Air France-KLM to challenge Gulf carriers with new airline

As part of the nine-point “Trust Together” strategic project announced by Air France-KLM on November 3, the carrier, merger partners of the KLM Group, has revealed the intention to create a stand-alone company to run alongside which will be both “competitive and innovative”, designed to drive growth for the Paris-Charles de Gaulle hub.
The creation of the new streamlined, as opposed to low-cost carrier is a reactionary measure from the KLM Group to tackle, head on, the growing threat from the ‘big three’ gulf airlines, Etihad, Emirates and Qatar airways, along with Turkish Airlines. The Group also wants to strengthen its cooperation with U.S. carrier, Delta Airlines, one of a number of U.S.-based carriers, including American and Delta Airlines, who are challenging what are seen as unfair government subsidies which have enabled these Gulf carriers to rapidly grow their market share in a highly competitive area. The initiative from the KLM Group is referred to as “Boost”.
The new airline will concentrate solely on medium- and long-haul international routes, which has proved particularly challenging in terms of profitability. Air France-KLM intends to be flying up to ten aircraft by 2020, challenging the competition by opening new routes, reopening closed ones which were unprofitable, and maintaining routes which are currently under threat”.
According to Air France-KLM, “This new company will propose a simple, modern and innovative offer, whose positioning will not be low cost. It will offer its customers business and leisure destinations with standards comparable to those of Air France in terms of product quality and the professionalism of the crews.” It is understood that the first flights will begin operation by the end of 2017.
Strategic negotiations will need to be held with unions, who had previously sunk attempts by the airline to create a lower-cost subsidiary. According to Air France-KLM, “It will operate with Air France pilots on a volunteer basis at work conditions adapted to its competitive positioning. For cabin crews, an independent career path will be created to enable this new company to be operated at the level of market costs.”
According to The Associated Press, Christophe Pillet, of cabin crew union SNPNC, expressed concern that the new unit’s staff would have to forego the same labor benefit protections, also expressing concern that the new company might even “supplant” Air France sometime in the future. In a radio interview with Europe-1, Pillet also said that: “The new company will not really be low-cost for customers, because they will find the classic fee conditions in different classes that they already see at Air France. However it will be low-cost for the cabin crew.”