Air France has announced it intends to reduce its short-haul capacity and cut up to 465 jobs on its domestic network as it faces competition on short-haul routes from railways and low-cost carriers.
The French flag carrier said it is facing “extremely fierce competition” from high-speed train routes within the country, as well as from low-cost carriers operating in the market. It claimed French authorities ensured that train travel has expanded “without being subject to taxes or charges that directly target air transport”.
The airline claims it has lost 90 per cent of its market share on routes where high-speed trains connect Paris to other regions in France.
Air France also hit out at low-cost carriers that “have not contributed to developing employment in the regions where they operate, taking advantage of European mobility and basing employees in jurisdictions with lower labour costs”.
The airline has restructured parts of its operations since new Air France KLM CEO Benjamin Smith took up his role last year. The group has rebranded its Hop! regional subsidiary to Air France Hop and is retiring the short-lived Joon brand and incorporating its operations into the main carrier.
In a statement, Air France praised its teams for launching several initiatives that have improved its offer for passengers, which it said has helped it maintain a 65 per cent market share in the French domestic market. Nevertheless, it admitted the revenue decline on some routes “could not have been prevented, nor unit costs reduced”.
Air France posted a loss of €189 million in 2018 and said its “financial situation has deteriorated significantly on its domestic network”. It plans to cut its short-haul capacity in terms of available seat kilometres (ASK) by 15 per cent by the end of 2021.
During a review of its operations, the airline said it identified hiring requirements in some departments but also overstaffing in its short-haul ground operations.
There will be no “forced departures”, according to the carrier, which added that it has informed union representatives of plans for voluntary redundancies over the course of a year. The strategy is due to be the subject of a consultation with Air France stakeholders. Any staff who voluntarily accept a job cut will be offered “personalised support measures” that will be discussed with labour groups during the consultation.
Air France has had a strained relationship with staff unions in recent years, with strikes over pay costing the carrier €335 million in the first half of 2018 and forcing Air France KLM chief executive to quit after employees rejected a pay deal. An agreement was finally reached after Smith joined.
New Air France CEO Anne Rigail commented: “Many new talented staff – pilots, flight attendants, mechanics and engineers – will join us in 2019 to support Air France’s growth, but we also have the responsibility to guarantee an even balance of our activities in certain sectors to secure their long-term viability. This is the idea behind the project presented for the short-haul sector today. We will conduct the consultation process with our labour groups as part of an open and transparent dialogue, and we are committed to supporting all staff who wish to move to a new position or develop their career.”
Smith added: “The French domestic network is intricately linked to the history of Air France. It guarantees its regional base and connects the French regions to the rest of the world by offering several thousand daily connection opportunities. In a highly competitive marketplace, we are all fully engaged in defending a domestic market that is vital for Air France and also more globally for the Air France KLM Group.”