Air France restructures its short-haul product to counter loss of passenger to low-cost carriers

Air France has anounced it will restructure its European service to counter the loss of passengers to low-cost carriers and to make its short and medium-haul business (which account for 40 percent of its revenue) profitable again. Air France says the new European product will increase its market share by lowering its cheapest fares with 5 to 20 percent (depending on the route) and its most expensive tickets with 19 to 29 percent. Customers will also be allowed a greater flexibility to change bookings. The restructuring also means lower operating costs for Air France, for example by serving simpler meals and increasing the number of internet bookings. Air France’s new Europe product will come into affect from April 2010, with tickets on sale in January. 

According to Air France, its customers (passengers, travel managers and travel agents) all indicated they want two clearly differentiated products for short-haul air travel. At the one hand, they want a simple and inexpensive economy product, and on the other hand a more affordable premium product, for those that require additional flexibility, more comfort and a more efficient journey. According to Air France CEO Pierre-Henri Gourgeon “regarding short-haul travel, customer requirements have changed. They now want reliable, efficient air transport, with an appropriate service, at the lowest possible price, while retaining the Air France touch”.

Air France will split its premium cabin into a high-end (Premium Business) and lower-end (Premium Eco) offering. The new configuration also adds eight Premium Business seats to Air France’s short-haul aircraft, but passengers will have the middle seat kept free. On the ground Premium Business passengers will have access to all lounges in the network, while Premium Eco customers will be able to use those at Paris CDG and Amsterdam Schiphol only. Both sets of Premium fares will allow two pieces of free checked lugagge, priority baggage delivery, and upgraded miles earning, as well as free reservation changes and refunds. Premium Business customers will also be able to select their seat at the time of booking, while Voyageur and Premium Eco passengers will only be able to note their preference of an aisle or window seat.

Passengers traveling in Air France’s economy class (Voyageur) will continue to receive a free newspaper and complimentary catering, although this will be ‘a snack adapted to the flight time’. Checked baggage up to 23kg is also free of charge. Tickets (except promotional fares) can be modified for €50, although they will not be refundable. A new innovative feature is the so-called ‘Time to Think’ option, which allows passengers to hold a booking for seven days, for an additional EUR10 (USD14).

Air France is the latest European legacy carrier to adapt its short-haul offering to the new economic environment. Earlier, British Airways scrapped free meals, except breakfast, on its short-haul flights and the airline is also considering a single-class cabin for flights in and out of London Gatwick. Iberia, BA’s new merger partner, even takes a more radical cost-cutting approach and will set up a new ‘lower cost’ feeder airline at its Madrid hub by 2011.

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