orbitmic

The problem is that this way of framing things (not yours, AF's) formulates both question and answer at once. It becomes something like: "our way is the only way because we 1) can't keep the status quo, 2) can't close routes, 3) can't face another pilots' strike, 4) can't consider any partnership outside the AF group in the domestic market, etc.". It is has though the AF question formulation is tailored to the answer that they want to find and not the other way round.

To me, the question of "are there other strategic options/solutions?" should be reformulated as three separate questions:

- Has what AF/Hop is proposing a convincing chance to solve the problem of losses that the airline has identified?

- What is the worst case scenario with that option, ie does it entail risks that it could make things even worse and under what circumstances?

- What are the alternative options available (without pre-determining the pre-requisites) such as route closures, sale of some groups if anyone is interested, etc and what would be their possible value as solutions and risks (including the risk of "letting some additional space" to low cost or other competitors)?

I think that if disaggregated in such a way, it leads to very different conclusions.

nicolas75

I would love to hear such solutions.

brunos

We all know that Orbitmic is not the CEO of AFKL, but I find it unfortunate as his three questions seem to me totally central to the discussion.


Desperately trying to keep the same number of soldiers and hold on every fort is a typical attitude for some generals. But maybe AF should stop considering that it must hold on slots at ORY or have its own LCC to compete with well-managed LCCs.

San Gottardo

To do some (not even very creative) out-of-the box thinking, here are a couple of things that have been ruled out because of the "taboos" that orbitmic mentioned, or they have never been considered (some of these are combinable, others not):

• "Go BA" - i.e., sell everything except the CDG shorthaul and longhaul operations. If they like, they could keep the ORY routes to NCE, MRS, TLS, BOD, make it a true shuttle service (along the lines discussed earlier) - that would be the LCY analogy
• Build Transavia into a real pan-European LCC organically. Not only one that flies to leisure destinations, but more like Vueling or Norwegian
• Build Transavia into a real pan-European LCC by buying Norwegian and Wizzair, and growing the HV operations.
• Outsource all flying to KLM
• Buy FlyBE, Air Nostrum, Lufthansa Cityline, and a couple of other regional airlines and build a "regional carrier" powerhouse (never tried on such a scale)
• Buy Malaysian Airways from the state for 1 USD, turn it around and let MH do all Europe-Asia flying for them (wet lease if need be for regulatory reasons)

Just ideas.

Henry III

I'm not sure how 'serious' your ideas list is ... maybe not so much "out of the box" but more "into the asylum!"

But a big problem with taking the Transavia-as-LCC option is the danger of creating even more of a Frankenstein's Monster than the current HOP! fiasco: I have no experience with (and little knowledge of) Transavia France but, if it's a similar set-up to their Dutch counterpart, then it's not a general LCC in the sense of easyJet or Vueling, who cater for both leisure and business travellers (regular, scheduled point-to-point routes, convenient times, no-fuss boarding, etc.) HV are, IMHO, more akin to the old-style "Holiday Charter" airlines (like Monarch and Brittania, in the old UK market): most of their routes are "Sun, Sea and Sand" package holiday resorts and (I can tell you from recent experience), their turnaround times and operations at the outstations are slow and clumsy. I think business travellers would very quickly become disenfranchised.

From my (outsider's) point of view, it seems that AF is stuck in a vicious circle: unable to do 'what it wants' or 'what it needs' with 'what it's got' (which, of course, includes recalcitrant unions). Maybe the "Go BA" option is the only solution? (But, I must admit, the "KLM" option made me smile!)

-- Henry

carnarvon

Yesterday, upon boarding, they announced that they would check cabin luggage size.

Interestingly enough, the plane was a packed Embraer 145, where all compliant cabin luggage has to be left at the bottom of the staircase anyhow due to overhead bin size.

Not that I mind such checks, but trying to figure out what the point was.

San Gottardo

Any arguments to back up your "point of view"?

orbitmic

+1. Or at the very least, it shouldn't make it a question of principle (or what San Gottardo rightly refers to as a "taboo") but an empirical question which true cost and actual advantages should be dispassionately assessed.

As for the question of other alternatives, San Gottardo has mentioned some; my own list (partly overlapping) would include:

- indeed, do a BA, cut all those loss making routes and not worry about other airlines "occupying the ground";

- Even consider vacating ORY completely if need be, after all, it is also expensive to keep this additional hub in the same city as CDG, ground staff, etc and there is still space to grow at CDG - or consider a swap with U2: accept to let them grow at ORY if they accept to vacate 2A at CDG;

- cut all those loss-making routes AND make Transavia a genuine low cost airline; this to me would mean tell the board they are getting x planes and y ORY slots and have 6 months to prepare their plan. No pre-requisite in terms of which routes to fly or not to fly (including competing with AF if need be just like VY competes with IB on some routes), no AF meddling with costs, services, pilots etc. Of course this would also mean accepting another quasi certain mega pilot strike;

- cut all those loss-making routes AND aim for an old-boys alliance against the new kids in town by negotiating a full co-operation with the SNCF for a properly integrated rail-air experience from most of France to Paris (except the impractical ones like NCE, BIA, Brest, Corsica, maybe TLS or MPL);

- try and transform ORY into a Parisian equivalent of LIN, moving a number of point to point rotations to primary business destinations - in addition to NCE, MRS, TLS, add LIN, FRA, GVA, ZRH, etc. ;

- give up regional transport - sell Hop! and only code share on whatever routes sound useful for CDG feeder traffic. I am convinced there would be some buyers;

If you relax the assumption that ORY presence must imperatively be kept unchanged not to leave anyone else put a foot in the door, a lot of things become conceivable. I'm sure AF would dismiss them all but I wouldn't be surprised with they came to something like that in 2 or 3 years if current plan fails.

San Gottardo

Thanks for joining me in the asylum

I also like many of your ideas, and thanks for bringing up the SNCF link which I had thought about but not written down.

Add a couple of unexpected M&A transactions and you'll have a broad spectrum of interesting ideas that today would be dimissed immediately because of not meeting the "holy criteria" of abandoning ORY slots, abandoning regional routes, shrinking the fleet, being the junior partner for certain activities, etc.

orbitmic

Yeah, I know, we might be crazy but we are not dangerous!

The whole idea is very basic anyway. Right now, AF is being 'religious' in its approach, with a number of holy beliefs that cannot be questioned. If you make them hypotheses instead that can be tested and played with, the world is your oyster and a multitude of ideas - good or bad - can be formulated and evaluated on their own merit. This can even be used to decide afterwards if one indeed wants to maintain some beliefs and which ones.

NickB

Yes, there is much that I agree with in what you two are suggesting. I do not know whether the ORY slots is a sacred cow or not at AF. It may or may not be. However, what makes me feel uncomfortable with it is that it has all the flavour of tactics without strategy.

It is all very fine to hold on to slots to prevent Easyjet from getting their hands on them but such tactics can only ever succeed if they are part of a thought-through strategy regarding the development of ORY services on a sensible, long-term profitable basis. Otherwise, you are just buying time and delaying the inevitable and weakening yourself in the process of holding onto something that you will end up losing anyway.*

The difficulty is that it is very hard to see a clear strategy in the transfer of services to HOP, unless it is accompanied by a range of measures to make HOP profitable. Now it may well be that there is in fact such a strategy in the background. But, as outside observers, it is hard to see anything to suggest that there is. It feels almost from outside as if AF was waiting for something to fall from heaven to suddenly change the environment and magically turn HOP into a profitable operation. I guess that we will have to wait and see whether there is something of substance rather than just re-arranging the chairs on the deck of the Titanic in that move but it is hard to be very optimistic based just on what is visible to the outside observer's eye.



*: AIUI, that was, to a large extent, BA's decision at LGW. They did not have a meaningful, sensible project for a large full service but leisure-oriented carrier at LGW so it would have been pointless to hold onto slots there and lose money and far more sensible to sell assets to Easyjet, even though Easyjet is a competitor. And I guess that the future of the smaller, more targeted operation that BA now have there still hangs in the balance.