Originally Posted by
Airlib
Notwithstanding the crisitism brought up by former posters, the blogger makes an interesting argument:
This argument is clearly valid for bargain-seekers Y travellers, but these customers do not contribute to the profit margin of the airline. So what about business travellers, have they changed their patterns, prefering price to travel time? Judging by posts of C-travellers on this forum I quite doubt it but it is a pertinent point.
I think that the argument developed by the blogger is incoherent. Pax have two choices 1) nonstop at higher price, 2) hubbing somewhere at lower price. If anything, the hub concept has been growing in popularity. Well over 50% of AF Longhaul traffic is hubbing in CDG. Paris is a very small market, AF has no choice but attracting pax from other airports and that can only be done at lower price. All airlines compete on hubbing. IMO the argument that the hub concept is outdated is ridiculous. Indeed, some flights/airlines require a long connection time and gulf airlines are sometimes obliged to include such long connection times due to their geographic position. But if AF does not hub and mostly relies on Paris-point traffic, it might as well close immediately.
Regarding
Airlib's interesting question about premium pax: I think that there is a third factor to be included and that is product's quality. When you have a 12+ hours flight to Asia, quality/reliability is a major factor. there is much more differentiation in premium products than in Y. Frankly, when I contemplate 12 hours in AF angled seat (meaning back problems), poor customer service/respect, inconsistent onboard service, potential strikes, mediocre FFP (very few benefits to frequent flyers), etc... I have no problem adding one shorthaul and 3 hours of travel time. That is even if price is equal. And if I can fly BA, CX or SQ at a lower price, then the choice is obvious. Some premium pax are constrained by the company's policy (who can negociate good fares from AF), but many others are not. AF has lost market share on premium traffic not only from pax flying to/from Paris, but also pax who hub somewhere anyhow and can choose another airline to do so (e.g. pax flying from MAN or NCE). Then BA, LX, LH or some US/Asian/Gulf airline prove more attractive in terms of quality/price.
AF faces a huge uphill fight in premium classes, but it is a hopeless fight if they do not have the money to invest in better quality. It is a hopeless fight if they compete on price alone as 1) they have higher cost structure and 2) premium pax are less sensitive to price and more sensitive to quality given the huge money spent anyway.