Air France will review its regional hubs this fall, following a lackluster 2012 performance from its domestic and medium-haul operations.
In October 2011, Air France announced a “commercial offensive” from the French provinces aimed at challenging its low-cost rivals. This initiative involved the creation of four new regional hubs at Bordeaux, Marseille, Nice and Toulouse. However, a number of routes and frequencies have already been cut, prompting speculation about possible base closures.
“Medium-haul losses were not reduced in 2012, in fact there was a slight increase over 2011 and above all this came from the regional bases,” Air France-KLM Group chairman and CEO Jean-Cyril Spinetta said. He added that the company will take a “very strong look” at the regional bases in September to take stock of the situation.
However, he stressed this would simply be an evaluation of “where we are” and added that no base closures were expected. “I don’t have the impression that we will close the bases in September,” he said.
Marseille was the first to receive a capacity boost, followed by Toulouse and Nice in spring 2012 and Bordeaux last summer. Spinetta stressed it was too early to tell whether the strategy has been a success.
Conversely, leisure operation Transavia—which has arms in both France and the Netherlands—turned in a bright performance. Revenues rose 9% to €852 million ($1.1 billion), off the back of a 3% increase in capacity and a 4% uptick in demand. No profitability figures were given, although Air France-KLM said Transavia is close to breakeven.
Transavia France will boost its fleet from eight to 11 aircraft this year, while Air France’s core Airbus medium-haul fleet will be slashed by 16 aircraft this summer. Spinetta said the removal of the 16 aircraft will only lead to a “slight” drop in production because unions have agreed to greater productivity on the same pay.
“The [medium-haul] result for 2012 was quite obviously disappointing, but in 2013 we will post significant improvements,” Spinetta said. “Now we have renegotiated our collective agreements and identified new ways of operating the aircraft, all the structures are in place. This did not fully apply in 2012, but it will in 2013 and I am convinced this will improve.”