Friday, May 19, 2017

Air France aims to launch Boost with five A320s

Air France has given more details of its Boost project, revealing plans to launch the new airline with five Airbus A320s in winter 2017.

The Boost project was unveiled as part of an Air France strategic plan in November 2016 in a bid to regain the offensive in the face of strong Gulf carrier competition and to stem losses on Air France’s weakest long-haul routes.

Air France is still waiting on agreement from its pilots, but chairman Jean-Marc Janaillac gave more information on the plans during a recent investor day and separate shareholders’ meeting.

Under the current plan, Boost’s real name will be revealed in summer 2017, paving the way for an operational launch in winter 2017.

The airline will start with a fleet of fives A320s or A321s, serving three to five routes and feeding the group’s European hubs. Destinations such as Turkey, Spain, Italy and Germany are being considered.

This will be followed by a long-haul launch in summer 2018, most likely with three wet-leased Air France A340s as an interim measure before Air France’s order for 21 A350s begins to deliver in August 2019. The A340s will be freed up as Air France transitions to its new Boeing 787s.

At the same time, Boost’s mid-haul fleet will be stepped up to 10 aircraft.

By 2020, Janaillac said the new airline will operate 28 aircraft, 10 long-haul and 18 medium-haul, representing about 8% of Air France’s 350-aircraft fleet and 10% of the group’s flying. All of Boost’s aircraft will be equipped with Wi-Fi.

Boost will be a lower-cost—but not low-cost—achieving ex-fuel unit cost savings of 15% on medium-haul and 18% on long-haul, compared with Air France

The airline will be “agile” and “innovative,” aimed at winning back market share from Gulf and long-haul, low-cost rivals—particularly from younger-generation millennials travelers. Mid-haul flights will be operated in a single class with paid catering, while long-haul flights will be dual class.

Air France said the Boost product “must be perceived as more accessible, different but not downgraded.” The new airline will be “completely different” to its mainline operation, despite acting as a feeder, and “not a similar product” to short-haul leisure carrier Transavia.

“It will focus on ultra-competitive routes, with a mix of Asian routes in competition with the Gulf carriers and the opening of new routes,” Air France said.

The operation will serve a mix of business and leisure markets, while avoiding “real business destinations” like New York or “real holiday destinations” like Mauritius.

Instead, Boost will be used to reopen routes which have been closed because of poor profitability, with 70% of the long-haul network being made up of current loss-making routes and the remaining 30% being new destinations.

The airline will target destinations such as Bangkok and Kuala Lumpur in Southeast Asia, where the mainline carrier is facing Gulf competition, or where the routes “do not work as they should.”

“The Air France Group must react, as 35% of its long-haul routes and 80% of its medium-haul routes are not profitable. 10% of its long-haul network and 20% of its medium-haul network generate €300 million in losses every year,” Air France said.

Boost will protect hub feed, the airline added, and enable Air France Group to expand long-haul 10% by 2020.

Air France plans to achieve the necessary cost savings by agreeing €40 million in annual cost savings with its pilots, falling to €30 million ($33 million) by 2020. Cabin crew will be sourced from outside the company, with recruitment starting in summer 2017, securing a 20% saving on salaries and a 20% saving through improved productivity. Ground handling will be simplified and largely outsourced.

(Victoria Moores - ATWOnline News)

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