northernlights
Topic Author
Posts: 85
Joined: Thu May 20, 2004 8:13 pm

KLM Goes Into Battle With LCC´s

Wed Dec 29, 2004 10:05 pm

KLM GOES INTO BATTLE WITH LCC´S

KLM will lower the fares to the European destination as from 01 january up till 40%. They say they will not cut on service levels.

A return to London Heathrow will now be available from EUR 69, instead of EUR 109; to Stockholm for EUR 139 (from EUR 188); to Vienna for EUR 149 (from EUR 287); and Madrid for EUR 109 (as opposed to EUR 185).

This price reduction is the largest in the 85 year old history of KLM.

KLM says it has taken this step because of the competition with the LCC´s such as Ryanair and Easyjet.

What do you think: will this lead to more lower fares from other European airlines, will this be the beginning of a pan European battle between LCC´s and established (more national) airlines?

http://www.klm.com/nl_en//nl_news/pressrelease_dec04.jsp



 
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RE: KLM Goes Into Battle With LCC´s

Wed Dec 29, 2004 10:13 pm

If they won't be cutting service levels, I assume that they will cut other costs considerably, by, for instance, making some employees redundant (the biggest or second-biggest cost), or perhaps reducing their profit margin. Still, rationalisation, for instance cost reduction and increased efficiency, is essential.

FR currently flies from EIN to STN, GRO, BGY and CIA.

[Edited 2004-12-29 14:14:14]
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
LifelinerOne
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Joined: Tue Nov 25, 2003 10:30 pm

RE: KLM Goes Into Battle With LCC´s

Thu Dec 30, 2004 12:05 am

KLM will not change it's service in the cabin and on the ground, that will remain the same.

KLM will introduce 4 ticket brands:

* Take Off Fares
* Overnight Fares

These are meant for the tourist market.

* Same Day Return Fares
* Select Fares

These are meant for the businessmen.

The prices which NorthernLights mentioned are prices excluding taxes.

With this action, KLM hopes to fill their planes more and with it, creating more money from it's European network.

Cheers!
Only Those Who Sleep Don't Make Mistakes
 
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RE: KLM Goes Into Battle With LCC´s

Thu Dec 30, 2004 1:11 am

It would make more sense if KLM undertook a programme of rationalisation, thus becoming more efficient, and then reduced its fares and reorganised its pricing structure.
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
jrebel
Posts: 169
Joined: Sun Aug 27, 2000 5:14 am

RE: KLM Goes Into Battle With LCC´s

Fri Dec 31, 2004 5:23 am

Two observations :

- in intra-European Y class, service levels can not be cut much further, they are already atrocious.

- in all probability, the new low fares will not earn Flying Dutchman miles. KL has introduced two new fare buckets in economy class, N and E, which are not eligible for mileage accrual. I suspect that the new fares will be booked in these buckets.

johan
 
Tango-Bravo
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RE: KLM Goes Into Battle With LCC´s

Fri Dec 31, 2004 8:06 am

- in all probability, the new low fares will not earn Flying Dutchman miles. KL has introduced two new fare buckets in economy class, N and E, which are not eligible for mileage accrual. I suspect that the new fares will be booked in these buckets

If it proves to be reality rather than probability, my regards to KLM for implementing a reform that is long overdue in the industry. If cheap fares are what it's all about for consumers then they have their reward in full -- in the form of cheap fares. For airlines give mileage credit toward free reward travel to pax traveling on below cost fares is sheer folly on the part of airlines -- and a huge reason behind their inability to pull themselves out of their malaise.
 
gkirk
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Joined: Thu Jun 15, 2000 3:29 am

RE: KLM Goes Into Battle With LCC´s

Fri Dec 31, 2004 8:11 am

Why dont KLM buy Ryanair and kill it off?  Big grin
When you hear the noise of the Tartan Army Boys, we'll be coming down the road!
 
IberiaN
Posts: 163
Joined: Sun Sep 21, 2003 6:41 am

RE: KLM Goes Into Battle With LCC´s

Fri Dec 31, 2004 8:15 pm

That's a nice try, but I think it won't last much, because LCC's are much cheaper and have a different financial structure. In addition, service levels logically are not going to be as good as they are right now. If not, in which things are they going to reduce costs? Sounds funny: If they reduce their fares by 40% and don't save money in on board services, ground operations..... What will they do?
Anyway, hope this plan will work!
Cheers
Emilio
Has decidido puntualidad, has decidido Iberia ;)
 
jrebel
Posts: 169
Joined: Sun Aug 27, 2000 5:14 am

RE: KLM Goes Into Battle With LCC´s

Tue Jan 04, 2005 12:44 am

"Sounds funny: If they reduce their fares by 40% and don't save money in on board services, ground operations..... What will they do?"

Deceive the public, that's what. They may have reduced fares by 40%, but at the same time they have introduced a reservations fee (€10 to €45), a fee for using the CRS (no kidding! €5), a fee for paper tickets (€30), all on top of the existing charges and levies. Furthermore, if you book directly online with KL, you run a serious risk of being overcharged, because a bug in their system sometimes causes taxes and charges to be calculated incorrectly, occasionally by over 1000% (I am aware of someone who was charged €133 instead of the correct amount of about €10).

No longer offering miles on low fares means that pax have no or little incentive to fly via AMS if direct flights are available at roughly the same cost. Given that KL depends on transfer pax for 60-70% of its business, it needs to compete on more than price alone.

johan


 
trident2e
Posts: 1286
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RE: KLM Goes Into Battle With LCC´s

Tue Jan 04, 2005 1:05 am

KLM is hardly going 'into battle with LCCs'. The reductions apply only to flights FROM Amsterdam. If your journey commences elsewhere you will still be charged outrageously high fares.

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