What Air France does about Ryanair may not seem immediately relevant to what airlines do in Australia, Asia or North America, but its launching of a declared ‘long term’ low fare initiative is being monitored world wide.
This is because more than 14 years after British Airways tried and then failed with a second brand carrier, Go Fly, the question remains as to whether such second brand carriers, like Qantas’s Jetstar brand, can succeed long term, or if they appear to succeed, do so without killing their owners full service products.
Jetstar is the only notable example of a successful second brand airline strategy by published financial guidance. United, Delta, Air Canada and others have failed where Jetstar succeeded, and Go Fly, which under UK law was required to compete independently with its parent British Airways, was too successful for its owner’s core interests, and sold to private equiteers who then sold it to successful stand alone low cost carrier easyJet.
But in this new move, Air France KLM is augmenting its subsidiary regional brands including Britair and Transavia France which any Australian traveller would immediately regard as low fare brands in their service offerings.
The amenity of full fare Air France flights is similarly pretty basic by the standards in Australia and Asia.
One of the startling things about the Air France offer, however, is that in focuses on Orly airport in Paris. Orly is much closer and easier to use from ‘business’ Paris and many of its inner domains than the larger Paris airport at Charles de Gaulle.
And the fare conditions are aimed at those flying on typical short business trips with no checked luggage.
What Air France could succeed in doing with the emphasis on Orly is to further widen the wedge between easyJet (which uses major airports, including Orly and CDG) and Ryanair and some other Ryanair imitators, which use remote airports, such as Beauvais for Paris, which is almost in Belgium and a total PITA to reach from the inner city by coach, and is grossly misrepresented in the literature as being only 75 minutes from the city.
Will it work? It can be argued that easyJet is more a threat to Air France than Ryanair is, in so far as Paris in concerned.
In the Australian context, Air France is doing what Virgin Australia set out to do with a single brand policy until it announced its pending approval deal to buy control of Tiger Airways Australia. Virgin Australia says it will keep Tiger a separate operation, unlike Jetstar, which has evolved into an integrated operation with Qantas which arguably drives Qantas full service customers to try out the Virgin Australia alternative.
It is the fluid situation with the low cost brands in Australia that makes other major moves in the area by large brands so interesting.
A cynic could argue that what Air France is really doing is admitting that full service shorter haul flights have no future, and it will make all of them direct competitors to Ryanair and easyJet and so forth, while retaining premium product differentiation for long range flights.
In that sense, this could also be the fate of domestic air travel within Australia within the next 10 years. Qantas and Virgin Australia will no doubt work hard to avoid such a fate, but if they are to do that they may well have to engage in infanticide when it comes to their low cost brands, and as far as Qantas is concerned, Jetstar is no longer an ‘infant’ but starting to look all grown up.
With the ACCC expressing reservations about the Virgin Australia deal to control Tiger Airways, and Air France seen as running up the white flag, the outlook for low cost domestic travel is starting to look anything but predictable.