The passenger business is Air France-KLM’s main activity, contributing some 80% of the Group’s revenues.
Within the framework of the Transform 2015 plan, the Group launched a series of action plans in the passenger business. For the long haul activity, these plans aim to reinforce profitability by phasing out the least-efficient aircraft, improving schedule productivity and, in particular, repositioning the product in line with the industry best in class. For the heavily-loss-making medium-haul activity, a restructuring program has been launched. These action plans do not call into question the Group’s strategic priorities and it continues to invest in customer products and services, strengthen its presence in growth markets and deepen its relationships with partners.
The medium-haul activity
The short and medium-haul network is a cornerstone of the Group’s development in that it ensures not only its operations across Europe and the power of marketing tools like the Flying Blue frequent flyer program or contracts with companies and the major agency networks, but also feeds the long-haul flights at the dual hubs of Paris-CDG and Amsterdam-Schiphol.
The profitability of this network has seen a significant deterioration since the 2009 crisis. In addition to increased competition from the low cost airlines, this network has experienced a profound change in behavior with Business customers abandoning Business class and flexible fares for the lowest-priced tickets.
Increased productivity for the Air France-KLM medium-haul schedule
Thanks to the new collective labor agreements which enable an improvement in productivity for all staff, the Group is going to increase the utilization rate of its medium-haul aircraft.
Reorganization of Air France’s medium-haul activity around three business units
The Air France group’s medium-haul operations have been reorganized around three complementary business units: Air France, the French regional division and Transavia France:
- Air France now operates the flights feeding the long-haul operations at the CDG hub, the routes with a high proportion of business customers in France and across Europe and the flights on departure from the provincial bases (Marseilles, Toulouse and Nice).
- Under the Hop! brand, the French regional division regroups the companies Regional, Britair and Airlinair. This division operates flights to the Paris-Charles de Gaulle hub on behalf of Air France together with the point-to-point flights on departure from Paris-Orly and the domestic network. This regrouped division enables a new commercial offer which is rapidly adaptable to market changes and competition while being more competitive for business and leisure travel, both inter-regional and to Europe. On the occasion of this reorganization, the regional fleet is being reduced by 18 aircraft, from 116 in 2012 to 98 in 2013.
- The leisure division comprising Transavia France will develop by operating flights to destinations across Europe and the Mediterranean rim from Paris-Orly and the French regional capitals (excluding Marseilles, Nice and Toulouse).
New services and a revised range of fares
Air France decided to revamp its medium-haul customer proposition by offering new services to Business and Premium Economy customers together with new catering. At the airport, Business and Premium Economy customers benefit from SkyPriority while, on board the aircraft, the differentiation between the two cabins has been accentuated. Furthermore, these passengers have access to catering inspired by the service on long-haul flights.
The long-haul activity
In long haul, the Air France-KLM group is aiming for a threefold improvement in the performance of its network: be more efficient to return to a growth dynamic, do better by respecting its basic contract with the customer and differentiate itself through the quality of the products and services.
A strong presence in growth markets
In the past few years, the Air France-KLM group has developed its presence in growth markets. More than 60% of the Group’s offer is oriented towards Asia, Latin America and Africa compared with 48% for IAG and 41% for the Lufthansa group.
An ongoing improvement in ground and in-flight services
The two airlines continue to improve their levels of in-flight service. Air France’s customer-centric ambitions notably focus on a more personalized service which is closer to the customer, improved services and investment in new La Première and Business cabins for the Boeing B777s and Airbus A380s as of 2014. The Economy class, which represents an important source of growth for the airline, will also benefit from innovation with, for example, new in-flight entertainment systems. Lastly, since June 2012, the Premium Economy class has benefited from a differentiated service with an improved menu aimed at reinforcing the identity of this cabin.
KLM is rethinking the configuration of its Business cabin to offer its passengers a high standard of comfort and greater privacy. In addition to new seats which convert into fully flat beds, the Business cabin has been revamped by the renowned designer Hella Jongerius with the inaugural flight scheduled for July 2013. The 22 Boeing B747-400s will be fully equipped in April 2014 and the 15 Boeing B777-200s by the summer of 2014. In addition to new seats and a redesigned World Business Class cabin, the airline introduced a new initiative giving Business customers a choice of meal tray and time of meal service based on their individual needs.
At every stage of the journey, Air France plans to improve its products and services by putting particular emphasis on punctuality, developing new services and taking advantage of the new infrastructure at Paris-Charles de Gaulle brought into service within the framework of the Hub 2012 project. 2012 was a year of transformation for CDG airport with the opening of major new infrastructure including Satellite 4, the new boarding pier at terminal 2E dedicated to long-haul flights and wide-body aircraft. It is exclusively for Air France flights and those of its SkyTeam alliance partners, and also accommodates a 3,000 sq.metre –plus lounge for Air France’s Business customers, the largest on its network.
Pursuing customer-centric initiatives
To facilitate and improve the airport experience for customers, Air France and KLM are developing the use of new technologies to enable boarding autonomy and streamline the baggage drop-off process.
More autonomy and self service
Launched in a pilot phase last year at Paris Orly, the roll-out of the new automated baggage drop-offs is continuing aimed at increasing the deployment of this service at Orly followed by Paris-CDG.
Facilitating transit through the airport
SkyPriority is an airport priority service exclusively for Premium SkyTeam alliance customers. In launching this service, the members of SkyTeam are aiming to improve the ground experience of their customers by offering a more homogeneous service irrespective of the carrier.
Ongoing digital innovation
To ensure the success of this in-depth transformation, the Group has embarked on the renovation of its digital organization to make it simpler, more responsive and completely focused on the customer.
Paid-for options to enhance the travel experience
Paid-for options are an opportunity for customers to personalize and enhance their travel experience and a source of additional revenues for the Group.
A more-attractive Flying Blue frequent flyer program
With 21 million members, Flying Blue is the leading frequent flyer program in Europe. In June 2012, Air France and KLM decided to enhance their program for their frequent flyer customers by offering more reward ticket seat availability on the Air France and KLM European network and increasing the opportunities to earn miles.