Air France Outlines Plans for Growth and Improvement

Last week, we looked at what Germany's flag-carrier was doing to appeal to the American market. This week, we'll look at France's, which is also looking to stay on top in the increasingly competitive skies. To that end, Air France has recently announced several initiatives to improve business and customer relations.

In late March, Air France Chairman and CEO Alexandre de Juniac presented an update on the company’s business transformation plan, "Transform 2015." The presentation was compiled by seven project groups set up to identify critical issues, key objectives necessary for recovery and priority actions to achieve them. On the basis of the groups’ recommendations, Air France’s Executive Committee defined a series of priority actions to return the company to a path of sustainable growth:

Restore competitiveness: Although it claims that passenger unit revenue is better than competitors, Air France acknowledges that its operating costs remain too high. The objective is to reduce controllable costs by 20 percent to reach the industry level.

Win back customers: Air France also acknowledges that its customer focus has become insufficient. An action plan will refocus the organization and its processes on the customer as Air France’s central concern, the improvement of products, the development of digital and e-business communications as well as the creation of new business models.

Simplify the organization:
To make the company "more responsive and agile," a new organization will be established, streamlining processes and procedures, reducing the number of hierarchical levels, improving management practices and deepening the integration with KLM.

Revamp and reposition long-haul: Long haul, Air France’s traditional growth engine, is today moving in slow motion under the combined effect of the economic crisis, higher fuel costs, increased competitive pressure and higher costs than the competition. Apart from the priority to lower production costs and improve on-time performance, Air France is looking for ways to better respond to growing leisure travel demand. To win back customer preference, significant investments will be made to the product, conditional upon a successful savings plan.

Restructure short- and medium-haul: Air France will continue to offer short and medium-haul service on the condition of achieving extensive restructuring and a drastic reduction in costs. The goal is to return to break-even for point to point service in 2013 and for the entire short and medium haul business in 2014.

The first steps identified and presented include developing the Transavia subsidiary under its own or another brand to respond to the growing leisure travel segment. The regional commercial offensive also will be extended to the rest of the point to point network, including Orly, with all components of the offer clarified and optimized. Finally, a true, standardized regional division will be created to optimize the working relationship between Air France and its regional subsidiaries.

The airline is also stepping up its environmental initiatives, including a new process for cleaning the exterior of planes, called Ecoshine. The technique for applying the product with wipes requires a small amount of water compared with traditional cleaning and reduces water consumption used for the external cleaning of aircraft by 100. For example, the polishing of a Boeing 777, which required 2,641 gallons of water before, now only requires 26. (This also divides aircraft cleaning time by three.) The product used is over 96 percent biodegradable, non-toxic, non flammable and allows staff to work without individual protective equipment. It complies with all European environmental directives.

And finally, Air France is expanding its network: The airline took delivery of its 60th passenger Boeing 777 last week, which will reportedly be used on its Caribbean-Indian Ocean network. In April and May, Air France will be receiving two more Boeing 777-300ER.


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