FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.

Foxtrots – leading the industry in a dance.

 

AirFrance-KLM new subsidiary; we thought of it first.

AF-KLM has just announced plans to create a lower-cost subsidiary airline to operate (at least currently limited to) Asia and transAtlantic. And taking over some unprofitable routes of the two airlines.

 

We first presented/published our ideas – where an airline type such as this AF-KLM proposal we would describe as an LCA* – long ago. Although parts we defined earlier, the 3-airline-type split into what we call FSAs* LCAs NFAs*, was set with some specific definitions seven years ago.

 

At the end of October, days before the AF-KLM announcement, we published a 3000-word White Paper on ‘What full-service-airlines need to do to survive’. See

https://medium.com/@tbaoffice/airline-strategy-185fa3ef7d0c#.octgrysmf

 

This was aimed at what are becoming what we call AGs (Airline Groups). We also have proto-definitions for these AGs – and AF-KLM fits into this category.

 

Specifically, in the section on AF-KLM we proposed:

 

‘AKAG [AirFrance-KLM Airline Group] needs to expand its Hop subsidiary/affiliate to operate on other routes (short- medium- or long-haul) where profitable operation is hard, traffic is light, market is low-spend, or a new market. And not just those little local routes that it has today.

 

‘For instance, AF started and stopped a route to Kuala Lumpur within 12 months. Hop should have taken over from AF.

 

‘Also, AKAG keeps Hop out of the main hubs in France — Marseille, Nice, Paris CDG, Toulouse. But why is not Hop operating, say, Nice-Paris in competition with Easyjet rather than AF – which must be losing a lot of money on that route?

 

‘And why not inter-continental flights from Marseille and Nice? Amazingly, MRS — France’s 2nd-largest city — has no US route, and from NCE only a US airline operates. And nothing from either city to Asia  - giving most of the market to Emirates over Dubai.’

 

But why is AKAG planning to create a new airline when it already has one doing half the same job? And why limit AKAG’s proposed LCA to just Asia and Atlantic? There are many domestic, intraEurope, African, Middle East routes where an LCA might profitably be used. Plus of course new routes.

 

Other comments:

 

-Unions at AF in France will block the creation of AKAG’s proposed new LCA, perhaps tearing more shirts. (Another reason to use Hop, which is already there.)

-AKAG management might realise before planned end-2017 launch that it makes more sense to develop an airline that is already there.

-End-2017, the planned start of the new LCA, is steam-engine-slow. Summer 2017 at the latest (also, better for seasonal traffic).

 

 

*Our definitions:

-FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates – full service.

 

-LCA = low-cost-airline. (Not a no-frills-airline; see next.) An FSA but with lower operating costs – cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. If relevant, usually similar to the parent airline, but a different name, and competition against parent airline allowed.

 

-NFA = no-frills-airline. We believe that among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; paid seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

 

 

The Fox

Remember, I’ll be famous after I’m dead.

Advertisements