What can business travelers on Air France and KLM expect to see in 2016 in terms of fleet renewal, cabin upgrades and other modernizations?
We are in the process of investing $1 billion until 2017 to renew all our long haul cabins. On the fleet side, KLM just took delivery of its first two 787 Dreamliners late last year and more will be coming soon. Air France has just phased out the 747 and will also be receiving Dreamliners. KLM also has new Embraer regional jets coming to replace the Fokker 70 fleet.
In terms of the cabin, we are renewing both the long-haul and the A319 and A320 of the Air France European fleet. We are about halfway concerning the European project, and by end of next year, we should be done with the long-haul fleet. Regarding the onboard experience in longer intra-Europe routes, KLM is adding hot snacks and Air France is also improving its offer with menus in business class designed by chef François Adamski.
We are also upgrading services offered to our most loyal frequent flyers. Our Flying Blue Platinum members will now have access to a 24/7 phone line that will be a one-stop shop for any requests they may have. This line will be extended to Spanish, as well as the current English and French. We are currently renovating the lounges in airports such as Madrid and Barcelona.
Our network is also growing in Spain with KLM starting service to Valencia on the 26th of April, as well as doubling capacity to Bilbao and adding summer peak capacity to Ibiza. This winter season, our Group is offering nearly 900 flights from 14 airports, including the offer of our low cost carrier Transavia and the one from our partners Air Europa and Delta Air Lines. Lastly, we continue to invest in social media with 1-hour response and 24-hour resolutions to customer requests.
I have recently flown long-haul in both Air France and KLM’s premium economy cabins. Clearly, the Air France product is a distinct cabin in-between business and economy, while the KLM product is really just economy with a little bit extra at a smaller price premium compared to Air France. Do you differentiate between these two different types of products because of the nature of Air France and KLM’s customer bases or because you are testing to see which product is ultimately more popular and generates more revenue?
Both are correct. There is a difference in markets as Air France has a heavy local source market in Paris while KLM is based 70% on connecting traffic. Air France is also a more luxury offering, which is why we also offer first class on long-haul aircraft. We are also continuously testing. For example, Air France premium economy in Europe didn’t work, but for KLM it has been very successful. You will also see over time that the business class seats between the two carriers will actually converge.
It seems that with all of the expansion of low-cost airlines in Europe, it is difficult for full-service carriers such as, not only Air France and KLM, but also the likes of British Airways and Lufthansa, to compete on price on point-to-point routes. Have you decided to focus more on Europe as a feeder to your hubs as opposed to competing on short-haul point-to-point service?
Indeed, we are network carriers that are feeding capacity to and from European origins and destinations. We compete on the low-cost side with Transavia, which is currently undergoing substantial growth. Transavia France increased by 30% its offer in 2015. We also have just added Munich as a base for Transavia. Transavia can now be flown by Flying Blue members, both to earn and redeem points. However, we know that some customers may not choose Transavia because the brand is not as well known as other low-cost competitors, but it’s a question of time and we are working on that. We are positioning Transavia to be complementary. As the booking window gets shorter, it is true that full-service airlines don’t always have the most attractive fares compared to low-cost carriers, but the traveler has also to value the offer as global, taking into consideration aspects such as the schedule offer, the flexibility, the after sales service or the product itself.
What trends do you see these days among the corporate travel managers with whom you speak?
The use of self-booking tools is an increasing trend. Compliance with travel policies, such as favoring cost savings from connecting flights over more expensive direct flights, is more and more common in northern Europe and it’s starting in southern Europe.
What broad innovations do you see coming in corporate travel over the next 5 years?
Development in the use of mobile applications by travelers will continue. Business travelers are becoming more autonomous and independent and innovations are making it easier to book and manage travel. SMEs want more autonomy and it will be interesting to see how they work with tools such as TravelPerk, whether these innovations become a layer on top of human interactions and whether companies will re-design their travel policies to work together with these new types of tools.
I see the trend of continued capacity expansion and consolidation in the airline sector. There will also be more self-service, such as the ability for travelers to self-print luggage tags and to get through Customs and Border controls faster.