Air France says regional future lies in low-cost hubs

5th December 2011, Comments 0 comments

Air France, restructuring a large part of its operations around regional flights in France and the Mediterranean basin, intends to break-even on them by the end of 2013, the airline said on Monday.

Air France intends to compete with low-cost operators on direct point-to-point flights in these areas by copying their best practices and reorganising flights around regional hubs, and also including Orly airport south of Paris.

Tickets priced from 50 euros ($67) for a one-way, short-haul trip and 80 euros for a one-way medium-range trip, went on sale on Monday.

Air France is counting on cost savings of 15.0 percent by increased use of staff and aircraft.

The new chief executive of Air France Alexandre de Juniac said the airline intended to quickly achieve break-even point on these short and medium-range routes.

Air France is experiencing severe financial difficulties but De Juniac said he was "optimistic", in remarks outside the press conference to present the Toulouse hub.

"We are aiming for a return to balance on these point-to-point flights at the end of 2013. The provincial hubs are part of the restructuring of our short and medium-range network," he said told journalists in Toulouse, southwest France where the company is to open its new hub.

He explained that the point-to-point network served airports, including Orly in southern Paris, but without flying to the main Paris international airport, Charles de Gaulle.

The general manager responsible for commercial activities, Bruno Matheu, said that the three provincial hubs of Marseille, already opened this autumn, and at Toulouse and in Nice, southern France, to be opened early next year, should generate overall sales of 950 million euros ($1.282 billion) at the end of next year.

This was a budget target for overall revenues for the three hubs, he said.

Air France has decided to open regional hubs, reduce costs and raise productivity so as to compete with low-cost airlines.

The hub in Toulouse is due to be opened on April 1. It will be the base for fights to 16 new destinations in Europe and in the Mediterranean basin. This amounts to an 11.0-percent increase in the number of flights and 24.0-percent in terms of seat capacity.

Toulouse will be the base for 10 Airbus A320 aircraft, for 120 pilots and 230 cabin crew.

"It is an operating arrangement inspired by the best of the low-cost companies but with Air France service," Matheu said.

The aircraft would be in the air for 11 and a half hours per day instead of eight and a quarter hours now, and the flight hours worked by pilots and cabin crew would be increased by 25.0 percent to 715 hours per year for the pilots and 650 hours for the cabin staff.

Alexandre de Juniac expressed satisfaction with the initial results from operations out of Marseille launched on October 2. He said that 95.0 percent of the flights were on time and aircraft were turned around between flights in 35 minutes.

"These results will enable us to open (from Marseille) three new routes in March 2012: Barcelona, Hamburg and Venice," he said.

Asked about Bordeaux, intended to be the fourth and last such hub, he was unable to give an opening date, saying that feasibility studies had not yet been completed.

© 2011 AFP

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