The airfare dogfight over France

28th July 2003, Comments 0 comments

Get packing! There has never been a cheaper time to fly in France. Marc Burleigh reports on the recent, but long-awaited arrival of cheap air travel within, to - and from - the world's premier tourist destination.

France has been shaken by the new realities of post-September 11 air travel, with domestic and foreign airlines now engaged in a dogfight for its burgeoning cut-price passenger market.

The market, once virtually a closed shop plied by high-price Air France, has been split wide open by low-fare competition from other European carriers in time for the summer vacation rush.

As a result, no fewer than three no-frills airlines - Britain's easyJet, Ireland's Ryanair, and Dutch-owned Buzz - have cheap routes to France, and one, French newbie Air Lib, has begun services within the country.

That prompted Air France to follow suit, slicing up to two-thirds off its fares from Paris to the sunny south of the country in a bid to hold on to customers.

The venerable flag-carrier, the ninth-biggest in the world, took the decision in March after its global business-class revenues had by then fallen five percent since the September 11 attacks by hijacked passenger planes on New York and Washington.

But its ambitions to make up some of the money by targeting more of the 76 million tourists who have made France the top tourist destination have been undercut by the upstart cut-price airlines. Added to its woes is the new high-speed TGV train line that can whisk 10,000 passengers daily from Paris to the popular destination of the Mediterranean port of Marseille, and which has attracted 18 million passengers after just one year of service.

The SNCF, the state-owned French rail company, boasts that it has grabbed 60 percent of the Paris-Marseille market, adding to the woes of Air France, which found itself unable to compete with rail services to Brussels, which as a result it no longer serves.

 Air France is also now only a second choice for passengers headed to London, to which the SNCF offers the high-speed TGV Eurostar service via the Channel Tunnel.

The competition has given a clear advantage to consumers, especially those on vacation looking to save a few euros against a backdrop of a receding global economy.

The public can, for instance, now snap up a one-way ticket with Buzz from London to Paris for around EUR 100 euros, or a one-way flight from the French capital to one of six southern French cities from around EUR 30 with Air Lib, or an Air France return from Paris to Marseille for EUR 82.

The cheapie deals, of course, come with a different sort of price: most (but not privileged Air France, of course) arrive and depart from small regional airports that are often a fair distance from the nearest city, and cabin service has been trimmed to barest minimum.

Far from saturating the market however, analysts say the 'no-frills' sector can only getting bigger.

The low-cost carriers are expected to grow around 30 percent per year for the rest of the decade, eating into the once-profitable short-haul sector dominated by the traditional big airlines, almost all of which are now struggling to turn profits.

The biggest winners are seen as the British and Irish no-frills carriers, which have the longest experience in the budget end of the market.

Ryanair, for instance, already transports more than a million people a year between France and Britain - more than the venerable Air France.

Its wise-cracking chief executive, Michael O'Leary, told Business Week magazine earlier this year that he expects his company - which is the only European airline to have made a profit every year since 1990 - to "be a monster in Europe within the next 10 to 12 years."

Although public awareness of the offers is relatively low at the moment, industry watchers predict it will explode as the summer holiday season hits.

That prediction is rattling Air France, and indeed all the other flag carriers, like British Airways and Lufthansa, as they tentatively their own forays into the unfamiliar world of small margins and high traffic on the short hops.

June 2002


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