Attention, Air France Passengers: Take Out the Trash

Air France, eager to launch a low-cost service, hits union turbulence

In an industry where speedy and sparse service has become de rigueur, Air France has made much of its full-service operation. Its first-class cabins are spacious, and free wine flows for all on every flight. But there’s a limit to how much coddling the French carrier’s in-flight staff is willing to provide. Air France will ask passengers on new regional flights from French cities to carry some trash with them when leaving the plane to recycling bins in the jetway. The reason: Cabin-crew unions refuse cleanup duty.

That’s just one of the challenges Pierre-Henri Gourgeon, chief executive officer of Air France-KLM Group, faces as he tries to update the airline’s operations to fend off the advance of discounters EasyJet and Ryanair Holdings in its home market. The carrier has so far met resistance from unions as it attempts to craft a low-cost operation to win back traffic at provincial airports.

Gourgeon’s strategy involves shifting part of Air France’s fleet of single-aisle Airbus A320s from Paris to airports in Marseille, Nice, and Toulouse. Then the airline could fly dozens of new routes from those hubs to North Africa, Eastern Europe, and Scandinavia. Staffers stationed at the regional bases would work longer hours under more flexible work rules. Ground-based plane cleaning on short hauls would be cut to every fourth flight, from every one or two now. Such changes would pare costs and trim the turnaround time between flights to less than 35 minutes, up to 10 minutes less, boosting time in the air to about 12 hours a day from the current eight or nine.

Air France’s share of domestic and international traffic from its homeland has fallen from 39 percent in 2002, when Luton (U.K.)-based EasyJet opened its first French base, to 34 percent in 2009, the most recent year for which data are available. EasyJet more than quadrupled its share over the same period, to 7.6 percent, and increased capacity on French routes by 35 percent in the first half of 2011. Spokeswoman Celine Prenez declined to comment on the Air France plan. Spain’s no-frills Vueling Airlines, which in 2009 absorbed Iberia’s discount unit, earlier this year set up a base in Toulouse and plans to expand at Paris’s Orly Airport. “Our cabin crew go through and do a cleanup because they’re already onboard,” says Alex Cruz, CEO of Barcelona-based Vueling. “You won’t get Air France staff to do that unless you hire a new crew under new conditions.”

Air France’s pilots union in early July accepted the regional strategy. But talks with its two cabin-crew unions broke down this month over issues including reduced rest periods and lower hourly pay. Union wrangling has already forced Air France to abandon plans for a fourth large-plane hub in Bordeaux; it will now base small regional jets there. It’s also delayed opening the Marseille base from June to October to allow extra union consultation, says Gourgeon. “The delay is mainly because we want to do it in a win-win way with staff,” he says. “We don’t force anybody. We don’t have to say, ‘O.K., you have to work more and make less money.’ ” Instead, the airline is seeking 300 volunteers to staff the Marseille operation.

Ryanair, Europe’s No. 1 discount carrier, isn’t worried about Gourgeon’s plan and regards the strategy as “hopeless,” says CEO Michael O’Leary. “No flag carrier in the history of aviation has ever succeeded in rolling out a real low-fare airline,” he says.

The rebound in demand for air travel since the recession eased has given labor representatives more leverage, weakening Gourgeon’s hand, says Yan Derocles, an analyst at Oddo Securities in Paris. He says Air France-KLM should have acted after racking up €2.4 billion ($3.37 billion) of net losses in the two years ended March 2010. “The time to negotiate was during the crisis, when management held the bargaining power,” he says, citing increased labor flexibility won by Deutsche Lufthansa in 2009. “Now the environment has changed completely.”


    The bottom line: Air France is belatedly trying to start a lower-cost unit to counter the growth of no-frills airlines in its home country.

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