Pauillac

source La tribune (French)
http://www.latribune.fr/entreprises-...ir-france.html

google translation
Air France has decided to adjust its fleet to more customers in economy class. On the new Boeing 777 she receives, there is no First Class cabin and the number of seats in business class has been significantly reduced.

Air France-KLM reactive strategy of profitable growth, bracketing during the crisis. The group intends to increase its capacity measured in seat kilometers transported (SKO) of 4% per year on average between 2010 and 2013, including 5% in long-haul and 6.5% to the developing areas in Asia (excluding Japan) , Latin America and Africa. On these three pillars, Air France-KLM intends to open routes to new destinations from 9 to 11 in total.

This growth will be an increase in flights, but also by use of larger capacity aircraft. This is because the entry in the fleet by the end of 2012, all Airbus A380s on order (there are eight deliverables), and intensification of long-haul aircraft. And the B777-300 ER with a capacity of 303 seats in three classes (8 First, 67 Business, 28 Premium and 200 economy) will switch to 383 seats for the next deliveries. But there will be more first and business class will contain only 42 seats. Conversely, the number of seats will jump from 58% in economy class (317 seats).

The trend is the same on the B777-200 in operation whose capabilities are being increased from 25% to 309 seats. For over six years, the fleet the first class was removed from the A330 and A340 fleet. "The First is a reduction in all airlines," said Chief Financial Officer of Air France-KLM, Philippe Calavia, which states that without these measures the proportion of First and Business seats would increase sharply as and when the arrival of the A380. "The offer remains comparable." Enough to adapt to travel behavior, modified by the crisis.

"The guidelines of some large companies to reduce travel in business class are not yet exercised," admits the group managing director Pierre-Henri Gourgeon. The advantage of denser the air is clear: "It can reduce unit costs," explains Philippe Calavia. This is expensive in the cabins before the [First and Business Editor's note] is the space and staff. The déproductivité is terrible. " However the challenge lies elsewhere. "We must come to fill the plane." In case of backtracking, remember the direction it may alter the configuration of an aircraft up to a year before delivery. Many analysts feared that such a growth level of capacity does too heavy investments. However, if the A380, B777 must return to the fleet, several deliveries of B777 were postponed while the Boeing 747-400, are extended until 2016.

Gajan

So AF's B77W will have a similar configuration to KL's 77W.
The removal of First is not a real surprise, but what is a surprise is that they are drastically cutting Business.

orbitmic

Great. Those of you who read the interview of PHG linked the other day will have seen the comment I highlighted then on AF-KL doing less well than (even) they expected in premium classes but better than they expected in economy and he adding 'we can live with that'.

So it seems that AF-KL's way of 'living with that' is to consider that they really don't have much of a role to play (or really don't want to play much of a role) in the premium market (bear in mind that despite the comments made in the article, airlines such as BA have announced a strong recovery of their premium cabins in both load factor and revenue figures) and would rather bring their model even closer to a low cost pattern. Many of us commented that the newly announced AF long haul business class was simply not good enough to compete with the rest of the traditional industry. Maybe it is more a case of them not even wanting to compete with the rest of the traditional industry. In this case, though, I wonder if AF won't find that their new long haul business class product is likely to be too upmarket - maybe they should have just stuck to premium voyageur as their 'best' offer and compete with the various charter airlines out there (xl, thomas cook, air transat, etc) maybe AF could 'live with that'. They would also be able to get rid of the rather pointless 'premium affaires' and offer premium eco short haul as their best product to densify the planes too. It would be pathetic, but at least it would finally be coherent.

Falco Peregrinus

The K word... say it.

KLM-ization of Air France.

JOUY31

Now, now, no need for such errr ... sweeping statements

Gajan

And all Dutch/KLM people thought it would be the other way around when the two companies merged

bodory

Basic strategic case : how to turn a leader (world leading airline) into a looser (a sort of undefinable hybrid thing)?

Very few years back, AF was almost the best in class within these fields :
- Y product
- FFP
- fleet (because it was recent)
- finance (fuel hedging)
- rationalisation (fleet, engines, integration into ST...)
- own network

Now I wonder where AF is leading something :
- Y product has been aligned on low cost model but without lowering the fares
- Flying Blue is one of the worst FFP since April Fool
- fleet is starting to be outdated (old noisy 777, extended life of 747) and IMO the introduction of some A380 as flagships does not reduce the odds to fly on the sardine can
- the fuel hedging boomeranged on balance sheet and P&L
- with the big effort Star Alliance made on integrating the network while ST remained steady, AF seems to have lost market shares
- maybe the network remains a strenght, but even in Africa AF is now competed by LH

And I do not speak about C class product where seat is not fully flat and that 2-3-2 configuration, nor about the devaluation of the food (depsite I personaly do not care that much about that point because I do not fly for gastronomy).

Sad, really.

KIXJNB

Less capacity in AF Business
= fewer discounted AF Business seats
= AF fares don't pop up that high in my corporate booking engine
= more opportunities for me to fly Star and Oneworld...

^

Or I'm dreaming.

orbitmic

No, I think you are exactly right:

= fewer business class seats = prices of J with AF will go up considerably on average as availability of Z fares (particularly promo fares) will become minimal;

= considering the increasing gap between AF new-lie-flat-without-foot-rest and everyone else offering fully flat, nobody will want to pay this increased price;

= as noone pays the increased price for a product which will have definitely slipped behind the competition, AF will further increased the said price in order to make benefits with the very few paid tickets sold to corporate customers almost-only;

= in fact, AF will stop offering Z and I fares from anywhere except from France, people wanting to fly AF from other countries will only be able to do so on full-fare tickets;

= AF will prevent regular FB members from booking award tickets in business class - it will only be available to elite customers and only on flex awards;

= with the disappearance of P, AF friends&family will now be upgraded to the empty J cabin instead;

= after a few years, AF will thus consider that on many routes maintaining a J cabin is no longer justified and will therefore transform the A330-A340 fleet into a Y and W aircraft only except on 'high contribution routes'

= after a few more years, J will also disappear from some of the 777, 787, an 380 fleet for the same reason. The AF boss will declare 'AF is doing better than expected in Y but less well than expected in premium classes, however, we can live with that as long as we adapt'.

= "CQFD" Revolutionary concept!! Oh, no, wait... this is exactly what has happened to P right??

Goldorak

This is nothing new : it was announced at least 2 years ago. The new 777 are due to be delivered without F and about 35-40 J seats. So compared to the current config, it means less J seats for the 77W but not that much less for the 772. These new planes will have a config close to the B744 and will in fact mostlt replace the 744.
But it's true that in addition to these new planes, AF is removing the F seats on a few frames currently equipped with. But I don't think they are removing some J seats on these ones.

jsfr

Air Austral still has those 800+ seat A380s on order - at this rate Air Austral may become the Luxury French Airline...

brunos

This is indeed not new, but confirms the trend. As AF says, they have about a 1-year lead to change the equipment of delivered planes. Apparently they have committed for the low-cost option (no F, few C) and decided to push the life of the 747 and delay deliveries of 777.
Frankly, many posters (incl moi) have said that AF business plan is consistent and geared to the low end of the market. So no surprise there. A major mistake they made was to put PV seats in lieu of regular Y seats rather than to replace C seats. But that will change soon.

San Gottardo

I fully agree with the above analyses and I observe a continuous slipping of AF from one of the higher end players to one of the more mediocre ones. Not really LCC because of its longhaul activities and use of a connection platform, but targeting a very similar market.

Thus I wonder whether all of us complaining about AF getting "worse" have just missed the moment to fundamentally adapt our expectations. AF will no longer play in the same league as BA and LH (and never did play in the same league as CX, SQ, EK...) but its European product will be benchmarked against Easyjet and its longhaul activities should only be benchmarked for its Y product, which will be more in the league of Iberia, Egyptair, Air China (I know there are differences between the three, but I don't where AF's journey towards the gutter will end). J class and some very limited P will be kept to milk frame contracts of French corporates which are almost captive, thus no need to offer a good product.

What I therefore suggest:

1. should stop whining about AF no longer offering this or that whilst BA/LH/LX still do
2. in our expectation and perception put AF in a different drawer (that of a leisure-oriented network carrier with a product geared towards cost efficiency, not revenue maximisation)

and rejoice that they are doing certain things better than IB or SK.

That will spare us many traumatic moments and disappointments.

I have been one of many people saying since years that AF is not a business airline and have been flamed by the AF apologists (who have become remarkably quiet as of recently). The market seems to think the same and the numbers confirm it: AF is making its turnaround through success in the Y market, whereas LH and BA make their turnaround through success in the C market.

I am not saying that targeting the eco market is necessarily a bad strategy for the AFKL group (who knows, maybe they'll make tons of money there), but we should say bye bye to them as being in the relevant set of top tier European airlines. They aren't any more. Adieu...

jbcarioca

The same thing is happening with a great many airlines so AF is not alone. LH is not expanding F or C, although it remains dedicated to excellence for the products it has. Even SQ, CX and EK have many business only flights and have cut the sheer quantity of F seats on sale. The otehrs ahve been making extensive use of codeshares to mask some of these actions but reducing the high end they are. They do a better job of masking the reductions because they certainly have glitz in the little F they do have. Have you tried to get an A380 suite on SQ or EK lately?

I share the dismay, but I also accept that the days of widespread luxurious F everywhere are gone.

The long haul AF business class is OK, and the prices on my routes are cheap too. With lower prices I also expect less. As for the new "Premium" that is a real joke. Even I cannot make my rose colored spectacles work on that one.

SU is looking good!

brunos

I agree with you, with three exceptions:

- Their turnaround is not really one. Without the sale of Amadeus, they would have reported no profit for H1 March-September 2010. That is very different from most airline who had healthy profits.

- IB has horizontal flat seats in C on all longhaul flight

- Whining is such a pleasure