Air France has outlined plans to help fend off competition from high-speed rail and low-cost carriers within its home market. The airline said the financial situation of its domestic operations has “deteriorated significantly”, and revealed that since 2013, cumulative losses within the division have amounted to €717m (£626m). In response, the company plans to reduce its short-haul capacity by 15% in available seat kilometres (ASK) by the end of 2021, with 465 job losses also planned, albeit with no compulsory redundancies.
The French flag carrier acknowledged that TGV rail services “have increased capacity throughout the country, reduced journey times and developed a very competitive low-cost offer.” The airline cites the launch of four new high-speed rail routes between 2016 and 2017 as exacerbating the shortfall in its domestic passenger numbers. The problem appears particularly marked on services to and from the French capital: “on routes where high-speed trains connect Paris to the provinces in under two hours, Air France has lost 90% of its market share,” the statement continued.
It isn’t just the railways giving Air France a tough time. The carrier also highlights the “rapid development of low-cost airlines” as being detrimental to its balance sheet. The company takes a swipe at the conduct of some firms within the budget sector who it alleges “have gained ground rapidly with aggressive pricing policies and often with the help of public authorities.”
The Charles de Gaulle-based carrier added: “unlike Air France, where 90% of staff are based in France, a majority of these airlines have not contributed to developing employment in the regions where they operate, taking advantage of European mobility and basing employees in jurisdictions with lower labour costs.”
Benjamin Smith, CEO of Air France-KLM Group said: “The French domestic network is intricately linked to the history of Air France. In a highly competitive marketplace, we are all fully engaged in defending a domestic market that is vital for Air France and also more globally for the Air France-KLM Group.”