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Topic: AF Will Transform Transavia Into A LCC
Username: Gonzalo
Posted 2013-09-09 08:01:52 and read 7979 times.

AF would slim down its operations at Paris Orly in favour of handing over a number of routes to Transavia.

The move could happen as early as next year.

Let´s see what the unions have to say about this....

http://www.businesstraveller.com/new...jump-on-low-cost-carrier-bandwagon


Rgds.
G.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Pe@rson
Posted 2013-09-09 08:04:49 and read 7959 times.

Quite a logical idea, but will it work? We shall wait and see.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Azure
Posted 2013-09-09 08:49:42 and read 7725 times.

Transavia is already a LCC ! AF wants to strengthen TO by tripling its fleet (up to 30 737-800 by 2015). The new 738s will be leased. AF will get rid of 10 A320s and will slim down its domestic ops at ORY which will free slots for TO. But TO will not operate domestic routes at least at the beginning. I am guessing TO will mainly fly to "holiday destinations" that cannot be profitable with AF current cost structure. Anyway AF is unlikely to transfer all its european network to TO as its short/medium haul fleet will remain far more substantial than Transavia's (AF owns over 130 A318/319/320/321).
I doubt this new measure will be sufficient to make the European network profitable but the move was expected. I do not think the unions will strongly oppose this...

Topic: RE: AF Will Transform Transavia Into A LCC
Username: rojo
Posted 2013-09-09 11:30:35 and read 7324 times.

They finally made it official... TO is already a LCC but AF hasn't been able to grow the ailrine from its current 11 aircraft operating for the French subsidiary because it will infuriate its unions. TO competes against AF on half of its routes from Paris and, in those routes, looks like AF has more capacity than TO...

With AF/KL short/medium haul still losing $$ and TO/HV also posting an operating loss (small but still a loss in 1Q and 2Q13), AF/KL group should get its act together in terms of cost structure and unions. It will not be easy, but Transavia doesn't look like the proper solution... AF/KL group has been growing Transavia at the expense of AF/KL, but results in the first half of the year were not what they expected. AF/KL short/medium haul lost more revenue than Transavia gained reducing the combined revenues for the region. That means other airlines (like easyjet) are winning the battle.

Hope AF/KL group finds the magic formula, but it will not be easy...

Topic: RE: AF Will Transform Transavia Into A LCC
Username: mozart
Posted 2013-09-09 12:02:18 and read 7194 times.

Quoting Azure (Reply 2):
Transavia is already a LCC !

Exactly. That was my first thought when I read the thread title.

Quoting Azure (Reply 2):
I do not think the unions will strongly oppose this...

My first reflection would be "they actually will strongly oppose this". AF has a number of unions that are anything but reasonable, and a "deterioration in working conditions" - i.e.: AF pilots moving to a TO contract with less pay and/or more work - will not please them. Heck, these are the unions that negotiate how many drinks round are the maximum on a plane and doing more than that is perceived as an attack on worker welfare. These unions also have the balls to ask the French government for protectionist measures ("no more landing rights for Emirates, Etihad, Qatar Airways).

Quoting rojo (Reply 3):
TO competes against AF on half of its routes from Paris and, in those routes, looks like AF has more capacity than TO...

No. There are very few routes where TO and AF overlap. But I read somewhere that AF plans to shelve some existing codeshares for instance with Air Europa so that they can serve destinations like Palma and Seville.

The challenge will be to differentiate the two. AF is already on the lower quality end of a legacy carrier with LCC elements for many parts of its offering. How hard core LCC can Transavia be positioned? Especially given that easyjet is actually moving upmarket.

And what will happen to Transavia Netherlands?

Topic: RE: AF Will Transform Transavia Into A LCC
Username: luckyone
Posted 2013-09-09 12:21:14 and read 7096 times.

Quoting mozart (Reply 4):
No. There are very few routes where TO and AF overlap. But I read somewhere that AF plans to shelve some existing codeshares for instance with Air Europa so that they can serve destinations like Palma and Seville.

For now there are few routes. This is most likely just the first step in turning over shorter routes to the LCC, and leaving the less competitive routes to the mainline. More is coming.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: kl911
Posted 2013-09-09 14:32:38 and read 6601 times.

Quoting Azure (Reply 2):
Transavia is already a LCC !

No it's not. I often see routes for 99 euro or more which is not low at all. Within Europe you can often fly KLM and Lufthansa for 100 - 130 euro return. LCC fare for me is 39.99 or less one way.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: peanuts
Posted 2013-09-09 15:59:30 and read 6433 times.

Quoting kl911 (Reply 6):

But that's not what LCC means or stands for.
We're talking "costs" on their end. Not on your end.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: alitalia744
Posted 2013-09-09 16:31:30 and read 6359 times.

Quoting kl911 (Reply 6):
No it's not. I often see routes for 99 euro or more which is not low at all. Within Europe you can often fly KLM and Lufthansa for 100 - 130 euro return. LCC fare for me is 39.99 or less one way.

LCC isn't about price for you, it's about COST of doing business for the AIRLINE. Thus "Low Cost Carrier" - often met with a no frills approach to service which helps keep costs down for you.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: mozart
Posted 2013-09-10 01:16:25 and read 5915 times.

To be fair, the definition of LCC is a little fuzzy.

There are legacy carriers whose cost base is almost as low as that of LCCs. Still that doesn't make them LCCs.

There are legacy carriers whose service offering has many elements that are typical of an LCC (pay for luggage, pay for food, Y only cabin, no miles...). Still that doesn't make them LCCs.

Then there are legacy carriers whose fares are as low as those of some LCCs, and sometimes LCCs' fares are as high that you'd think this is a legacy carrier.

So in the end it is a matter of how the carrier is positioned by the marketing people and in the public's perception. Often it is a matter of how an airline defines itself.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Azure
Posted 2013-09-10 02:48:02 and read 5737 times.

Quoting mozart (Reply 4):
My first reflection would be "they actually will strongly oppose this". AF has a number of unions that are anything but reasonable, and a "deterioration in working conditions" - i.e.: AF pilots moving to a TO contract with less pay and/or more work - will not please them. Heck, these are the unions that negotiate how many drinks round are the maximum on a plane and doing more than that is perceived as an attack on worker welfare. These unions also have the balls to ask the French government for protectionist measures ("no more landing rights for Emirates, Etihad, Qatar Airways).

We completely agree on the fact that these unions are neither reasonable nor realistic, but I think AF has learnt its lesson. The management will offer hefty compensations to the pilots who will accept to transfer their contract under TO rules, which will calm down the unions. Remember, last year AF offered up to € 100,000 to each pilot who accepted the deal with TO. We can bet the same policy will be followed this year again.
Of course this is going to cost a fortune... Last year, the provisions for restructuring costs accounted for half of AF losses, but it is a punctual spending that will be largely offset in a few years by a lower cost structure.



Quoting mozart (Reply 9):
To be fair, the definition of LCC is a little fuzzy.

There are legacy carriers whose cost base is almost as low as that of LCCs. Still that doesn't make them LCCs.

There are legacy carriers whose service offering has many elements that are typical of an LCC (pay for luggage, pay for food, Y only cabin, no miles...). Still that doesn't make them LCCs.

Then there are legacy carriers whose fares are as low as those of some LCCs, and sometimes LCCs' fares are as high that you'd think this is a legacy carrier.

So in the end it is a matter of how the carrier is positioned by the marketing people and in the public's perception. Often it is a matter of how an airline defines itself.

   In Europe, the main legacies have their own "house LCC" and furthermore even the mainline brand has the same kind of unbundled offers as the LCCs have on intra-european flights.
TO is a LCC, its cost structure is competitive with U2 or VY.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: DL747400
Posted 2013-09-10 06:25:05 and read 5188 times.

Quoting Azure (Reply 2):
Transavia is already a LCC !

My thought exactly!

So it sounds like AF is going to restructure Transavia's network to include some new operations at ORY. But is AF going to invest in additional aircraft for the Transavia operation? Or is the ORY growth going to be at the expense of some existing services currently feeding AMS? Knowing the AF culture, I expect unions to throw a fit.

If they establish an ORY operation in a smart way, this could help AF defend it's Paris turf from the encroachment of other LCCs. If handled poorly, this could spoil the operating cost advantage that Transavia brings to the AF/KL Group in the first place.

Here is a Transavia route map. Hover over AMS and take a look at the extent of the AMS network:

http://www.transavia.com/hv/en-EU/destinations

By smart, I mean AF should grow Transavia rather than taking the easy road and simply reduce the AMS operation then move the planes to ORY. If AF cannot make a profit using mainline equipment and labor, then the short haul should go to Transavia and they should aggressively time the schedules for connecting opportunities wherever it makes sense. I do realize that we are talking about ORY versus CDG, and I do understand that ORY handles more O&D than CDG, but ORY does still have connecting opportunities to AF which can be exploited.

[Edited 2013-09-10 06:27:42]

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Aircellist
Posted 2013-09-10 07:25:36 and read 4749 times.

Isn't that a bit akin to resurrecting Air Inter, at least in spirit, somehow?

Topic: RE: AF Will Transform Transavia Into A LCC
Username: photoshooter
Posted 2013-09-10 07:35:44 and read 4658 times.

I see KL started some codeshares on HV flights recently, something which I wanted to see years ago... Should work with AF/TO as well. TO should consider adding 737-700s instead of 737-800s. HV is pretty good at using them on routes to and from smaller airports or on routes with less passengers during our winter.

Quoting mozart (Reply 4):
And what will happen to Transavia Netherlands?

I don't expect any major changes. They got a few brand new 738s lately, more 73Gs would be nice to see as well. Remember this airline has been a profit airline since it started. Only the past few years have been rough for them but still nothing to worry about.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: nicode
Posted 2013-09-10 07:55:43 and read 4512 times.

Is this the beginning of the end of "La Navette" by AirFrance ?
And we can't (yet ?) earn miles with Transavia...(unless we'll see codeshare between AF and TO)

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Azure
Posted 2013-09-10 10:05:19 and read 4296 times.

Quoting DL747400 (Reply 11):
is AF going to invest in additional aircraft for the Transavia operation?

Yes. the plan is to make TO fleet grow to 30 B738s (TO now has 11 B738s). The new aircraft will be leased. In the meantime AF short haul fleet will decrease by 10 aircraft.



Quoting DL747400 (Reply 11):
is the ORY growth going to be at the expense of some existing services currently feeding AMS?

I do not think so, HV is doing fine, there is no reason to change anything there. The plan is to transfer the AF unprofitable ORY-based routes to TO or open new routes from ORY with the advantage of a lower cost base, not to downsize AMS or HV. Most of AF troubles come from its regional ops and it stated recently that KLM City hopper and HV should serve as an example.



Quoting DL747400 (Reply 11):
If AF cannot make a profit using mainline equipment and labor, then the short haul should go to Transavia.

   Their plan actually.



Quoting Aircellist (Reply 12):
Isn't that a bit akin to resurrecting Air Inter, at least in spirit, somehow?

Indeed... Albeit Air Inter operated wide-bodies and TO at this stage will have no domestic ops.
Speaking of Air Inter, I find it ironic that they invented the LCC concept over 30 years ago, got merged into AF and are now brought back to life in a certain way by the same AF that used to look at them with disdain...




Quoting nicode (Reply 14):
Is this the beginning of the end of "La Navette" by AirFrance ?

I expect AF to decrease capacity and frequency on some routes but certainly not to cease all domestic ops from ORY.




Quoting nicode (Reply 14):
we can't (yet ?) earn miles with Transavia...(unless we'll see codeshare between AF and TO)

This might happen since :


Quoting photoshooter (Reply 13):
KL started some codeshares on HV flights recently, something which I wanted to see years ago... Should work with AF/TO as well.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: BasilFawlty
Posted 2013-09-10 17:56:32 and read 4013 times.

Quoting alitalia744 (Reply 8):
LCC isn't about price for you, it's about COST of doing business for the AIRLINE. Thus "Low Cost Carrier" - often met with a no frills approach to service which helps keep costs down for you.

No, it's not, that's just what 'fake' LCC's want you to believe these days. A proper LCC means LOW COSTS for EVERYONE; low operating costs for the airline so they can offer low fares to the passengers.

Quoting photoshooter (Reply 13):
more 73Gs would be nice to see as well.

Not going to happen, all -700's will leave the fleet within the next 2 years, the first one is leaving in November already.

[Edited 2013-09-10 17:57:37]

Topic: RE: AF Will Transform Transavia Into A LCC
Username: C010T3
Posted 2013-09-10 18:42:30 and read 3980 times.

One step closer to Frenchwings...

Topic: RE: AF Will Transform Transavia Into A LCC
Username: Aircellist
Posted 2013-09-10 23:01:06 and read 3852 times.

Quoting Azure (Reply 15):
Quoting Aircellist (Reply 12):
Isn't that a bit akin to resurrecting Air Inter, at least in spirit, somehow?

Indeed... Albeit Air Inter operated wide-bodies and TO at this stage will have no domestic ops.
Speaking of Air Inter, I find it ironic that they invented the LCC concept over 30 years ago, got merged into AF and are now brought back to life in a certain way by the same AF that used to look at them with disdain...

Ironic indeed… Air Inter used widebodies, yes, but if I remember well, at the end, they had some kind of "navette"-like operations on high-debit liaisons, like Toulouse, Marseille, Nice, Bordeaux, using mostly A320s, didn't they? They kept the A300s (and the few A330s) for the rush-hour flights, I believe.

I do regret that airline… even though I disliked it's employee's tendency to strike every summer…

Topic: RE: AF Will Transform Transavia Into A LCC
Username: mandala499
Posted 2013-09-10 23:30:52 and read 3819 times.

Quoting BasilFawlty (Reply 16):
No, it's not, that's just what 'fake' LCC's want you to believe these days. A proper LCC means LOW COSTS for EVERYONE; low operating costs for the airline so they can offer low fares to the passengers.

How much is a walkup fare between two identical routes for the LCC and non-LCC? The LCC would be cheaper.
Once you go further away from the walk-up fly now fare, the term LCC goes on the cost for the airline... why? Yield management employed by both LCCs and legacies blur the difference.
Low cost for everyone? Fly an LFC... Low Fare Carrier... we've seen how many of those went bust...   

Topic: RE: AF Will Transform Transavia Into A LCC
Username: photoshooter
Posted 2013-09-11 02:31:12 and read 3691 times.

Quoting BasilFawlty (Reply 16):
Not going to happen, all -700's will leave the fleet within the next 2 years, the first one is leaving in November already.

That's weird, though they aren't new, they surely are efficient. So all the RTM/EIN based 73Gs will be replaced by 738s? Doesn't make any sense. Do you have a source?

Topic: RE: AF Will Transform Transavia Into A LCC
Username: rojo
Posted 2013-09-11 07:07:53 and read 3518 times.

Quoting photoshooter (Reply 20):
That's weird, though they aren't new, they surely are efficient. So all the RTM/EIN based 73Gs will be replaced by 738s? Doesn't make any sense. Do you have a source?

B73G's are efficient, but with oil prices going up, you need more capacity to lower cost per passenger. The question will be, why hasn't Boeing sold 736?? They sure are efficient, but they are too small to cover fixed costs on most routes.

Topic: RE: AF Will Transform Transavia Into A LCC
Username: WAC
Posted 2013-09-11 11:03:31 and read 3354 times.

LCC carrier means all variable costs are paid by the customer such as check in at the airport, printed traditional boarding pass, meals drinks etc. It also mean the airline has striped it self to very basic, low fixed and operating costs. Whether the savings or low cost is passed on to customer is solely based on the laws of supply and demand.


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