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 9 posts - 16 through 24 (of 24 total)

  • lesmclaren
    Participant

    MarcusGB. Very much support your comments. Just a note that it is not only the UK that KLM has had the enterprise to offer multiple locations. I now live in Norway and we have the same options of multiple locations which is a much appreciated KM USP. I moved the majority of my business to KLM 3 years ago based on the flexibility KLM can offer, fair pricing, comfort and facilities and certainly easier connection via AMS than LHR. I have at least 4 direct options to either LHR, LGW or Stanstead but still consistently get a better overall deal and service from KLM
    I sincerely hope that this new combined AF/KLM structure will not detract from the service KLM offers, especially the option to buy economy comfort seats on SH [which it appears AF do not offer].


    MarcusGB
    Participant

    Good to hear, and i see the same with those more remotely serviced in Europe, as i mentioned in Lisbon and Budapest, that have very few Long haul destinations, and choice of carriers.
    I read that 96% Load factor was the norm on some of their routes, and they are currently up 6% load factor on last year, despite AF!

    Lufthansa have (or are) on Strike, in The Times BA Crews are threatening to go on Strike around Xmas, and Pilots with Virgin Atlantic, all around the same changes on pay, conditions, and new Contracts.
    Seems like KLM will be the only major group that could be reliable for Christmas season flights!
    What a rotten trick to play on your Customer base at that time of year, and how damaging and negative for any Airline.
    You would never forgive an Airline once they did this to you, and probably not use them again if this happened this time of year, as years gone by have shown!


    Swissdiver
    Participant

    KSHaggag nailed it: political interferences. AF cannot suppress some unprofitable routes, notably to the ex-colonies. In addition, AF has to maintain a domestic network, something KLM does not face…


    MarcusGB
    Participant

    The French Government, holds just over 16% of AF / KLM shares, 6% by employees, and the usual other Financial Companies, individual investors etc the rest.

    KLM feel that Europe IS their domestic network, as truly they have no flights internally, and over % 80 of people are connecting to other KLM flights. This is why they try so hard and have a greatly expanded network, 10 extra routes this year. Plans were afoot, to hand over all European flights to KLM Cityhopper, as a Sub group of KLM, currently using the Embraer 175 /190, and remaining Fokker 70’s being phased out. They also have very new fleet of B737 7/8/9’s

    Transavia – KLM’s low cost services, are doing very well with 94% load factors, and service less well known, smaller European Countries.

    Quite correct, AF have run many domestic routes regardless of profit, but many of these have been turned into “Hop”, their low cost version, and unprofitable routes cut long haul. The groups Cargo load factor, has been as low as 54%, but this is being tackled now also.

    The new Directors and major reforming plan for the group all under the AF/KLM group until 2020, are cutting routes on AF or using smaller aircraft, so no profit, no services. Senior Management are no longer tolerating loss making routes.

    Good example of this is AF Cancelled the Kuala Lumpur route (as have LH), and now KLM expands the capacity on this route, additionally runs a 2nd service using the 789 Dreamliner, a few days of the week.

    BA recently launched a KUL Dreamliner service, this competing directly with the Malaysia Airlines A380 twice daily service ex LHR. So the Europe side of the channel, KLM take much business for this route, as an example.


    JohnHarper
    Participant

    One of the things that has surprised me with the AF/KL relationship is that there has been no rationalisation of the short haul fleet. While both came with their historic fleets they still have a mixture and have new deliveries of A320 series and 737s. Surely there would be savings in rationalising around one type?

    I know others, SK and TK spring to mind have both but SK appear to be moving towards A320s and TK have such a large fleet of both and are having new delivered of both but I fail to understand why it makes sense to operate both except in a transition phase.


    MarcusGB
    Participant

    Hi John.
    I think plans for the fleet renewals at Air France, and KLM as separate entities, were set some 10 years ago. Just after the merger.
    KLM have more 773’s now in operation, 10 789 Dreamliners with a fleet of over 25 planned.
    They renewed the 737 fleet in Europe, which gives great flexibility as they have a mix of 737 7/8/9 for increased or lessened capacity, which can be tailored and prepared in time for that flights so load factors are met.
    They have almost finished the Fokker 70 disposal, with 190 Embraers in Operation, a few more 175 to come. these were all due to go over to KLM City Hopper operation.

    Clearly, KLM have had the Boeing preference, and short regional to the new Embraer.

    It seems Air France want to operate every manufacturer and all types of aircraft and have been less successful in forecasting their needs, and they carry some old tatty aircraft. However, they tend to favour Airbus, though cutting back on new orders. AF needs to change to survive, it does not make profits, and is very costly, compared to KLM.

    I choose not to fly AF but fully support KLM, as their many regional UK and European services are filling their increased load factor for traffic and profit this year.

    Frankly, The Group, need to be split, and launch KLM independently again, and it will be very happy, and much more profitable on its own!
    AF will just fall into a demise, as its conversion to routes on the “Hop” model have shown, and cancelling of routes such as KUL show, and poor A380 services, over estimated, and poor services overall, with their ageing fleet.


    Edski777
    Participant

    As one of the relative success stories in aviation in Western Europe KLM announced today that in the first half of 2017 they will hire 400 new cabin attendants and 100 pilots. All due to new routes and increased frequencies.

    In the mean time AMS Schiphol has reported an increase of the number of passengers in October 2016 of 8,7%. The other main hubs in Western Europe, LHR, CDG and FRA all posted a decrease over the same period.

    Top 4 European airports in october
    1. London Heathrow: 6,50 million (-1,2 percent)
    2. Schiphol: 5,79 million (+8,7 percent)
    3. Parijs CDG: 5,75 million (-1,2 percent)
    4. Frankfurt: 5,70 million (-0,3 percent)

    CDG and FRA have had their share of strikes, LHR is congested. But what are they doing different (or right) down there? Can’t we learn something in stead of fighting and bashing?
    After all, we are largely competing for the same market ((transfer) passengers).

    Oh, and I fully agree with Marcus: the best would be to split AF/KL again. Both for passengers, shareholders and employees.
    I truly believe the two entities are too different in country and company culture to become one and work together to become an economic success.


    MarcusGB
    Participant

    I agree Edski777. Answer simply, it is Dutch!

    Congratulations to Schiphol, 100 years old, as posted all around the airport with vintage film and photos. Seems they are all set for the next 20 years also with their expansion plans for two new aprons to add to A-G!
    This after 2 years of almost doubling the existing airside, with a floor on top! Now incoming and outgoing passengers are mostly separated, and 2 sets of 20 lanes Security Body scanners on these upper floors.
    Skyteam / KLM Priority Customers have their own departure route after the check in desks also. It is so busy, yet there is so much space, and superb contemporary design, and Dutch Flare.
    The children’s Library, piano to play, Art Gallery, casino, Physio treatment area, Chill out / sleep seats, and many more unique areas others will never have.
    The airport still gaining so many people, new Airlines coming in, or expanding services now, and KLM having opened 10 new routes this year, LCY one of the most welcomed from February 2017 also.

    I flew through Singapore today, and i have to say how wonderful and efficient that is, but Schiphol is side by side in my experience. Many people, from all around Europe appear to be using KLM to then fly on from there with their chosen Airline.

    We already have exactly what we need for the extra UK runway, at Schiphol, which for many is easier to reach than trekking through LHR on a short flight over to Amsterdam.

    They are leaps ahead of any other European Airport, and up with the best Worldwide.


    AMcWhirter
    Participant

    Report [FR] in Lesechos.fr that Air France / KLM are “confronted by a debt wall.”

    The group faced a net debt of Euros 4.2 billion at the end of September which, according to Lesechos, both carriers had inherited through years of losses.

    It appears Air France is in a situation of “negative equity” which has required the airline to sell its “family jewels.”

    Hence to reduce debt Air France recently sold a 49.9% share of its catering subsidiary Servair to Chinese consortium HNA. This raised Euros 237 million.

    http://www.lesechos.fr/industrie-services/tourisme-transport/0211645519509-air-france-klm-reste-confronte-au-mur-de-la-dette-2053599.php#xtor=CS1-3046

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