Air France’s plan to radically overhaul its domestic operations with a prominent role for Transavia France has received a major boost this week when the majority of pilots’ union SNPL voted in favor of the proposal. This will allow the low-cost leisure airline to operate on domestic routes, helping to reduce costs.
With a turnout rate in the referendum of 82.63 percent, 90.37 percent of the SNPL members supported the proposal. SNPL is a major force within Air France, representing the majority of its cockpit crew. In recent years, the union has played hardball with AF’s top management, costing the airline millions in prolonged strikes in 2017 and 2018.
Domestic loss-making for two decades
Air France’s domestic network has seen numerous restructuring efforts in the last two decades, each trying to curb the trend of ever-continuing losses. Between 2013 and 2019, losses amounted to EUR 717 million, of which EUR 185 million in 2018. In May 2019, AF announced it would reduce its domestic operations by 15 percent until 2021.
Group CEO Benjamin Smith blamed the poor performance on the increasing competition from France’s high-speed TGV rail network and foreign competitors that have entered the French (domestic) market, including easyjet, Ryanair, and Volotea. Only a few weeks ago, IAG’s Spanish low-cost airline Vueling announced a drastic attack on France. Air France tried to reduce costs by more integrating its domestic subsidiary HOP! into its own operations, but this has had only limited success.
Key to reducing costs will be Transavia France, formed in 2007 with a separate AOC from its Dutch sister Transavia that has been active since 1965. The Dutch even hold a 4.45 percent share in the French airline. Transavia France started operating out of Paris Orly and has added Nantes, Lyon, and Montpellier to its hub network. In 2019, it flew 7.4 million passengers on 100+ routes.
Its options were rather limited, however, as the French airline was restricted by an agreement with SNPL about the size of the fleet to a maximum of forty and that of the airline. The former hurdle was taken successfully in July 2019, when in a referendum the majority of the pilots (78 percent) lifted its objections to further growth of the fleet beyond forty aircraft.
CEO Nathalie Stubler was busy updating her strategy and growing the Montpellier base with fourteen new routes when Covid-19 struck France. This forced Transavia France to ground all forty aircraft until June 15. Part of the growth was supposed to come from new routes into Algeria, taking over traffic rights at Orly after the demise of Aigle Azur.
Slide from Air France’s latest HY1-results presentation, showing the new domestic network.
Domestic network reformed until 2023
The second hurdle – the network – has now also been overcome and opens up the way to a revised domestic network.
Transavia France will become the major force at Orly, connecting the airport on domestic routes into Brest, Biarritz, Pau, Perpignan, Montpellier, Toulon, and Nice. From there, passengers can tap into its European leisure network as well as the Air France long-haul network to the French Overseas Departments and Territories plus New York JFK.
Air France will continue to operate its historical Navette (shuttle) routes into Toulouse, Nice, Marseille, and the island of Corsica, introducing the Airbus A220-300 from September 2021.
Routes within 2,5 hours driving distance from Orly will be transferred to the train network. This has been one of the conditions set out in the state aid package for Air France agreed in April.
Lyon will become a hub for both Air France-HOP! as well as Transavia France, the latter offering domestic routes to Nantes, Bordeaux, and Toulouse. Its presence is there to fight competition from other LCC’s.
Paris Charles de Gaulle will remain the dominant airport of Air France and Air France-HOP!. Looking at the proposed network, there remains significant overlap and competition with Transavia’s network out of Orly as AF serves the same airports except for Toulon. If this will change over time remains to be seen but this has a negative effect on both airlines.
Transavia France will continue to expand its bases at Nantes, Lyon, and Montpellier. More route details will be announced in due course.
The airline has an all-leased fleet, with the oldest Boeing 737-800 over 21 years old but the youngest a little over two years. It used to operate four Airbus A320ceo’s in 2014 and 2015, all transferred from Air France.
Stubler told Airinsight at last year’s World Aviation Festival in London that she was in no hurry to decide about the renewal of the fleet, preferring to add 737NGs where they would become available. She denied that Transavia France was looking at the A321neo and could be joining Dutch Transavia, which has had the MAX on its shortlist for almost two years. A decision on buying double-digit numbers of MAX 10s has been on hold since the MAX was grounded, with a decision unlikely for some time now in an industry marred by Covid.