JOUY31

I don't think AF is embracing a LCC model with the introduction of the MINI fares. These fares are expected to represent a million seats out of 75 million passengers using the airline group each year (of course this includes the long-haul passengers, but I haven't taken the time to look up the data for short-haul and medium-haul passengers). So, for me, it is just about making promotional fares available year round, with the option of unbundling a service some people don't use (checked baggage), one that makes no real difference (what can one do with 125 miles) and disallowing seat selection in the window between 30 hours before the flight and arrival at the airport. There are few, if any, recurring costs; there might be some lost revenue from people who used to pay for the checked baggage without actually using it, there might be some additional revenue from people who would have chosen U2 or the TGV, but who will deem that the reduced price differential makes AF a palatable choice again. Overall, nothing ground breaking. Minor changes with minor risks and possibly minor gains.

I do not believe the risk of brand dilution is important in this respect; people have often argued that AF has a black and white approach to corporate customers as opposed to the leisure traveller. I would argue similarly that we can all be short/medium haul travellers as well as long-haul travellers and that it has been (painfully) drilled into us that we shouldn't expect too much on short European flights. So I don't think having reduced services on short/medium-haul flights with the MINI fares will impact AF's image, especially if essentially it is only the seat selection at the airport that is the real change, as opposed to being forced to pay a penalty on a real LCC, that can be as expensive as the ticket, for getting the boarding pass at the airport.

If AF had removed status benefits from the MINI fares, I would have found it inconsistent with what is just, for me, the extension of some existing low fares with one added restriction.

On the other hand, I believe that, with the extension of Germanwings, LH is embracing a low cost model, and doing so according to accepted wisdom within the airline industry, with a clear understanding of the risks, and at this stage, an offer that can still be improved in terms of clarity, such as the possible limitations of some elite perks to routes where the "Best" fares are offered, lounge access or lack thereof for FTL ...

What is more tricky for AF, IMO, is the next steps they are contemplating. With the MINI fares, as a passenger loyal to AF, I keep my elite benefits across the network and I see the airline as having an integrated network that appeals to me.

If the routes currently operated by Britair, Regional ... are operated as Hop aka Transavia aka Germanwings, instead of being labelled Air France by ..., my perception of the network will change, probably to a separation into London Airways and FlyBe, which is another type of brand dilution. Whether or not I keep all my status benefits will also be an issue. On the other hand, this could be closer to a true LCC model.

Of the 58 routes that now have the MINI fares, 14 go to/from ORY and can contribute to flows into the CDG hub. 6 are operated by Cityjet, and may not be part of AF sometime in 2013. It could be argued that the 38 remaining routes from the "bases province" could have been integrated into the future regional brand. I would guess that, since the staff operating these routes volunteered to go from mainline to "bases province", it would be difficult to transfer them to another legal entity with worse work conditions. Having major strikes at the bases province would be quite counterproductive.

Now, introducing the MINI fares on the existing 58 routes, seems to me to be the easy part. Contemplating the extension of these fares to medium-haul routes ex-CDG is another matter altogether IMO, as I strongly believe it could impact premium cabin revenue. AF should thread very carefully and first introduce enhancements to the premium fares and experience, just like the Abonné cards, before extending, if at all, the MINI fares to the CDG routes. Timeliness and quality in execution will be important, much more so than for the 58 existing routes.

Well, in a way, that's what most European legacy carriers have been doing over the past years when facing LCCs.

I would say it is indeed a balance of risks, but I am personally unable to give a prediction, among the possible outcomes:
1) the path chosen by AF works for AF, the path chosen by LH works for LH
2) the path chosen by AF doesn't work, but the path chosen by LH works for LH
3) the path chosen by AF works for AF, but the path chosen by LH doesn't work for LH
4) both the paths chosen by AF and LH are unsuccessful

NickB

Well, the experience that we have of airlines who offer an unbundled product alongside a more traditional product in Europe (BD, SK, SN, EI, JE) suggests the LCC image tends to overshadow the traditional product.
It may be that AF will defy the laws of gravity but I am somewhat sceptical about the Harry Potter powers of AF execs.

orbitmic

I think this is an excellent example because it shows one of the aspects of the inescapable logic of brand dilution in my mind. When AF tried to start imitating some of the LCC recipes when they first introduced NEO and the 'bases province', they included the following measures:

- NEO seats without recline or coat hooks (cheaper maintenance)

- Single class operations from bases province (cheaper costs due to less personnel needed and no 'waste' through curtain)

- Faster rotations with cleaning only overnight and no longer between each trips (cheaper maintenance and better aircraft utilisation)

It would be crazy to argue that any of these three measures only affects a specific category of passengers and thus leaves the brand unaffected.

Unless someone is an airlne geek he won't say "oh I had a terribly uncomfortable on my MRS-BEY 5 hour trip on a non-reclining seat but that was only because I took an MRS flight so I think that the AF quality is unaffected as CDG birds have not changed except for domestic ones". They will say "AF has some nasty seats on some of their aircrafts, I'm flying much more comfortably on BA"

And similarly, nobody finding lots of rubbish in their seat pocket will say: "oh, I had clean seat pockets in 80% of my flights so it is only the last 20% that didn't have clean planes that were affected, it doesn't matter, plus they were all from ORY", they will say "AF has dirty planes, in 2 of my last 10 trips I had tons of rubbish in my seat pocket".

And I also don't think that passengers totally compartimentalise between medium haul and long haul. Again, fair enough if you are an aviation passionate and a very analytic mind, you might try to compartimentalise but even then I doubt that subconsciously you wouldn't be affected - and for most people, in fact, you would not compartimentalise at all and take the airline as a whole - as per all the examples that NickB mentions.

I can indeed, only echo his other point on 'defying the law of gravity'. In other words, in the case of AF, I don't think that brand dilution is a risk, I think it is altogether inevitable.

JOUY31

In terms of passengers per year, the unbundled product, the MINI offers, will represent 1/75 of overall Air France/KLM passengers in 2013. In terms of revenue, far, far less. So, the comparison with BD, I am even less familiar with the operations of the other carriers you mention, is not compelling in my eyes. The critical mass just isn't there.

NickB

Which begs the question: if it is really insignificant, why do it? why even risk damaging the brand for little gain?

GetSetJetSet

Crap like this is why I didn't bother to requalify for AF elite this year. I'd rather fly1-stop flights with LH or LX than ever set foot on an AF plane again.

orbitmic

And to echo NickB's other point, if that is the case, then why risk the brand's reputation to just take out people's right to change their seat online, which of course, is entirely covered by AF's current systems and may even increase the airline's costs.

If 125 miles is 'nothing' then why withdraw them from the Mini service while we know that it may make 'some' people choose AF over U2 within a few euros of difference if it means prorogating their miles life by another 20 months or help them towards their status? If changing one's seat online does not cost AF anything (it doesn't), then why withdraw it? In fact, if the only part of what 'disappears' with the MEAN-y offer that actually costs AF some money or represent value are (1) checked luggage (costs money) and (2) flexibility (people could choose to pay more for changeability) then why not make the R class non-changeable again and even say that it does not entitle to a checked luggage allowance?

The answer, of course, is that those other things are not 'nothing' for the passenger and that AF chose to withdraw elements that it absolutely did not need to take out (because they cost them nothing or near nothing) solely for the purpose of artificially deteriorating their Mini project and creating a differentiation with their 'classic' offer. If they had just said "From now on, R fares are non-changeable and R and N buckets do not include a piece of free checked luggage", I would have been far less critical. But no, they choose to sell a product which is deliberately less good than they would be able to for the sole purpose of trying to push people to "upgrade" ("buy classic if you do not want a low cost experience"), or milk ("your hand luggage weight 13 kilos, sorry you need to check it in and that will cost you €30) which is exactly the methods used by Ryanair when, as you say, they charge people for arriving at the airport without a boarding card.

I personally know of no well-run company with a respected brand image which functions by offering less than the best it can offer for a given cost. If you need to make your product worse for no other reason than to make one of your other products look comparatively better within an artificial concept of 'internal competition' then I think that your concept is fundamentally flawed. Whatever you think of the LH choice, they do not fall into this silly trap and Germanwings will offer the best product it can for within a cost and fare constraint, as will Lufthansa (within a different cost and fare constraint). AF will not, and in my humble view, in a context of tough competition, it is a 'schoolboy's error' to shoot yourself in the foot in such a way and risk your brand image and alienating your frequent customers' base in a number of markets including the ORY, LCY NCE, MRS, and TLS areas by withdrawing things which you could have included in your 'Mini' product to make it better without impacting your cost basis.

JOUY31

With respect to the miles issue, you have France Telecom Orange mobiles for which monthly charges can be lower if you choose not to earn points with the goal of changing your cell phone each year.

Mokshu

And which is still 3x times more costly than Free

JOUY31

Guess who is my provider . It is colourful, although I still remember it as Itineris

orbitmic

So are you on the 'points' or 'no points' version? Hearing "itineris" makes me feel old !

JOUY31

Points . But I am not sure I should be. But I am sure I am not going to waste time to re-evaluate my choice.

orbitmic

I think it makes us both coherent In my case, both my British and French mobiles are on 'low cost' contracts with low cost providers (€4.95/month in France and £7.99/month in the UK), both with zero committment. At those rates, I am not getting any points, no free phone in France and infrequent replacements in the UK, specified allowance of calls, texts and data and 'buy on board' if I want more!

PS: Recently, Orange which gets me my French domestic package (from a time when they were doing a great one which they keep trying to make me change without success) contacted me to propose me a semi-low cost package which would have given me a bit less than what I get from my current provider for twice the price and take away my freedom for 24 months, but boasting about their great network, the fact I could add my points to my domestic ones, and 'great customer service' rather than what they wrongly presumed would be the dodgy service of my current provider (it is not) - I said no - if I'm gonna do low cost, I'd rather get the real thing!

JOUY31

To make matters worse in my case , until a year ago, I had no smartphone, but an Orange Pro service at EUR 49 per month for just two hours of calls. Not the best deal (!), but I didn't change it until I got a smartphone: I now pay EUR 44 for 2 hours of calls + 500MB or 1GB of data. It's been at least three months since I could have asked to have it repriced at EUR 30 for exactly the same service, but I have yet to get to it.

One minor detail about my Orange Pro service was that international calls were included in my allowance, which is not the case with my Origami whatever service. Details, footnotes ....

stimpy

It was only the 1990's. Not that long ago! And my phone was smaller back then. Weird.