Air France: Pay to Collect Own Trash

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Air travel has become an affordable expense thanks to many budget airlines. The glitz and glam of flying is gone. I can remember my father telling us about the art of travelling by air, passengers would be dressed smartly and in their best clothes. Well thats a by gone era.

The European carriers used to be the most stylish carriers, with good food and great service. All this just seems to fade in the background.

Once prestigious airline, Air France- KLM Group Europe’s biggest airling has decided to ask its passengers to do clean up their own messes. The passengers will be asked to clear their own seats and take their trash with them when leaving. The Paris based Air France decides that this was the way to go after cabin crew refused to assume cleaning duties for low wages.

This announcement comes in the wake of rising fuel prices and fierce competition from EasyJet Plc and Ryanair Holdings in French airspace.

Unions

The CEO Pierre-Henri Gourgeon wants to eliminate ground bases cleaners to keep jets flying longer. This seems to be the best way to tackle the no frills airline packages a source told arabiangazette. the company is bleeding money, obviously the first thing that would be chopped is the low level workers salary not the CEOs

The airline has already been forced one of four planned bases to be abandoned due union wrangles. Whereas EasyJet adds French routes and Sapains Vueling Airlines SA (VLG) begins flights from Toulouse, one of the remaining locations.

Ryanair, the regions No. 1 discount carrier, isnt worried about Gourgeons plan and regards Air Frances strategy as hopeless, Chief Executive Officer Michael OLeary said in an interview.

No flag-carrier in the history of aviation has ever succeeded in rolling out a real low-fares airline, OLeary said.

The SNPNC cabin-crew union has rejected the plan, it said in an e-mailed statement yesterday. Fatiha Aggoune, the unions president, said in a phone interview to Bloomberg that talks broke down earlier in the week over issues including reduced rest periods and a lower hourly pay rate.

Last to know

Other big European airlines had seen the threat from the no frill budget ride long before Ai France.

Air France is a little late making these adjustments and the market rolls on without waiting for them, said Penny Butcher, an analyst at Morgan Stanley in London. Most of their peer group recognized the low-cost threat and adapted their businesses years ago. The delay is 99 percent labor-related.

British Airways founded a low-cost subsidiary, Go Fly, in 1998 at London Stansted airport, Ryanairs biggest base. Go was sold to 3i Group Plc in 2001 and then to EasyJet a year later, while BA pared its own unprofitable short-haul network to focus on providing feeder traffic to London Heathrow.

Deutsche Lufthansa AG (LHA) created GermanWings to defend its position on regional routes, and Iberia combined its no-frills operation with Vueling in 2009. The Spanish company has since merged with BA as International Consolidated Airlines Group SA.

Wind lost

Air France seemed to be in a cloud of its own and oblivious to the happenings on the ground.

The airlines domestic and international traffic was 39% in 2002, the year Luton, England-based EasyJet opened its first French base. In 2009 it dropped to 34% the most recent year for which the break down is available .

EasyJet more than quadrupled its French market share to 7.6 percent over the same period. It increased capacity on French routes by 35 percent in the first half and based a 22nd aircraft in the country to add summer flights from Paris Charles de Gaulle airport and winter services to Verona and Bologna, Italy.

Analysts say the airline should have acted after racking up 2.4 billion euros ($3.4 billion) of net losses in the two years through March 2010.

Whats more, Air France could soon face competition in southern cities from other discount carriers, such as Norwegian Air Shuttle ASA, Europes fourth-largest, Butcher said.

Its not a recent phenomenon that EasyJet decided to move into France, and it has been over a year since Vueling decided to move into the market, she said. Yet they really only launched the idea of short-haul bases late last year, so theyve taken a very long time to actually get things moving.

Rail

French short-haul air travel is also under pressure from state rail operator SNCFs TGV high-speed trains as the network is extended and journey times fall.

Gourgeons strategy involves shifting part of Air Frances single-aisle Airbus SAS A320 fleet from Paris to Marseille, Nice and Toulouse, opening up dozens of new routes including services to north Africa, eastern Europe and Scandinavia.

Under the plan, staff will work longer hours and be stationed at the bases, paring costs and trimming the turnaround between flights to 25-30 minutes in order to lift time in the air to about 12 hours a day from the current eight or nine.

Labor Concessions

Its very difficult to get concessions from strong unions at traditional airlines, said Alex Cruz, CEO of Barcelona- based Vueling. Weve not yet seen a strategy articulated by Air France thats competitive enough to affect us.

Vueling, which opened its Toulouse base this year and is seeking to expand at Paris Orly, keeps to tight schedules because of pilots and flight attendants who accept their wider roles, he said, citing the actions of one pilot on a recent flight.

The plane wasnt getting refueled fast enough so he went down the stairs and began to give hell to the people on the ground until they got their job done, Cruz said in an interview. Our cabin crew go through and do a cleanup because theyre already on board. You wont get Air France staff to do that unless you hire a new crew under new conditions.

Yet unless Air France secures comparable agreements, it will never get near the productivity or 25-minute turnarounds of low-cost rivals, said Morgan Stanleys Butcher, who blames legacy labor costs for hampering no-frills experiments at other mainline carriers and called Qantas Airways Ltd.s Jetstar the only budget offshoot that actually worked.

Time to Negotiate

The time to negotiate was during the crisis, when management held the bargaining power, Derocles said, citing increased labor flexibility secured by Lufthansa in 2009. But there was almost no discussion with unions, and now the environment has changed completely. Management simply wasnt doing its job.

OLeary of Ryanair, which serves 26 French destinations but stopped basing planes in Marseille in a labor dispute, encouraging Air France to target the city, said Gourgeon could undermine demand at his companys own mainline operation in his eagerness to stem the discount tide.

For the low-fares airline to succeed it would have to cannibalize Air Frances traffic, OLeary said. What Air France will do is probably use it to block the development of Ryanair or EasyJet in some regional markets, but that will be it.

Source: Bloomberg, BBC

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