Better financial health for Air France-Klm. The Franco-Dutch airline group sees its accounts come out of the red in 2022 after two catastrophic financial years and massive losses. This is what the CEO of Air France-KLM made a point of saying during the press conference presenting the 2022 annual results which was held this Friday, February 17, 2023 at the Group’s headquarters in Paris.
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Operating profit of 1.2 billion euros for a turnover of 26.4 billion euros, slightly below that of 2019 (27.2 billion), the last financial year before the health crisis.
As a reminder, the group lost more than ten billion euros in 2020 and 2021 (7.1 billion euros in 2020 and 3.3 billion in 2021). This performance is all the more remarkable given that capacity, in terms of seat kilometers transported, is still down 15% from its pre-crisis level. Result: Air France-KLM transported 21 million fewer passengers than in 2019. Ben Smith expects to reach 95% to 100% of the capacity put on the market in 2019 throughout the year.
A return to green therefore for the two airlines. But is the management of the Air-France KLM Group disconnected from the feelings and concerns in terms of purchasing power and territorial continuity of Ultramarines concerning the prices of plane tickets between Overseas France and France? Asked by Overseas the 1st on the substantial increase in the price of plane tickets between France and the overseas territories and communities in recent months, Ben Smith – general manager of the Franco-Dutch airline group since September 2018 – replied: “The prices of plane tickets between mainland France and the Overseas Territories are probably the most interesting that I have ever seen in the four and a half years that I have been leading the group”replied the leader.
A response that is all the more astonishing December 2022 Air Passenger Transport Price Indexpublished on January 27, 2023 by the Ministry for Ecological Transition and Territorial Cohesion, reports an average annual increase in the price of air tickets departing from France of 20.6%, all destinations combined.
SOver one year, the Index reports an average price increase of 30% to Overseas Territories! On departure from all overseas departments, the increase in air ticket prices reached 34.6% on average in December. With regard to the West Indies, it is even worse: + 58.9% for Martinique and + 47% for Guadeloupe. “Indeed, these are prices that have suffered global inflation”ended up recognizing Anne Rigail, the boss of the Air France company. “The particularity is that the oil that we have to take from the Caribbean islands has undergone additional inflation. We are asking SARA – which is the oil supplier on the spot – to review its prices so that we can effectively lower our rates and not transfer this increase linked to oil which was decided locally” Ms. Rigail continued.
Furthermore, the general manager of Air France acknowledged at the same time that, with regard to the tricolor company, “Air France had put a lot of capacity on Overseas during the two years of pandemic crisis because overseas was a safe haven (sic) – most routes to Asia being closed due to the pandemic ( Editor’s note). This capacity with other carriers meant that the prices during the covid crisis had fallen. (…) So, we must compare with the 2019 prices and not with the heart of the crisis”.
Taken to words, Overseas the 1st checked the numbers. Still according to the Air Passenger Transport Price Index (public government data), departing from France, the prices of plane tickets in December 2022 increased by 22.8% to overseas France. sea compared to December 2019, the reference year for global air transport, before the health crisis. On departure from the overseas departments, the increase in air ticket prices is 30.5% on average (45% from the West Indies against only 21.2% from Guyana and 11.9% from La Meeting).
Still on the subject of increased competition which had lowered prices to and from overseas destinations, the private airlines serving the Overseas Departments had little taste for Air France’s strategy. “It’s unfair competition!” have repeatedly expressed the bosses of Air Austral, Air Caraïbes, Air Tahiti Nui, Corsair and French Bee who point to the fact that Air France has benefited from massive financial aid and recapitalization from the French state during the pandemic. “Helps to sink us”had even confided one of the bosses of overseas companies. Sky carriers who have had great difficulty, economically, in aligning their prices with those of the national company, due to the lack of filling of their planes (both in passengers and in freight) and repayments of loans guaranteed by the State (PGE).
“Infinitely less significant public aid than the approximately 5 billion euros in recapitalization of Air France added to the approximately 7 billion euros in public aid from the State”decried the bosses of ATN and the Dubreuil group (owners of Air Caraïbes and French Bee).
However, precisely, this competition on the service of Overseas destinations, Ben Smith made a point of saying a word about it during the press conference of this February 17, 2022: “The Overseas market is really the market that should see consolidation. But four airlines (on average) on one network – companies that are quite small – for us, that’s not the most optimal. And for passengers, it’s something we’re studying. Is there an option that could be interesting for us and one of the other operators? It’s something we’re studying!”
In other words, is the big boss of the Air France-KLM Group in talks with one or other of the small private companies for a negotiation on prices, a total or partial takeover of a competitor or for study agreements within the framework of territorial continuity? Or is Ben Smith quite simply announcing an offensive against private competition, in order to reduce competition on these destinations and regain a little more control over these airlines which have enabled Air France to out economically during the Covid crisis? The commercial war seems to be relaunched more than ever, nearly 35 years after the end of the monopoly of the tricolor company on the Overseas Territories.
The remarks of the CEO of Air France-KLM come at the very moment when the Overseas Commission of the Senate has taken up this problem of the prices of plane tickets and its consequences on the territorial continuity between France and the overseas communities.
Case to follow!