Air Austral faces harsh realities of the economic crisis, adopts contraction method

 Air Austral, the flag carrier of La Reunion, once rose into popularity when it became the customer for the highest density Airbus A380 ordered to date. But that plan which seemed optimum at the time has now faded away in the face of the economic crisis and Air Austral finds itself in the midst of a financial crisis and a need for curtailing its network.

 Air Austral is the only airline of La Reunion, a French department located in the Indian Ocean and relied heavily on VFR and O&D traffic between France, Reunion and other French departments. Its network, as well as the fleet, is well planned to serve this market.Its present fleet consist of the following aircraft
  • 3 x ATR 72- 500
  • 2 x Boeing 737-800
  • 3 x Boeing 777-200ER
  • 2 x Boeing 777-200LR
  • 3 x Boeing 777-300ER
 Its order book consists of two Airbus A380-800s and a single Boeing 777-200LR (more on that later).
 The economic crisis impending in Europe, and a weakening Euro, has now made Air Austral one of its latest targets. The airline is now finding difficulty achieving a profit out of its point to point strongholds.
 It presently serves six points in the homeland of France, with Bordeaux, Lyon, Marseille, Nantes, Paris and Toulouse. The airline also maintained a service to New Caledonia, another French territory, with a weekly flight to Noumea via Sydney. Clearly depicting the new realities of the evolving market picture, Air Austral over the next winter season will suspend flights to all of the above stations but Paris, leaving Paris as the sole long haul destination for its 8-strong long haul fleet.
 And intensifying the situation further, and describing a clear example of the level of problems the airline is facing – the airline is unable to pay for the Boeing 777-200LR that it has on order, and sitting on the Everett flight line. It is now looking for a new buyer for the aircraft. The airline has also reportedly said that it will either defer or outright cancel its pending order for the A380s, with a decision expected as soon as June.
 The airline will also be downgrading its Bangkok flights to a Boeing 737-800 service to be operated via Chennai.
 Air Austral is not alone with the problems, other Indian ocean carriers that heavily relied on leisure and Europe based VFR traffic, such as Air Madagascar and Air Seychelles are finding themselves in a troublesome situation and have adopted their own restructuring programmes.
 Would Air Austral be successful with its turnaround path? Only the time will tell.

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