Oh Air France, why do you do this to yourself? This month, the airline released yet another turnaround plan to try and shore up its weaknesses and prepare for the future. There is absolutely nothing imaginative in this nine-point plan, but instead it looks like a way for the new CEO to make it look like he’s been doing something.
The new plan is called “Trust Together,” which would be a great name if the title wasn’t being completely undermined by the actual details of the plan itself. I assume “Trust Together” means that they’re hoping the entire team can come together and move forward. But a large chunk of the plan is an end-run around labor. So I’m pretty sure there isn’t going to be much togetherness.
I know I said it’s a nine-point plan, but some points are really multi-part while others say nothing at all. For example, point #4 is “Strengthen the growth of the maintenance business.” How?
Air France-KLM will continue its investment in this high-growth market to reinforce its global number two position and improve the efficiency of its production tools. From this perspective, the Group will launch a review of this business’ industrial model, examining its potential corporatization, knowing that Air France-KLM wishes to retain exclusive control
Holy crap! What in the heck does that mean? I could have come up with that myself by using this website. So let’s focus on the bits that have any substance at all.
#1 Creation of a new company alongside Air France, which is competitive and innovative and will drive growth for the Paris-Charles de Gaulle hub
Remember that whole “undermining labor” thing I talked about? This is it. Just as Lufthansa has done, Air France (I’ll just call it Air France since I don’t blame the Dutch for the combined carrier’s problems) has come to learn that it can’t be competitive with gulf carriers. So it’s going to create a new low cost subsidiary to fly 10 A340s. Seventy percent of flying will be devoted to existing routes with low yield while the rest will be new or previously abandoned routes.
What’s the difference? Labor. They’ll be paid less. Forget that Air France will be devoting its most piggish, fuel-gulping aircraft here. Forget that “low costs” will have nothing to do with the product. What really matters here is that Air France is blindly deciding that somehow these 10 airplanes flown by lower-paid crews will vanquish the gulf carriers and solve the airline’s problems. (Well, that and point #9 “Pursue lobbying initiatives in Europe and France directed at more equitable competition.”)
Of course, even with “equitable competition,” there will be new entrants and Air France’s high costs will put it at a disadvantage. The airline itself needs to change. You can’t just carve out a piece and pretend like that solves all your problems. How many times have we seen this fail? Ted, Song, Delta Express, Metrojet, etc. And most recently, we have Lufthansa doing the same thing. This is all just stop-gap band-aid garbage. Air France needs to fix its own problems at the mainline airline.
#3 Develop the point-to-point markets on departure from the French and Dutch home market
What Air France and KLM have both done in this realm is similar to what Lufthansa Group has done. They’ve shrunk back into a defensive position at their hubs in Paris and Amsterdam, where they increasingly serve only shorter-haul, higher-yielding markets as well as long haul. That leaves two market types they’ve farmed out.
Those routes that don’t touch the hubs have been primarily handed over to the annoyingly-styled HOP!. HOP! buzzes around smaller airports, forming a regional network that overflies Paris. (It also does some regional flying from Paris to smaller markets like a traditional regional would.)
Then for lower-yield leisure markets from the hubs themselves (and from a few other cities), flying has been given to Transavia. That was actually originated by the Dutch but then Air France adopted it for flying from Paris too. It used to be nearly entirely separate, but this plan will integrate it better with Air France and KLM. That means it can more easily handle connections, etc. Transavia will also be expanded as the low-cost-carrier-killer. Good luck with that.
Again, it shows that Air France’s plan is to effectively get rid of as much flying as it can in its core business and give it to lower cost options. Will this solve Air France’s systemic problems? Nope.
The rest of the plan is fluff. Air France will “defend the cargo business,” increase aircraft utilization, introduce new uniforms, and yes, it will focus on “personalization of the customer experience and relationship thanks to Big Data.” Did you know Big Data was capitalized? I didn’t.
In the end, the airline hopes this will reduce costs 1.5 percent a year for the next few years and allow it to expand. To me, it just looks like the airline is confusing itself under a labyrinth of brands and initiatives that will hardly help its core business succeed in the long run.