San Gottardo

De facto they do not exist any more since some time because the flights were stopped, but now they also bring crews back to Paris.

Article in the French press

Can someone get the old threads out where many on these forum said that it's not going to work? Sometimes armchair CEOs aren't all that bad

brunos

As long as AF does not strongly improve the "productivity" of its pilots/FAs/ground personnel, it has no hope of competing with so-called LCCs. AF has a strong position from Paris for obvious reasons, but from a French region it is hard to compete with LCCs or legacy airlines flying from a French region to their hub. Just basing expensive pilots/staff in MCE, MRS or TLS does not the trick. Apparently AF pilots/FAs refused to bulge in terms of productivity for the Base de Province..

orbitmic

I'm not entirely sure that the FT discussion had anything to say as to whether it would work or fair to keep crews based on regional stations without additional routes, which was intended to save money by not having to pay enormous amounts of money keeping up crews every night in most large French regional airports. I thought it was more about saying that they would not manage to make profits on new "transversal" flights that would be opened. As you rightly mention, those were effectively discontinued some time ago (in fact, in NCE they arguably never opened with only 3-4 destinations, in TLS and MRS it was quite a few more and I'm feeling sorry for both the passengers and staff which came to depend on it).

In fact, I think that the announcement is simply a mechanical effect of AF only flying CDG-province now and having transferred all other routes to A5 (including La Navette) which means that they now let A5 decide how they want to manage their crew and lose their money.

The interesting thing to me is that I cannot see any reason why keeping crew based in various cities (regardless of routes) would not work. Most airlines do it and save money that way, including airlines which do not open any regional routes, but only AF manages to lose money with what seems to make intuitive sense.

The commercial part (ie the new routes) was different: AF managed to fill planes but not to make money. How could this not be a simple sign of bad management? The hilarious part is that it is always the same situation for AF: every time they plan something, they fail miserably and claim that this was not workable while someone else does the exact same and manages to make a hefty profit out of it:

- AF were the first to think of an all business London-New York flight: their plans got messy and BA started it before them, with resounding success. Exit AF.

- AF were the first to have the idea of making LCY a base for business o/d traffic, did it poorly, opening ridiculous routes and closing the ones with potential, they ended up needing to close their operations and sell WX looking a tonne of cash in the process. Because there was no potential to make profit from LCY? Not at all, BA has reopened, in effect, every single route that AF opened and made a big success of them and they now run thriving operations from LCY. Exit AF.

- Bases Province: AF sees potential and decide to open new routes and base crews locally. They manage to fill planes with very high load factors but still lose money, because as always their costs (and by that, I mean their personnel contracts, and their expensive management structure) are far too high. They reduce routes and frequencies, which makes things worse instead of better and end up closing the principle. Because there was no potential? Not at all: in the meantime, U2 at NCE and TLS, and FR at MRS have moved in the place and opened bases there, opening new routes every new season, including many of the ones that AF had thought of. When they don't, other full service airlines step in to fill in the gap instead, like LY which has opened TLV-NCE at the end of March when AF reduced its operations into an idiotic "many flights over a couple of months" charter like model.

I predict the same future for A5, and I predict the same future for TO. The truth of the matter is that AF is simply an incompetently managed airline run by a small group of Parisian civil servants who like to think of themselves as businessmen whilst they have never actually bought a plane ticket themselves and in most cases have only ever flown other airlines than AF accidentally.

They do not understand companies, they do not understand passengers, and more importantly, they do not understand airlines. Last week, they reported more losses at the very same time BA made their largest profit to date.

Sadly, as always, the victims of their incompetence will be customer-facing staff (both onboard and in planes) and secondarily passengers while it is the Juniac, Gagey, Guerin, etc of this world who should have been jobless for years if the airline had any sense (and undoubtedly would have been if this had been a genuine private company with shareholders effectively able to vote down management over incessant poor results without political powers meddling in).

Sadly, this won't happen, so I can only restate what I said before which is that the best hope I can have for AF is that Hop and Transavia collapse sooner rather than later to leave space for others to offer the low cost and regional options that French people deserve and allow AF to concentrate on the only thing it might still be able to do, ie a number (probably much fewer than currently) long haul routes from CDG fed by a limited domestic and European medium haul feeder into CDG (again, much fewer routes than currently), focusing on coherent economy and business class offerings (premium economy if they must) and most probably closing the P offering altogether. I would add that this is not what I "want" (by taste I prefer AF to have P) but what I think that they need.

brunos

Hi Orbitmic. As usual, I would agree with most of your points.
No doubt that AF has very many "brilliant" ideas that usually fail due to mediocre planning and execution.

I understand your dislike of the Parisian civil servant elite who regard themselves as businessmen (no women yet). I used to know that class well decades ago. They are brilliant people but their objective function is radically different from those of typical managers in a "private" company (private as opposed to government-controlled). And as you say, it is more like an aristocracy with little real experience of the business world.
But I also feel that this is just a hopeless situation with the head between the State and the Unions. For example, I think that AdJ had good ideas, but could not achieve anything. JCS had put the company in such a poor state, basically yielding to all union demands to achieve social peace, that I do not think that anyone would make a difference. Of course, that does not excuse the poor decisions that have been made.

I was also reflecting on your idea to remove P. Please excuse an old man who just finished a bottle of Morey Saint Denis 2009. I used to fly a lot on AF paid F years ago. In part, this decision was based on the poor J product at the time on AF (Espace 127) and most other airlines. I basically stopped a few years ago when they made F awards ridiculous and fares equally ridiculous. I still fly paid F on BA and CX. Frankly, I have no problem if they remove P, even with their new P with one row on selected aircraft. It is not going to be better than CX or most other airlines (BA is less good), fares are too high (so are award prices) and I hate the one-row concept. I will restart using AF J in a few years when BEST is guaranteed, but I doubt that I will ever fly P unless on opup. However, I think that they will keep 4 P seats on a few planes. it is an image issue. Not that I think that their ad campaign with glorifying images of AF P brings any customer. Rather, this is an important image for the glory of AF management and employees. They feel proud to work for such a great airline. And the civil servant elite/politicians love to be able to fly F.

NickB

It seems to me that you are attributing to AF a degree of innovation that never was there in the first place. There were quite a few operators that thought and some indeed even started all-business LON-NYC services and it was not an AF idea. Similarly, the idea that AF had a lightbulb moment of making LCY a base for business O/D and that this was an idea that nobody ever had strikes me as odd. LCY has always been oriented towards providing short-haul business routes.
And I think that I can also exclusively reveal that AF did not invent the fil à couper le beurre.

Incidentally, those two examples that you take as examples of poor AF implementation are, imo. just reflections, among others, of the fact that it is extremely difficult for an airline from another country to penetrate a market dominated by the local carrier. Examples of this in Europe (other than LCCs)* have pretty much all been resounding failures, with perhaps the exception of Openskies which keeps on going but that, I think, one would struggle to present as an outstanding success either.

*: Deutsche BA, KLM UK, BA/TAT, LH Italia, ...

orbitmic

I very much agree with your description of those civil servants playing business with large public or ex-public companies (I would personally add arrogance as one of their defining features), and indeed with what you say of the situation that AdJ inherited. However, I do also think that a lot of time has been wasted since the end of the JCS period with the new management playing around with pretty much everything... except what really matters (ie fundamentally productivity and personnel costs).

I agree with you that they will keep P for prestige. My personal sense is that it is a mistake. Ultimately, I think that there is genuine "space" for P on only a few routes (e.g CDG, LAX, IAH, PEK, etc) but the mere cost of maintaining an (excellent) P lounge, dedicated ground crew, dedicated air crew (who might end up only being "needed" one way and return pretty much workless as it is not unusual for P cabins to be entirely empty), etc makes it unlikely to be a money maker. In the current state of affairs, it is fine for the EY of this world to go for "prestige" with their (somewhat ludicrous) "apartments", but I just do not believe that AF can afford to pay for its prestige by now.

It is also the same reason why I personally think that they probably should close a lot of medium haul routes and a significant number of long haul ones. I think that much of their coverage has to do with "prestige" and being able to claim to be a "major" airline, but I personally think that they might need to go through a phase of downsizing to strengthen their bases and only regrow if they manage to be leaner and profitable again. Maybe they need to go through an "IB phase" of sorts.

You may very well be true! I still think that not all of their ideas have been bad. And while I agree that foreign implantation is hard, I think that there is something else at play with AF. Other airlines just manage to do better whatever idea AF has a stab at. So in a way, regardless of whether this was innovative or not, other airlines manage to make a profit on operations which AF attempted, and that includes French regional bases which low cost airlines successfully maintain whilst AF did not.

NickB

I bolded a fragment of sentence in which, imo, is crucial. LCCs manage that but legacy carriers can't and that is not specific to AF. The fact that both BA and LH have completely pulled out of those markets is no coincidence. It seems to me that the implicit assumption that the reason why bases de province failed was because AF was uniquely bad at it and that a more competent full service carrier would have succeeded to go rather against the weight of evidence, which is that not a single full service carrier has in fact managed to do it and pretty much all those carriers in Europe have more or less completely pulled out of non-hub operations.
For that reason, I cannot agree with your statement that "other airlines manage to make a profit on operations which AF attempted" if by "other airlines" we mean 'other legacy carriers.'

orbitmic

That's not what I said. I said that AF just fails at everything. They fail where they could succeed, they fail where they could not, at the end for them, it makes no difference, they just fail anyway, chronically, almost (if not entirely) systematically. As a business structure, they are rotten to the core, their fundamentals are wrong. They can always find individual reasons like the one you mention here and indeed they always try to rationalise and explain that their failures are not their failures but the fault of LCCs, oil prices, ME3, or le chat de la mere Michel, and they always find other examples of airlines which have also failed where they have. Ultimately, they lose money, some others don't and to me this is more fundamental and structural than any individual story of any individual sub-aspect of their programme.

NickB

You may well be right but I do not think that the bases de province* constitutes a context that offers a basis for that kind of assessment: the failure of the bases de province does not tell us much as to whether AF is run in an outstanding/good/mediocre/poor/catastrophically and irremediably doomed manner. One can perhaps say that trying in the first place was a poor idea (and, as you know, I was among those who were sceptical of the likelihood of success) but I can see why it might have been thought worth a try (although I would have thought that experimenting with a single base and see how it went would have been more sensible).

*: unlike discussion of the HOP strategy, for instance.

Dieuwer

How does KL play into all of this?

brunos

That's an excellent question.
The mere fact that KL was not alluded to in the discussion suggests how independent the two airlines are, have been and will be.

Goldorak

Why would KL come into this discussion about closing AF bases de province which were pure AF operations ?

NickB

I am equally perplexed. To my knowledge, KL has not contemplated opening bases in GRQ or EIN.

brunos

I was following the interesting points brought by Orbitmic and got sidetracked away from the original topic. Apologies.

San Gottardo

Well, it did at least express some scepticism, especially about this being successful in terms of reducing personnel costs:

Some excerpts:

orbitmic, on Nov 9, 2011:

Myself, replying to orbitmic:
NickB, in that same thread:

And brunos: