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rutankrd
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:04 pm

European air travel within the EU is a multitude more competitive than the US .

However beyond a hand full of Openskys treaties US- EU, Morocco, Israel, and Canada, almost all other routes remain bilaterally agreed at member state level.

This effectively means the three largest airline groupings retain national airline brands along with tax and local employment laws to comply with those bilateral treaties terms.

However all three have transnational businesses within their groupings targeting point to point and the burgeoning flexible fares (so called LCC) carriers.

These have almost certainly been more successful for a number of reasons because Hub and Spoke really doesn't work short haul this side of the Atlantic what with the effective ground modal networks particularly in Northern Europe and High Speed rail in Spain and Italy.

For the most part European travellers seem less prone to the bribes necessary to support the US Hub and Spoke model for especially for shorter and leisure travel.
 
rbavfan
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:24 pm

PatrickZ80 wrote:
Varsity1 wrote:
Breaking even isn't good either. Airlines need to earn a firm specific risk premium in line with the overall financial markets. The only ones that currently do are the US carriers. Heavy consolidation is needed in europe.


A typically American reaction. If you were from anywhere in Europe you'd know that consolidation doesn't work in Europe, specially for flag carriers like Air France. People need to associate them with their countries. The European aviation market is just different from the American aviation market.

Let's imagine the USA and Canada would become one single market, allowing Canadian airlines to operate in and out of the USA and the other way around. Would you think of Air Canada for a direct flight between Europe and the USA? No, you wouldn't. You'd feel like Air Canada doesn't belong in the USA, they belong in Canada. Well, that's the same thing for European countries and their airlines. Air France belongs in France, any base for them outside France wouldn't work because it's not France. KLM couldn't possibly have a base outside the Netherlands and Lufthansa only works in Germany. That's what I mean consolidation isn't possible, people just wouldn't accept it.

It is possible however on smaller airlines that are not flag carriers. They've got less association with their countries, for that reason Ryanair is able to open bases all over Europe. Ryanair may be Irish, but they're not the flag carrier of Ireland. Aer Lingus is, therefor Aer Lingus is much stronger associated with Ireland than Ryanair.


I could say thats a typical European view! There are quite a few carriers besides Ryanair with hubs in other countries and they do fine. The only reason Air France can't start a hub in another European state under Air France and make it work is due to their cost structure and unions forcing preferential hiring to residents of France. I guess all those people flying Norwegian, in your mind, are doing it because they are not associated with Norway? The younger crowd has no problem flying on the best carrier for them rather that screaming I'm French or I'n German I must fly the flag carrier to honor my country. Thats Bushit these days. It call comes down to money and what services they are willing to pay for. Quit making patriotic excuses for a company not willing to get off their ass and do what needs to be done to survive.

Also I have flown to Canada and meet with friends before continuing to Europe So I could fly Air Canada. That was some time back and was a nice flight. Last time I looked flying to Europe on a 777 with 388 seats vs other carriers. I'dd rather fly on a A330 then a sardine can.
 
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LAXintl
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:39 pm

vinniewinnie wrote:
Im not buying into this. How is SN able to make money on its African network operating to destinations with less P2P trafic & less feed at a lower frequency to the same destinations? (And AT much lower average prices)


Keep in mind SN was able to essentially start from scratch and rebuild an Africa network, one destination and one aircraft at a time with new staff contacts. Back in 2006 it launched with mere 3 A330 aircraft and low frequency service to 13 destinations.

AS result SN is not burdened to the same degree with decades of legacy overhead including staff, facilities, etc.

Also for AF one cant under estimate the political angle of flying the French flag across the continent. I am sure there is pressure from governments on both ends of the routes to maintain such services regardless of financial realities.
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rbavfan
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:39 pm

Aesma wrote:
mham001 wrote:
A typical European reaction, telling people what they "need". Who said airline customers "need" a country carrier? Supposedly, your are one market now, isn't that the great tout of the European Union? Are you really claiming that Europeans would simply stop flying if their airplanes were a different livery? If the pilots wore different color uniforms? What will Italians do when Alitalia is sold to Arabs?


Can you explain why all your airlines have gone through bankruptcy multiple times ? Doesn't the US taxpayer deserve losers to fail instead of picking up the tab ?



Yes because bankruptcy is an option for cutting cost and is used more to break unions. Also the US does not keep tossing money to a national carrier that refuses to force cost reductions in order not to bleed money. Also not all of our airlines have gone through bankruptcy. i.e.: Alaska/Virgin America (5 the largest), jetBlue (6th), Southwest (#3)., Spirit (#10), How many flag carriers have not received state aid over and over and over to stay afloat and never paid the money back?
 
guyanam
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:52 pm

[A typically American reaction.Let's imagine the USA and Canada would become one single market, allowing Canadian airlines to operate in and out of the USA .



Don't use Canada. Use the other NAFTA partner. If Aeromexico gets route rights to do DFW LHR and let us see what the reaction will be if they snatch 30% market share. Yes with announcements in Spanish first, and then in English.

You will hear all sorts of excuses.

Americans are among the most nationalistic people any where so its a joke that some one denies Europeans the right to be. If the current debacle about the EU shows anything its that the EU is an economic and political arrangement. It doesn't address the issues of culture and national identity. THAT is the main reason for Brexit. Loads of Eastern Europeans arriving and British fears that this was transforming that nation.
 
rbavfan
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 2:56 pm

UltimoTiger777 wrote:
Varsity1 wrote:

It "doesn't work" because you don't want it to. Europeans hide behind medieval tribalism and call it "culture". You don't need AF, you don't need Lufthansa, you don't need BA. Look at the U.S. 50 years ago. Our perennial heavy hitters (Pan AM, TWA, Eastern) are all gone, replaced by even larger more successful airlines that fit the business climate of today.

Until Europe can get over themselves and let these dinosaurs sink or swim, there won't be any improvement. They make the market less efficient and worse.


Ummmmm.........BA is a profitable, larger, successful airline. Ain't no bailouts of airlines here in the UK.


Look at your history. BA is a hodge podge of failed British carriers that were propped up by the UK for years. It's doing good now, but if they had to pay back all the money the government feed them the last 40 years alone they would be broke.
 
rbavfan
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 3:03 pm

IndianicWorld wrote:
Not sure why Americans are lecturing to Europe on here. They are very different places.

from my experience living in Europe, it might be a single market but they are still separate countries, and as such many have very different drivers in the mindset of the population towards national brands,

At the end of the day things are not as simple from far away until you experience it yourself.

As for Airfrance, they are often more a victim of union and governmental control in their decision making processes. Many plans have been devised and scrapped over time to make it more competitive but have come to nothing due to stakeholder pressure. Not an easy process.


Agree. The state control & the Unions iron grip are the main things killing the European legacies. If France would let the airline operate to make a profit vs a "We Are France" attitude they would be in much better state of affairs.
 
rbavfan
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 3:12 pm

klm617 wrote:
Varsity1 wrote:
Breaking even isn't good either. Airlines need to earn a firm specific risk premium in line with the overall financial markets. The only ones that currently do are the US carriers. Heavy consolidation is needed in europe.



Right because customers have very little choice and have to deal with the rules these big corporation's make. Last I checked America was built on the foundation that every one would be looked after not just investors so that the could gain a maximum return on their investment. As far as I am concerned the American aviation industry really has done a disservice to the American consumer as a whole with even during the time of regulation the customer received a much better product than it does today and more communities had airline service and employee's had much better working conditions.



Yes and the government propped them up so they could make those route work. Prices were much higher, flight choices were much more limited. There are a lot of cities having air service now that would never have had it in the days of regulation. There are huge number of choice we have that would not have been available.

The same in Europe. Look at your choices of routes & times to fly if Ryanair, EasyJet, Norwegian, WizzAir, German Wings & Volotea were not around. If the legacy carriers had their way they would not exist. Corporations may make the rules, but they have freed us to have more time to travel.
 
directorguy
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 3:22 pm

Would be interested to know what the loss-making longhaul routes are for AF.
My guesses are AUH, DXB, RUH, JED, DEL, BOM, PPT, PEK, WUH, LAX, SFO, SIN...a mixture of long distances, low yields, and plenty of competition.
 
Anansaudiajet
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 3:37 pm

directorguy wrote:
Would be interested to know what the loss-making longhaul routes are for AF.
My guesses are AUH, DXB, RUH, JED, DEL, BOM, PPT, PEK, WUH, LAX, SFO, SIN...a mixture of long distances, low yields, and plenty of competition.

AF has already cancelled JED. I would also add GRU, BKK and KIX to the list.
 
UltimoTiger777
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 4:50 pm

rbavfan wrote:
Look at your history. BA is a hodge podge of failed British carriers that were propped up by the UK for years. It's doing good now, but if they had to pay back all the money the government feed them the last 40 years alone they would be broke.


A lot of that money would have been paid back via the fact the government privatised it.
 
VolvoBus
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 6:44 pm

MIflyer12 wrote:
VolvoBus wrote:
Repeal the Railway Labor Act and how successful would the American airlines be ?


So your criticism is that the U.S. has some intelligent law that keeps employees working and passengers flying?


My point was that there is not a level playing field. This 'intelligent law' also allows American airlines to extend negotiations with the unions for years, keeping that portion of their wage costs static. In Europe,pay increases are back-dated to the expiry of agreements if they are not finalised in time.

Would you extend it to drivers of fuel tankers or bank clerks as well ?
 
Super88
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 9:35 pm

does anyone know what route's make money for AF.....
 
EddieDude
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 9:50 pm

Super88 wrote:
does anyone know what route's make money for AF.....

I would imagine that CDG-MEX is a cash cow for AF.
Upcoming flights:
April/May: AM MEX-SCL 788 (J), AM EZE-MEX 789 (J).
 
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BobPatterson
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Re: Air France loses money on 33% of longhaul flights

Tue Dec 27, 2016 9:52 pm

Aesma wrote:
I'm saying financialization of the economy is not normal, it doesn't work and leads to crash after crash, causing misery across the planet.

Republicans in the US like to call Democrats "liberals" but they're liberal too, they favor individualism, "freedom", less government, less taxes, that's the definition of liberalism. That's what really matters, not their stupid "values" over what people do with their bodies.

Meanwhile no one is saying what I'm saying. Even Bernie the socialist was very tame, and would have probably been totally ineffective at changing things, because you need people to understand the problem first, then you need candidates at all levels that can deliver, the president is not enough in the US.

The funny thing is that in France I'm a liberal, I want less regulation where there is too much of it, but not over aviation or healthcare for example.


Thank you for taking the time to respond, Aesma.

First, political labeling is problematical. Some terms or definitions simply do not have the same meanings in Europe as in the USA.

Think back to the American Revolution when the surrendering British marched out of Yorktown to the tune of "The World Turned Upside Down" (also known as Yankee Doodle Dandy). There have been several political revolutions here (USA) and the social/political leanings of the people to not remain constant. However, individualism, "freedom", less government, less taxes, "that's the definition of liberalism" is no longer true. Those values are in this country the supposed hallmarks of conservativism. Liberals today tend more to group action, more government (regulations) where needed, and they are generally willing to pay more in taxes for important stuff. It hasn't always been this way and you can be sure things will again change over time.

Color me a fiscal conservative and a social liberal.

But let's get back to airlines and fiscal/financial policies. I still do not understand what you are trying to say or mean by "financialization of the economy is not normal, it doesn't work and leads to crash after crash, causing misery across the planet." What precisely is abnormal?

Are you in some way opposed to banks or lending institutions? For or against stock ownership of airlines (among all other businesses)? Tailoring of taxes to favor or promote selected industries deemed essential to the public interest? Just what is "financialization of the economy"? How would you prevent the "boom or bust" nature of capitalism?

If possible, can we discuss this mainly with respect to airlines and the aviation industry?

Thanks, again.
Facts are fragile things. Treat them with care. Sources are important. Alternative facts do not exist.
 
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N717TW
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 10:22 am

a lot depends on how you define 1/3...but generally this shouldn't surprising for many of the reasons listed. But the statement seems to indicate flights rather than routes, which then makes the statement seem all the more true and yet make even less sense. Take a look at intercontinental routes around the world on any given day and you'll notice that its very common for ABC airlines to be flying a plane full one-way and half-empty in the other direction.

As far as the East Africa routes, I'd be shocked if they weren't extremely profitable for AF.
As for TATL, we know from both AF-KL and DL comments that TATL (at least the US/Mexico/Can flying in the JV) is profitable on a year-over-year basis...although that doesn't mean CDG-JFK is. and it could also very well well mean TATL loses money 1/3 of the year...which would fit into a lot of historical models.
As for Asia/Middle East, its well documented that the ME3 are eating the EU3's lunch here. If you were to dump three groups: Africa/Americas/Asia...you'd see that one of those groups is struggling and that AF publicly complains about its performance on this.

The bigger issue isn't that 1/3 of long-haul is unprofitable its that intra-Europe is completely unprofitable and needs long-haul to prop it up. If Long haul isn't super profitable anymore then it puts more pressure on the intra-Europe flights. All of which keeps pointing to a major restructuring of AF (or demise) at some point in the next 5 to 10 years. I'm not sure what happens as I can easily play out many situations: 1) an intra-Europe LCC connecting to AF and 2) a Discount/LCC global carrier or even 3) a whole new brand flying from Paris slowly replacing AF.
 
oldannyboy
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 11:17 am

Until Europe can get over themselves and let these dinosaurs sink or swim, there won't be any improvement. They make the market less efficient and worse.

[/quote]

Sorry, stepping in with my two cents: I frankly hope the European market stays the way it is, and doesn't end up like the US - I don't think it needs to be "fixed", or "consolidated", thank you. And certainly not in a US style. No offence meant but..... flying in/within Europe is sooo much much nicer than flying in the US. It's cheaper, it offers greater choice and options, and a far better customer experience.
Having only three major players is almost akin to having a cartel (a triopoly?), and it's not good for passengers who inevitably get a reduced offer with less and less point-to-point flying and mega masses of flying on thin, uncomfortable RJs via congested hubs. No thanks.
And don't get me started on Chapter 11......
 
dcaviation
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 11:36 am

guyanam wrote:
Americans are among the most nationalistic people any where so its a joke that some one denies Europeans the right to be. If the current debacle about the EU shows anything its that the EU is an economic and political arrangement. It doesn't address the issues of culture and national identity. THAT is the main reason for Brexit. Loads of Eastern Europeans arriving and British fears that this was transforming that nation.


That is only excuse for Brexit. Really Brits are afraid of Easter Europeans arriving at their country, and taking their jobs? That's BS.
I think they are afraid of the "other" refugees which Merkel let in.

But going back to the subject. Maybe some of you are too young, but do you remember Air France flying from LHR to NYC (and maybe LAX)?
That was a disaster. The planes flew empty. Nobody associated Air France with London and TATL flights.
How long it lasted? Not even a year.
 
Bongodog1964
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 12:27 pm

The report after translation has come out as "35% of long haul flights lose money". If this is true it is deeply worrying for AF. Bearing in mind that as mentioned by others AF operates quite a number of routes to French Colonies, in order top provide them with a direct link to Paris, it is to be expected that quite a number of routes will be unprofitable, but 35% of flights ?
Airlines such as AF operate multiple daily services on their busier LH routes, therefore it should be safe to assume as an example that of the four daily flights to JFK at least the 1st three should be profitable or they wouldn't operate four !!

The only logical conclusions are that AF is either bogged down with excessive operating costs, choosing routes to ensure a good geographical spread rather than profit, or its both.

There comes a day when financial reality has to hit home. Here in the UK we have recently seen VS make a major retrenchment from everywhere except the USA, it finally dawned that it was better to be a bigger player in one market than a small one in quite a few.
 
trex8
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 12:34 pm

Well if SQ are supposed to be losing money on most of its long haul operations for multiple years, AF is doing a half decent job. All they need to do now is make up with not losing money on the shorter routes so they can turn a profit most years like SQ
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par13del
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 1:33 pm

I admit to being confused on some of the issues, but here goes my questions / statements.
1. The EU has Obama along with them in going against tax havens and companies & individuals not paying their fair share of tax, how is AF doing things to lower their tax payments to the government not hypocritical?
2. AF and KLM and BA and IB were merged for the betterment of both companies, yet we are now being told it was only at the back end because the customers still want AF to be AF, KLM to be KLM, BA to be BA etc etc, so in simple terms, are the customers being hood winked when the profits of the carriers are being shared with other countires?
3. On the colonies front, how many flights do they require on a daily basis, one would think in most cases weekly flights would suffice, its not as if those folks are commuting to work.
The UK had a bigger empire than the French, between WWII commitments and the EU, most were set free, heck BA via its APD tax charges a premium for travel to the Caribbean, so maybe the French could take a page from that book?

Generally, if the French Government has decided that its investment in the National Flag Carrier must accommodate links to its far flung colonies, why is it even a debate, are they trying to take the money and use it for something else?
 
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Aesma
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 2:05 pm

AF has done nothing to lower its tax payments, the best way to do that would be to move its headquarters to the Netherlands (last time I checked also in the EU) yet it hasn't done that.

The French government has lowered some taxes for all companies based in France, perfectly legal, and France is still one of the countries with the highest taxes in the world.

France has no colony. Each and every overseas territory or department of France is perfectly integrated to the country, more so than say Puerto Rico for the US.

People do indeed travel between metropolitan France and these territories for work, in both directions.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
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par13del
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 2:27 pm

As the thread is about long haul, its not impossible but I would think those travelling for work would not require daily frequencies, and may be good with weekly.
 
jmmadrid
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 2:34 pm

Why are you guys assuming that the money losers are the flights to the former colonies and overseas territories?

As someone pointed out in an earlier post, it's more likely that Air France are bleeding in the flights to places where competition is tougher and yields lower.

The paradox is that those flights are not easy to chop for many reasons, including market share, strategy and long term viability. Chop Paris-New York (for example) and your competitors (existing or new) will gladly start flying your passengers for you. Do it with a few cities and it's bad, do a system-wide cleaning and you end up a fraction of your size with stronger competitors ready to step into your TRULY profitable business.
 
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par13del
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 2:46 pm

If they are loosing money on routes where they have competition their options are very limited, one of the items on the boards agenda was to shift flying to their lower cost subsidiary. If that does not work the routes will have to be cut or funding made up elsewhere as pax are already speaking with their wallets. The unions are / were against the shift, and unless there is some great political upheaval, the shift will be minimal at best, which may be more appropriate for the former colonies where frequency can be more easily adjusted due to less competition.
On the bigger scale it may well mean that AF has to get smaller to be competitive and profitable, the order to be determined.
 
Varsity1
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 3:07 pm

oldannyboy wrote:
Until Europe can get over themselves and let these dinosaurs sink or swim, there won't be any improvement. They make the market less efficient and worse.



Sorry, stepping in with my two cents: I frankly hope the European market stays the way it is, and doesn't end up like the US - I don't think it needs to be "fixed", or "consolidated", thank you. And certainly not in a US style. No offence meant but..... flying in/within Europe is sooo much much nicer than flying in the US. It's cheaper, it offers greater choice and options, and a far better customer experience.
Having only three major players is almost akin to having a cartel (a triopoly?), and it's not good for passengers who inevitably get a reduced offer with less and less point-to-point flying and mega masses of flying on thin, uncomfortable RJs via congested hubs. No thanks.
And don't get me started on Chapter 11......[/quote]


Are you serious? How's that Euro business class working out for you? :lol:

I feel like a peasant flying in Europe, nickel and dimed to death, corralled like sheep and crammed into 737's 190 people at a time. The only thing that comes close in the U.S. are Spirit and Frontier, two very small carriers.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
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Aesma
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 4:51 pm

par13del wrote:
If they are loosing money on routes where they have competition their options are very limited, one of the items on the boards agenda was to shift flying to their lower cost subsidiary. If that does not work the routes will have to be cut or funding made up elsewhere as pax are already speaking with their wallets. The unions are / were against the shift, and unless there is some great political upheaval, the shift will be minimal at best, which may be more appropriate for the former colonies where frequency can be more easily adjusted due to less competition.
On the bigger scale it may well mean that AF has to get smaller to be competitive and profitable, the order to be determined.


Well François Fillon is poised to win the presidential election in May and has promised to bypass unions to reform the job market so that firing people at will becomes possible, that's quite a big political upheaval. Of course that might lead to a revolution and then all bets are off.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
usflyer123
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 5:40 pm

I have noticed that many of the French Overseas Colonies or former ones have competition on what seem as "thin routes" like CAY, TNR or SXM. I guess AF operates them due to cultural links, but why does the other carriers such as TX or SS operate them? Are they profitable?
for most people the sky is the limit. for those who love aviation, the sky is home...
 
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mercure1
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 6:50 pm

usflyer123 wrote:
I have noticed that many of the French Overseas Colonies or former ones have competition on what seem as "thin routes" like CAY, TNR or SXM. I guess AF operates them due to cultural links, but why does the other carriers such as TX or SS operate them? Are they profitable?

Well AF is not as bad as SQ longhaul.

Singapore Airlines loses money on most of its long haul network
viewtopic.php?f=3&t=1335573

usflyer123 wrote:
I have noticed that many of the French Overseas Colonies or former ones have competition on what seem as "thin routes" like CAY, TNR or SXM. I guess AF operates them due to cultural links, but why does the other carriers such as TX or SS operate them? Are they profitable?


Many route especially to Carribean and Indian Ocean have massive tourism demand, plus VFR flow going back and forth. Carriers like SS which are associated with tour operators excel in such markets.

For instance with French Polynesia, the market I am most familiar with, thousands of locals go to school or have other links that require them to travel to metropolitan France, while many French also have homes or jobs in Tahiti so they regularly go back and forth. As example large portion of the government sector (including things departments like police force) come from Metropolitan France so there is constant flow of people back and forth.
mercure f-wtcc
 
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KarelXWB
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 6:52 pm

Lots of airlines operate loss making routes. It's about connecting passengers to profitable routes.
What we leave behind is not as important as how we've lived.
 
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par13del
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 7:59 pm

"Of course that might lead to a revolution and then all bets are off."
If it were to happen my plea to you will be to stay safe.

When I visited Mauritius a few years ago, they have quite a large French community (upper scale), there was service by a couple European carriers, I did BA, it would entail a stop over in LHR but at least there are options. Issue would be whether AF is already charging a premium for such routes, in which case, they are already subsidizing the loss leaders.
 
airzona11
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 8:41 pm

As others have said, is 1/3 of long haul routes losing money bad? AF has a huge hub at CDG where they enjoy great scale and efficiencies, connecting passengers to profitable route. This is the foundation of the hub and spoke model. Not to mention, for their North America flights they are sharing the cost (profit/loss) with DL/KL.

I would love to be a fly on the wall in the finance dept of a large airline to see the actual data, but that wont happen. Heck, until such times, 2/3 of long haul making money might be the best in Europe.
 
DUSdude
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 9:11 pm

DfwRevolution wrote:
Uh, yes? Taxpayers don't "pick-up the tab" for anyone going through Chapter 11 bankruptcy.


That's not entirely true. US Taxpayers do pick up the tab for the unemployment benefits and social services claimed by laid off, furloughed and part-timed employees. There is a tendency in the US to look at all business exclusively through the equityholders' eyes. Europe tries (but doesn't often succeed) in taking a broader perspective that accounts for all stakeholders. That may make it seem more lumbering and incoherent than the US system where equity is essentially in the driver's seat.
 
Waterbomber
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Re: Air France loses money on 33% of longhaul flights

Wed Dec 28, 2016 11:00 pm

I respect others' opinions but I'm not impressed by reading that AF's long haul network is 33% loss-making.
While this may be acceptable in unfavorable operating circumstances, currently the operating circumstances are favorable.
Fuel is up from its lows but still cheap, aircraft are abundant on the market and cheap.
Manufacturers are seeing competition from new entrants and aircraft have never been as reliable as they are today.
Crews are cheaper than they were ever before and there is a huge middle class that can afford to travel.

This statistic means that at every turn of the corner, AF risks losing money on more than 50% of its long haul routes, meaning that their long haul operations can barely break even in favorable conditions. That is not the sign of a healthy, sustainable operation. It's non-profit.
Even that is acceptable considering the many jobs and the economy that it supports, but isn't it a shame that they can't become a true icon for their nation? A true icon wouldn't be in the news every week for its labor disputes and endless losses, showing how the country can't run a proper airline.

They've got the world's largest aircraft manufacturer down the highway, yet decide to send orders across the Ocean. How is that even possible?
We hear on airliners.net about how they should purchase aircraft based on the financial offer, but what price are they paying when they are sending billions abroad that could have served to create more jobs in their own country, in turn boosting travel needs in their own market.
Is it trade or is it stupidity?
Is it a non-profit, or is it a non-purpose?
 
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XLA2008
Posts: 428
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 12:25 am

Varsity1 wrote:
oldannyboy wrote:
Until Europe can get over themselves and let these dinosaurs sink or swim, there won't be any improvement. They make the market less efficient and worse.



Sorry, stepping in with my two cents: I frankly hope the European market stays the way it is, and doesn't end up like the US - I don't think it needs to be "fixed", or "consolidated", thank you. And certainly not in a US style. No offence meant but..... flying in/within Europe is sooo much much nicer than flying in the US. It's cheaper, it offers greater choice and options, and a far better customer experience.
Having only three major players is almost akin to having a cartel (a triopoly?), and it's not good for passengers who inevitably get a reduced offer with less and less point-to-point flying and mega masses of flying on thin, uncomfortable RJs via congested hubs. No thanks.
And don't get me started on Chapter 11......


Are you serious? How's that Euro business class working out for you? :lol:

I feel like a peasant flying in Europe, nickel and dimed to death, corralled like sheep and crammed into 737's 190 people at a time. The only thing that comes close in the U.S. are Spirit and Frontier, two very small carriers.


lol I don't know what your banging on about.... Economy and first on domestic US is exactly the same! I fly first all the time on US domestic it's nothing special at all!! Oh some free pretzels! And stupid sky high ticket prices, god awful customer service, constant connections through hubs making journey times longer... want to talk about feeling like a peasant then fly domestic in the states on regional jets, crammed in like a sardine, having to check your carry on because there is no space! Hahahaha no thanks! And let's face it America is barely catching up with onboard product! I've found the Europe services with British Airways, Lufthansa, Air France... far better than any airline stateside! And no I'm not European!
“For once you have tasted flight you will walk the earth with your eyes turned skywards, for there you have been and there you will long to return.“
 
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par13del
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 12:54 am

"They've got the world's largest aircraft manufacturer down the highway, yet decide to send orders across the Ocean. How is that even possible?
We hear on airliners.net about how they should purchase aircraft based on the financial offer, but what price are they paying when they are sending billions abroad that could have served to create more jobs in their own country, in turn boosting travel needs in their own market.
Is it trade or is it stupidity?
Is it a non-profit, or is it a non-purpose?"

Suggest you head over to the DL 787 Cancellation thread, your comments / questions would fall in line with some from the other side of the pond........go figure
 
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BobPatterson
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 4:13 am

DUSdude wrote:
DfwRevolution wrote:
Uh, yes? Taxpayers don't "pick-up the tab" for anyone going through Chapter 11 bankruptcy.


That's not entirely true. US Taxpayers do pick up the tab for the unemployment benefits and social services claimed by laid off, furloughed and part-timed employees. There is a tendency in the US to look at all business exclusively through the equityholders' eyes. Europe tries (but doesn't often succeed) in taking a broader perspective that accounts for all stakeholders. That may make it seem more lumbering and incoherent than the US system where equity is essentially in the driver's seat.


You need to be specific as to programs, and supply link/sources for claims about US taxpayers funding programs.

In the United States, typical payments to the unemployed (recently lost jobs and looking for work) are funded by dedicated payroll taxes collected by States and the Federal Government. Those are taxes paid by employers, and not from funds derived, for instance, from income taxes or other general taxation.

Wikipedia has a decent page on the topic of unemployment insurance/payments and the US Dept. of Labor website also offers much information.

This is not to deny that there are many "social service" programs funded by taxpayers.
Facts are fragile things. Treat them with care. Sources are important. Alternative facts do not exist.
 
infinit
Posts: 1058
Joined: Thu Jul 31, 2008 1:12 am

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 5:10 am

mercure1 wrote:
usflyer123 wrote:
I have noticed that many of the French Overseas Colonies or former ones have competition on what seem as "thin routes" like CAY, TNR or SXM. I guess AF operates them due to cultural links, but why does the other carriers such as TX or SS operate them? Are they profitable?

Well AF is not as bad as SQ longhaul.

Singapore Airlines loses money on most of its long haul network
trex8 wrote:
Well if SQ are supposed to be losing money on most of its long haul operations for multiple years, AF is doing a half decent job. All they need to do now is make up with not losing money on the shorter routes so they can turn a profit most years like SQ
http://onemileatatime.boardingarea.com/ ... rofitable/


I'd point out though that only 1 source, a Malaysian bank, has claimed that SQ loses money on most of its long-haul operation. That 1 source is the one quoted in the article above and the thread in this forum. I would question the reliability of that source- being a Malaysian bank they could have conflicting interests, and the fact that no other analyst has made the same claim adds to my suspicion.
Also the fact that SQ has never posted a loss for any year of their operation since the break-up of Malaysia-Singapore Airlines in 1972.

However, I do believe that airlines make losses on some of their routes at least as the loss-making routes may be important to the airline's network in the long-run. If AF really makes losses on 33% of its long-haul network, that implies it makes profits on the other 67% which sounds very good to a layman like me.
 
ytz
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 5:48 am

Where's everybody that was complaining about the ME3 losing money on such and such a route?
 
usflyer123
Posts: 567
Joined: Thu May 26, 2016 6:21 pm

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 3:57 pm

Does anyone knows or can guess what is the most profitable long haul route of AF?
for most people the sky is the limit. for those who love aviation, the sky is home...
 
GBNWB
Posts: 134
Joined: Thu Sep 29, 2016 4:56 pm

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 3:59 pm

People keep saying that the European Airlines need to get their act together and merge in order to make money, but British Airways seem to be doing very well as they are.

Many people in the UK don’t necessarily view themselves as Europeans. Many of us in our mind view Europe as that place on the other side of the channel where it is always sunny, they eat strange hams and talk funny languages. Many people in the UK when thinking of overseas imagine the Anglo sphere rather than France or Greece. The reason I voted to leave the EU is because I want Westminster to make the law not Brussels and want the courts in London to have the final say, not those in Strasbourg or Luxembourg. In a similar way I do not necessarily think of the US as a foreign country. I realise it is, and is a long way away, but it is just so much closer in spirit to the UK than the countries of Europe are.

I have been to the USA 28 times, all 50 states and PR, but France only twice.

Now if only we could have a revolution and get rid of the Royal Family........
 
Varsity1
Posts: 2226
Joined: Mon May 02, 2016 4:55 am

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 4:23 pm

GBNWB wrote:
People keep saying that the European Airlines need to get their act together and merge in order to make money, but British Airways seem to be doing very well as they are.

Many people in the UK don’t necessarily view themselves as Europeans. Many of us in our mind view Europe as that place on the other side of the channel where it is always sunny, they eat strange hams and talk funny languages. Many people in the UK when thinking of overseas imagine the Anglo sphere rather than France or Greece. The reason I voted to leave the EU is because I want Westminster to make the law not Brussels and want the courts in London to have the final say, not those in Strasbourg or Luxembourg. In a similar way I do not necessarily think of the US as a foreign country. I realise it is, and is a long way away, but it is just so much closer in spirit to the UK than the countries of Europe are.

I have been to the USA 28 times, all 50 states and PR, but France only twice.

Now if only we could have a revolution and get rid of the Royal Family........


From a US perspective: An anglosphere (UK-CAN-US-NZ-AUS) free trade deal would be in our common interests more than anything we have brokered elsewhere. It would give our 'side of the table' significantly more weight to throw around in trade negotiations.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
Waterbomber
Posts: 849
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 4:40 pm

par13del wrote:
"They've got the world's largest aircraft manufacturer down the highway, yet decide to send orders across the Ocean. How is that even possible?
We hear on airliners.net about how they should purchase aircraft based on the financial offer, but what price are they paying when they are sending billions abroad that could have served to create more jobs in their own country, in turn boosting travel needs in their own market.
Is it trade or is it stupidity?
Is it a non-profit, or is it a non-purpose?"

Suggest you head over to the DL 787 Cancellation thread, your comments / questions would fall in line with some from the other side of the pond........go figure


It's not because it's a US/DL thing that I applaud their B787 cancellation. In fact, one could say that DL and other U.S. carriers should keep their national interests in mind when ordering abroad.
However, in DL's defence, Airbus aircraft have much more U.S. content than Boeings have European content, including the expensive engines.
In addition, the U.S. content on the B787 is lower than other Boeing airframes, considering their global supply chain for the airframe.

Also, when you're dealing with a large country like the U.S., the impact of such orders is much smaller and dilluted.
France is comparable to a pair of U.S. states in both size and population, so the impact of ordering outside is much much bigger on the economy.
 
StTim
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 4:49 pm

As the accountants know you can define profit and loss in many ways when it comes to a particular route. Firstly I would say are they covering the variable costs on a route. Variable costs is the fuel, power by the hour, route, airport duties etc. You may include some personnel cost where you can reduce those costs easilly etc. Anything over that is making a contribution to the aircraft costs - ie is it cheaper not to fly than to fly a plane.

Obviously over time you have to recover sufficient to cover your aircraft costs plus all your other central ops etc.

But how are they defining loss on a route?
 
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Aesma
Posts: 13240
Joined: Sat Nov 14, 2009 6:14 am

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 8:58 pm

Waterbomber wrote:
Also, when you're dealing with a large country like the U.S., the impact of such orders is much smaller and diluted.
France is comparable to a pair of U.S. states in both size and population, so the impact of ordering outside is much much bigger on the economy.


I will take population because the US has states of all sizes so I wouldn't know which to take, but the population of the 2 most populous US states combined, California and Texas, is a bit less than the population of France. Their land size combined is twice the size of France. If I go the other way, France has more people than the 30 less populated US states combined.

Airbus is not French only so I don't know how to compare things, but any kind of AF order would only amount for a few percent of Airbus production, so it can't have that big an impact. I would certainly love if AF had plenty of A380, A346, A345, A350 instead of their massive 777 fleet, but if that would mean no US order for Airbus, then it wouldn't be a good deal for my country.

BTW, the relative emptiness of the US and how the population is scattered is a big reason why comparing US airlines and EU airlines is meaningless.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
LupineChemist
Posts: 826
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Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 9:16 pm

PatrickZ80 wrote:
Varsity1 wrote:
Breaking even isn't good either. Airlines need to earn a firm specific risk premium in line with the overall financial markets. The only ones that currently do are the US carriers. Heavy consolidation is needed in europe.


A typically American reaction. If you were from anywhere in Europe you'd know that consolidation doesn't work in Europe, specially for flag carriers like Air France. People need to associate them with their countries. The European aviation market is just different from the American aviation market.

Let's imagine the USA and Canada would become one single market, allowing Canadian airlines to operate in and out of the USA and the other way around. Would you think of Air Canada for a direct flight between Europe and the USA? No, you wouldn't. You'd feel like Air Canada doesn't belong in the USA, they belong in Canada. Well, that's the same thing for European countries and their airlines. Air France belongs in France, any base for them outside France wouldn't work because it's not France. KLM couldn't possibly have a base outside the Netherlands and Lufthansa only works in Germany. That's what I mean consolidation isn't possible, people just wouldn't accept it.

It is possible however on smaller airlines that are not flag carriers. They've got less association with their countries, for that reason Ryanair is able to open bases all over Europe. Ryanair may be Irish, but they're not the flag carrier of Ireland. Aer Lingus is, therefor Aer Lingus is much stronger associated with Ireland than Ryanair.


Could you imagine people using Norwegian to somewhere that's not Scandinavia. Sounds nuts.
 
Kilopond
Posts: 561
Joined: Wed Jun 15, 2016 10:08 am

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 10:04 pm

Slightly off-topic, but still relevant for the broader topic "AF-KL crisis".

Now they are getting some cash from China by selling their catering unit Servair to Gategroup, f.k.a. Gate Gourmet (which is Swiss-headquartered and Chinese-owned).

This $248 Million Deal Would Create a New Giant in Airline Catering

http://fortune.com/2016/12/29/air-franc ... -catering/

Gategroup to acquire Air France inflight catering unit Servair

http://www.dfnionline.com/lead-stories/ ... 9-12-2016/
 
Waterbomber
Posts: 849
Joined: Sat Jul 09, 2016 11:51 am

Re: Air France loses money on 33% of longhaul flights

Thu Dec 29, 2016 10:55 pm

Airbus is not French only so I don't know how to compare things, but any kind of AF order would only amount for a few percent of Airbus production, so it can't have that big an impact. I would certainly love if AF had plenty of A380, A346, A345, A350 instead of their massive 777 fleet, but if that would mean no US order for Airbus, then it wouldn't be a good deal for my country.


If you break down an aircraft into raw materials, you wouldn't be able to buy a decent house from it.
An aircraft is the culmination of hundreds of thousands, sometimes millions of man-hours, from the guy who operates the CFRP molds, the guy who inspects PCB's for a supplier, the guy who works on final assembly, to the guy working at BNP Paribas who handles the paperwork on a JOLCO; and some shareholder returns, taxes, patent royalties, etc...
A full-time worker amounts to about 2000 man-hours per year. A full-time worker is also a potential consumer.

If for an example an A330/A350 order instead of a B787 results in 200.000 direct and indirect additional man-hours in France, that's a great result right there.
Multiply by 50 aircraft and you're supporting a small city, who in turn consumes and supports even more indirect jobs.
Throughout the life of the aircraft, manufacturers offer support services and spares, also a good source of man-hours.

These are all potential AF customers who book flights for themselves and their families.
AF is clearly tripping over a dollar to pick up a dime.

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