CGRA

We're all on the same lovely AF boat (maybe they should start running a boat company, they may be more successful

Yes less service for the same price = price increased
same service for higher price = again price increased
same / better service for a lower price = I need to stop drinking / dreaming

San Gottardo

Why do you refuse to play the (marketing) game?

This isn't a price increase. What this is: "The low cost carriers take more and more market share in Europe. To counter this trend, we keep fares the same as before but withdraw baggage, seat and FFP privileges. However, this initiative which has offerings proper to the LCC segment and is designed to counter the LCCs is not an LCC approach."

JOUY31

Let's see, which LCC operates the route for a fare comparison ?

Cheapest AF fare: EUR 50 (of which EUR 18 goes to AF and EUR 32 goes to real taxes and not carrier surcharges)
Cheapest PREMS fare: EUR 25 (with an undisclosed amount going to RFF)

Guess why no LCC tries to operate the route ...

CGRA

Let's do better than the LCC :
I suggest that AF request PAX to clean the plane and break with their feet, still for the same fare of course

Yes Air France, I love to give you more money, you act like .. like the IRS of some countries......

petitaix

I was only comparing with the fare I paid for the last 10 round-trips MRS/ORY (July/January). 140€ (minimum Classic fare on the route) is above 125€ I paid on the average before the introduction of MiNi.

San Gottardo

Why only compare to LCCs? Comparison to AF's own fares from previous periods is sufficiently telling. Also, as an example further up showed, Lufthansa also offers EUR 49 for certain European routes (e.g. Berlin-Paris, Nice, Lyon), but including luggage allowance, FFP credits and choice of seat.

orbitmic

And you forget last but not least changeable tickets! Valid between Berlin and most Western European destinations.

San Gottardo

Also British Airways has flights at EUR 52 between France and London. 1 free piece of baggage, seat selection, miles for EC, changeable ticket (against a fee obviously).

Those examples show the way to go: offer low prices for the full service. Doesn't dilute your image and position, does not create frustration with passengers who after the big marketing campaign expect to also obtain these low fares but then don't.

So I wonder whether AF is just kidding themselves or think they can also take customers for idiots. Instead of low price for the full service they offer same price as before (granted, with more availability) or sometimes even higher, but with LCC service. But they refuse to call it LCC.

Interesting.

JOUY31

Well, I was making the comparison in the context of my hope that MINI fares help AF get passengers back from LCCs. Obviously, this is not an issue on the ORY-MRS route, the TGV is. As France Telecom's Stephane Richard put it, if all customers choose Sosh, the overall business model simply does not work. So if the people in charge of yield management at AF believe they can successfully increase the average yield on a given route by reducing the availability of the cheaper fare buckets, whether they are sold as MINI or CLASSIC tickets, they're just doing their job.

petitaix

Except I accepted to pay more for Air France than for a train ticket when AF still had a competitive advantage on SNCF. MiNi service & no miles on AF make TGV more competitive, from my point of view. Thus AF will certainly lose my business on MRS/ORY.

JOUY31

Fair enough . If many customers make the switch, then the people in yield management will need to take notice and adjust their models.

Nico40

Yes ! And meanwhile, SNCF has notably improved its frequent traveller programme. Award tickets are much more available than before, especially on Friday and Sunday night. On MRS, my choice is done aswell...

San Gottardo

What will that "model adjustment" look like? Two options:

1) bring back baggage allowance, mileage credit, seat selection and modifiable tickets to the MINI fares to make them more attractive or

2) increase the MINI fares whilst leaving in place pay-for-luggage, no mileage credit, no seat selection, no changes to tickets

Guess which ones they will choose?

orbitmic

[Emphasis mine]. This is exactly what I fear AF are already sort of doing with Mini. It reminds me of that Gordon Ramsay's kitchen nightmares episode where the restaurateur figured out that he did not have enough customers to pay for his bills. So he started lowering the quality of the products he bought and increase the menu prices at the same time with the hope that the lower costs and higher bills would allow him to make benefits again, but of course, this only led to further erosion of his clientele and took him closer to catastrophe. For what it's worth, Gordon Ramsay's advice (he does sometimes get on my nerves but I think he was right here) was that ultimately, quality and service always pay and with better rather than worse value-for-money people would be more likely to come to the restaurant often and even with very low benefits the restaurateur's situation would end up slowly but steadily improving. FWIW...

San Gottardo

AF and other airlines will of course respond that there isn't enough space for high quality/high price carriers, and they are obviously right.

However - and this is where they get it wrong - any player must find the right balance between price and value offered. The restaurant owner would have gotten away with lower quality if he had also lower prices.

Getting this right is obviously difficult, because to determine what is attractive customers compare several things
- for the same "value", how much money they'd have to pay with a competitor => they may choose AF over U2 if for the same route, time and service elements they get a lower price
- for the same money, how much value they'd get elsewhere => they may choose a LH offer for EUR 49 over an Air France offer for EUR 49 because it gives them more benefits like miles, luggage and changeable flights
- how much they paid for the same value in the past => people get upset for paying identical fares but now having to pay for miles and luggage
- how much it would cost them to get (real or perceived) higher value => they may chose to fly SQ instead of AF despite a higher price of SQ but the slightly higher price is more than compensated by a vastly better (real or perceived) product

Whilst this is obviously difficult it is the very job of those people designing products and determining prices, so getting it wrong is a job not well done. And what is even worse than doing the right things and still not meeting success is to make things which worsen one's situation. Not reducing prices but reducing the value offered is one such grave mistake. AF is currently making that mistake because it is faced with a difficult choice:

• The market for higher fares isn't big enough - not an attractive option
• Lowering fares for the same level of service will kill its costs because non-service costs are difficult to reduce (staffing levels, pension plans...)
• Offering low fares will result in non-profitable activities

So they decided to do a bit of everything. High prices for those people that are captive by route, timing, availability of alternatives, FFP or love for AF. Lower service whilst not offering fares to attack at least those costs that can be addressed, even if it is at the detriment of product quality and passengers attractiveness. Expanding the availability of lower fares and thus threatening the financial sustainability.