Ben Smith Highlights Regained Trust with Air France Staff

 - November 27, 2019, 11:15 AM
Air France-KLM CEO Ben Smith (Photo: Air France-KLM)

Fourteen months after assuming the role of CEO of Air France-KLM, Ben Smith believes he managed to deliver on his first priority to get Air France “out of crisis mode” and bring stability back to an airline that has suffered from social unrest, a heavily loss-making domestic network, and complexity of brands, fleet types, and aircraft configurations. Labor disputes and three major strikes cost the French airline over a €1 billion in the last few years, “but we have a fantastic level of stability now,” said Smith, speaking at the recent IATA Wings of Change Europe conference. Air France pilot unions have agreed to drop several restrictive agreements, including on the fleet development of Transavia France, the group’s low-cost subsidiary, and on the metrics surrounding Air France’s annual production versus KLM on an ASK basis. The latter practice for years forced Air France to reduce the premium cabin size—with up to 13 first, business, or premium economy seats on a Boeing 777-200ER—and consequently record a decreased footprint on the high-margin premium segment. “For me, it is all about trust, and trust has to be earned from all stakeholders,” said Smith.

Part of Smith’s strategy to reduce fleet complexity will result in Air France discarding its ten Airbus A380s—five of which it owns and five leased—by 2022. The Paris-based airline became the first European airline to deploy the double-deck airliner in November 2009 and its first example, registered F-HPJB, is undergoing repainting in Malta but will return to service before leaving the Air France fleet in early January. A second A380 also will leave the fleet next year.

Smith calls the A380 fantastic from a customer perspective and it said it “can be the best in class.” However, from an efficiency and financial perspective, the aircraft underperforms. “The plane is heavy and thus burns a lot of fuel, it has four engines, and it is operationally not reliable,” he said, describing the A380 as a “tough” airplane that takes too long to board and deplane. Moreover, not all airports can handle the superjumbo. Meanwhile, Air France operates at New York JFK’s Terminal 1, which has only one dedicated A380 gate. That circumstance can cause a hold of up to 45 minutes, especially in summer, when the airline operates two daily A380 services to the airport. Tokyo’s Haneda airport, a key gateway where Air France wants to deploy the A380, does not accept the aircraft at the international terminal.

Smith, though, acknowledged the A380 “obviously has a special role in airports that are congested.” But, he pointed out, Air France’s Charles de Gaulle hub is not full. “[We have] four runways, which still have capacity,” he said. “And for the bulk of our destinations, we still have sufficient slots to offer the frequencies that we want.”

The overdue modernization of the Air France A380 cabins proved a further justification to abandon the type, he conceded. Spending €35 million on the renovation of an uncompetitive aircraft does not make sense, the former Air Canada executive stressed. “Not one North American airline had ordered the A380,” he added. Taking the A380 out of the fleet equates to a €400 million capital expenditure avoidance for cabin refurbishment and necessary maintenance and engine overhaul.

Increased operational reliability and flexibility and reduced environmental footprint with more efficient, smaller-gauge replacement aircraft provide other benefits. Air France will accept its tenth—and last of an existing order—Boeing 787-9 in May 2020 and will add 28 Airbus A350-900s by 2025. Two A350s have already arrived, and the third one will join the fleet in the coming days. Future orders for long-haul aircraft could involve a new-generation narrowbody such as the Airbus A321XLR, allowing it to launch new routes from Paris to secondary cities in North America or open direct transatlantic services from secondary cities in France.