is using these figures to reduce costs, they should do it.

    Please finally accept my apologies for the spelling mistakes in my comment. Hey, I’m French ;-p


    TominScotland
    Participant

    Kimi_CDG – well put, such national stereotyping really serves no purpose.

    There is a certain irony here in condemning the AF unions (and, indeed, those at Lufthansa) for seeking to protect pay and conditions levels that are hard to sustain in the competitive airline industry (short-haul – LCCs; long-haul – ME3 etc.). BA, methinks, are widely condemned on this Forum for trying to move away from their high cost staff base, built on legacy terms and conditions as well as implementing a range of non-staff cost cutting measures.

    Confused? So am I!!!


    sandtrekker
    Participant

    @Kimi_CDG and @TominScotland

    Yes, stereotyping serves no purpose. So, why mention Donald Trump and Boris Johnson?

    Hopefully no one will have their shirt torn off by some irate French union neanderthal who does not like comments about AF unions. Can we also expect strikes this summer by French air traffic controllers? (Rhetorical)

    Plus ça change, plus c’est la même chose


    KSHaggag
    Participant

    Gentlemen,

    We need to admit that KLM has traditionally been a GREAT ,reliable ,and profitable airline for ages .Although I am culturally biased to France and French products ,let me say that KLM is working on purely commercial grounds ( they cannot allow themselves to lose money ever ) ,while AF has many other factors to consider ;they have not so far operated on according to commercial criteria ;in other words political and cultural considerations have had their toll on many routes profitability .What I have found infuriating so far after the KL acquisition by AF is that the latter has tried to COMPETE against KLM in markets where KLM has been performing superbly well e.g. Kuala Lumpur ,Jakarta ,Panama City ,San Jose , etc…the result is a withdrawal of the AF services shortly thereafter …why ???!!! Additionally ,let s not forget that KLM unfortunately does not OWN its decision anymore ..helas !!!


    Kimi_CDG
    Participant

    @sandtrekker
    I did mention Donald Trump and Boris Johnson because these individuals have used this technique in politics for a long time (against the EU and immigrants resp.). Worse, they proudly acknowledged it.
    This is a fact.

    Talking about “French union neanderthal” or a so-called French inefficiency is not.


    Kimi_CDG
    Participant

    To come back to the topic, it would be interesting indeed to compare the respective network and how it can impact the profitability.
    AF has a strong network in America (North and South, mainly Brazil) and Africa while KLM seem to serve more destinations in Asia (please correct me if I am wrong).

    Hard to compare since they are, by definition, not competing against each other.


    MarcusGB
    Participant

    This issues has come up in many topics here on the Forum, and also over many years.

    KLM has the advantage of Schiphol as a base, well run, always voted the leader in Europe. As i mentioned in a topic a week ago, KLM has an almost entirely renewed fleet offering fuel efficiency savings, and many technological uses that make it efficient more on the ground, as also when flying new Aircraft.
    KLM has a far better reputation Worldwide compared to Air France, and has a distinct and highly valued reflection of Dutch culture, as a Brand well respected.
    They do have an extensive network (as previously questioned) to Central & South America.
    A greater presence in 23 Airports in the UK, connecting us all here with Schiphol, giving many regional options to connect in Amsterdam, avoiding LHR. Asia (especially China) is well covered, and along with Delta, the US is covered well.
    Many of their European flights are often always full, and all over Europe, they are seen as reliable, good service, fair pricing, and for countries where there are poor International / Long haul options (eg Budapest, Lisbon), many use KLM for their long haul flight needs.

    They are returning in February 2017 with their new Embraer 190’s to fly the LCY – AMS route, and in March have an additional flight to 2 daily. Hopefully this will then grow, and the need to take codeshare and unreliable Cityjet, will be replaced with their own aircraft and a better service. I notice many leisure travelers using KLM codeshare seats on Cityjet connecting in Amsterdam with KLM.

    Many have commented on this Forum over many years, the differences between AF and KLM.
    There are debates around about the future of them remaining one group, and that KLM could once more operate independently. KLM are expanding capacity, load factor are very high, and 10 new routes are being created. AF and LH gave up on Kuala Lumpur, yet KLM runs a mix of 777-2/3’s, supplemented several days a week by an additional service using the 789 Dreamliner.

    As a Shareholder and Platinum Flying Blue member, it is KLM that make much of the profits, and have not been striking, which sheds profits and creates a very poor impression unlike AF in recent years. Seeing the innovations, ideas and plans, and seeing figures often, as well as knowing several Senior Managers in KLM, they’re so apart compared to AF. AF have run unprofitable routes for many years, where-as KLM will cut the services if they do not With far more innovations, new aircraft, and a better reputation, it is not suprising KLM are seen more positively, and operate more efficiently, and Schiphol is the leading Airport in Europe to work with as a hub!


    LuganoPirate
    Participant

    I don’t know if this is correct, but I’ve heard AF would have been bankrupt by now had it not been for KLM’s contribution. It could only have kept going with state aid, which as we all know under EU rules is illegal!

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