Air France reworks India strategy

After nearly 60 years of operations in India, French flag carrier Air France is reworking its Indian strategy to optimise its share of the growing outbound passenger traffic.

“Though the domestic passenger numbers are likely to see a dip of 15 per cent in the second quarter of this fiscal, the outbound market from India still has a modest double- digit growth and the current number of outbound travellers of 30 million passengers will be 120 million by 2020. Therefore India is a significant market with Indian traveller recognised worldwide," said Kapil Kaul, CEO (Indian sub-continent and Middle East), Centre for Asia Pacific Aviation.

"With the homegrown airlines just making inroads into the international market, international carriers want to fortify their position in this market,” he added.

The airline has also plans to renegotiate its flying rights with the Indian government as it mulls deployment of the Airbus A380 — a double-deck, wide-body, four-engine plane — in the Indian skies.

“India is a destination where we would look at deploying our A380s as and when the airport infrastructure at the Mumbai and Delhi airports supports the aircraft. That would also mean we will have to renegotiate with the Indian government our rights portfolio,” said Jean-Louis Pinson, senior vice-president, International and the Netherlands division, Air France, addressing a team of Indian media in Paris last week.

Air France might look at a 2010 entry date for India for the superjumbo. It has placed an order for 12 of these aircraft with first deliveries planned next year.

The airline said it expects to leverage its network strength with its fully-owned subsidiary, the Netherlands-based airline KLM, which has a dual hub advantage of Charles de Gaulle Airport, Paris and Schiphol at Amsterdam as gateways to North American and Canadian markets. Air France has 80 per cent of Indian passengers as transit passengers.

“We want Air France to be a preferred European airline for the Indian passenger and we are looking at a long-term investment in this market as the market has strong growth potential,” Pinson said.

Air France has over the last few years increased its capacity on the India routes by three fold, post the easing of bilaterals between the two countries. It is in talks with private carriers Jet Airways and Kingfisher Airlines for a codeshare agreement.

The move of consolidating and expanding in India by Air France is to be seen in conjunction with other international carriers like British Airways (48 frequencies per week), Singapore Airlines and German carrier Lufthansa (50 frequencies per week) ramping up their India operations amid a downturn due to the turmoil in the US market and also saturation in growth numbers in the mature European market.

The airline, which operates daily flights out of Mumbai, Bangalore and Delhi, is aiming at daily flights from Chennai (currently thrice a week) as well as Hyderabad (currently four days a week) and then launching Kolkata, Pune and Ahmedabad flights later.

Air France currently has 35 frequencies per week as negotiated bilaterals of which it is using 24, and four codeshared frequencies are operated by KLM. On the Mumbai route, it deploys a Boeing 777 whereas the Delhi, Bangalore and Chennai routes are serviced by Airbus A340/A330 types. It also has put in a cabin crew action plan specifically targeted at the Indian passengers transiting through its hub with Indian meals onboard.

In terms of total operating revenues, Air France-KLM has emerged as a leading carrier worldwide and is the third largest in terms of passenger kilometers and passenger fleet size. Though its operating revenues declined last fiscal it still made a net profit of $1.8 billion and is one of the most profitable airlines in the current downturn that has hit the aviation industry.