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Aviation History
1988
1988 - 0206.PDF
AIR TRANSPORT Air France shapes up for hotter markets PARIS Air France is preparing itself to meet tougher competition in the 12-nation European Community by deregulation day, January 1,1993. Spurred, too, by current US and Asian carriers' offensives, it is harnessing new resources to meet the challenge ahead, with a clear determination to emerge among the leaders in Europe and the world, reports Gilbert Sedbon. Priorities for the French flag carrier are enlarging the company's fleet with 25 Airbus A320s and 16 additional Boeing 747-400s (bringing the fleet total to 111 aircraft), extending the present network of 176 desti nations in 77 countries, and launching new commercial operations with a variety of quality products. Air France plans new alliances with French and foreign carriers in the coming years, and intends to cash in on the increasingly important hub at Charles de Gaulle Airport, Paris, whose significance is magnified by the likely decision to inter connect the various TGV high speed train routes there. The TGV rail station is being built under the two main CDG terminals. Air France made a profit of more than Fr700 million ($127 million) in 1987, despite a degree of air transport lib eralisation in Metropolitan France and French overseas territories, compared with the previous year's Fr677 million profit. Air France seating capacity in 1988 should increase by 3 • 5 per cent and cargo capacities by 9 per cent. The company is putting the first four of 25 Airbus A320s into service on its medium-haul network in Europe beginning this spring. The A320s will be operated on routes from Paris to Amster dam, Berlin, Dusseldorf, Frankfurt, Geneva, Hamburg, Milan, Stockholm, Vienna, and Zurich. The airline expects to add a Boeing 747 Combi in April and a Boeing 747 freighter in September on its inter national network, bringing its Boeing fleet to 64, mainly 747s. In 1988 Air France plans to fly to 11 new destinations out ttggtlMK "Stf&* Air France's expansion plan includes 25 A320s of Paris and 12 new cities out of the main French provincial centres. The hub routes would be Paris to Glasgow, Izmir (Turkey), Leningrad, Salon ika, Southampton, Stavanger, Tirana (Albania), and Verona; in South America to Belem; and in the Middle East to Alexandria (Egypt), and Aleppo (Syria). The new routes out of the French provincial centres are: from Nice-Cote d'Azur to Barcelona, Frankfurt, Stock holm, Tel Aviv, and Zurich; from Lyons to Barcelona, •Istanbul, and London; from Nantes to Dusseldorf and Milan; from Bordeaux to Lisbon; and from Toulouse to Lisbon. In addition, Air France will take two services under its own flag instead of in joint operation with Iberia: Paris- Valencia and Paris-Seville. The major carrier is devel oping operations with French third-level airlines TAT, Air Littoral, Brit Air, Europe Air, and Air Limousin, to cover low-traffic routes and for pioneering new routes. To solidify further its French base, Air France's chairman and chief executive officer Jacques Friedmann is nego tiating an alliance with French domestic airline Air Inter in anticipation of the opening of the European Community market to wider competition among member nations. Meanwhile, the emergence of all-French competition between Air France and UTA (Union de Transports Aeri- ens) on the Paris-San Fran cisco and Paris-Papeete runs, in addition to competition from the French charter airlines Minerve and Point Air, is adding new dimensions to the fight at home. To cope with this com petition, Air France imple mented throughout 1987 an aggressive commercial policy in North America. This was reflected in the opening of routes to Boston and Phila delphia and in an increased number of promotional fare operations: for example, a 3-8 per cent reduction of the Vols Vacances fare to the USA, and a Fr650 reduction of the one-way fare in Air France's Le Club class which has been in force since November 1 on all the company's flights to the USA. With the opening of new destinations in the USA—San Francisco (September 1986), Miami (October 1986), Boston (April 1987), and Philadelphia (December 1987)— together with a more aggressive sales drive, Air France has met this increased competition. But the French flag carrier is bitterly resisting UTA efforts to obtain landing rights at New York Newark which would lead to unwanted additional competition on the lucrative New York route. A decision from the French Government will be delivered shortly. "The fact that UTA and Air France now compete on the Paris-San Francisco, Paris- Papeete, and Los Angeles- Papeete routes has not yet proved that all-French com petition would strengthen the French presence on routes where tough international competition already exists," says Friedmann, rejecting UTA arguments to the con trary. The traffic carried by French carriers between France and the US west coast in 1987 increased by 38-9 per cent. This improvement was obtained in conjunction with a 51-4 per cent increase in capacity, although to other US destinations served by Air France the traffic increase was obtained together with a limited increase in capacity of 12-8 per cent. "The result was a drop in the passenger load factor on French flights to the US west coast, together with lower overall profitability for French carriers on routes to California," says Friedmann. "This was mainly due to the decrease in unit revenue, together with the competition between two airlines of the same nationality." With both Air France and UTA running on this route, the French presence on the American west coast has not been reinforced, compared with American and other European carriers. In fact, says Friedmann, the French share has dropped 0-2 of a percentage point when com pared with other European carriers. But Air France has also to face UTA competition on European routes in the coming months, as it is UTA's firm intention to spread out across Europe, too. Discus sions are under way which should allow Air Inter to extend its operations beyond Metropolitan France to the UK, Germany, Italy, Spain, FLIGHT INTERNATIONAL, 30 January 1988
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