Air France-CEO KLM’s has warned that European airlines forced to take longer flights to Asia to avoid Russia will struggle to compete with Chinese rivals if travel picks up following the Covid-19 shutdowns.
Ben Smith stated that Chinese airlines had a “unfair edge” over European airlines that have been prohibited from Russian airspace since the full-scale invasion of Ukraine about a year ago, with the EU and Moscow imposing limitations. Chinese airlines are still permitted to fly over Russia and are able to take shorter routes to Europe.
“The travel duration between Paris and Seoul can increase by up to three hours,” Smith told the Financial Times. If a Chinese airline is flying over Russia, they will have an unfair edge against us.
In the coming months, airlines want to capitalize on the anticipated return of Chinese travelers to renowned shopping locations such as Paris. Smith stated that the Franco-Dutch firm wanted to return at least fifty percent of its flying capacity to China in 2019.
This is the result of a rebound in air travel that is already bringing traffic levels in places such as Europe near to pre-pandemic levels, therefore fueling an industry revival. Air France-KLM announced on Friday that it returned to profitability for the first time since 2019 due to a substantial increase in sales. The group anticipates significant expansion of its worldwide capacity in 2023.
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Since last year, Air France-KLM has been one of the major benefactors of the increased demand for air travel within Europe and to the United States. It is attempting to overcome the last of its pandemic problems by reducing the €10 billion of public aid it receives to deal with halted aircraft.
While a portion of the aid included limits on making acquisitions and paying dividends, the firm will once again be able to make acquisitions freely. By the end of April, Air France-KLM will have redeemed its remaining €2.5 billion in French state-guaranteed loans and refinanced certain state-linked hybrid bonds, freeing itself from the conditions related to portions of the rescue package.
“Consolidation is occurring across Europe,” Smith stated, “We don’t want to be marginalized. From my opinion, smaller independent carriers lack a sustainable business strategy for the future. They will need to form a stronger alliance with an existing, larger group, or they may become takeover targets.”
The executive reaffirmed Air France-interest KLM‘s in the privatization of Portugal’s TAP by the Lisbon government. Smith stated that the Franco-Dutch carrier had “no genuine interest” in Flybe, the British minor airline that ceased operations after failing to find a buyer.
Air France-sales KLM’s increased 84 percent to €26,3 billion, topping the Refinitiv polled estimates of analysts by a little margin and matching 2019 levels. The firm made a net profit of €728m, compared to a net loss of €3.3b the previous year.
Smith also criticized a plan by the Dutch government to lower the maximum number of flights authorized at Amsterdam’s Schiphol airport beginning at the end of this year in an effort to decrease noise pollution for local residents. Air France-KLM was “fighting it with all its might,” he added, adding that the company intended to introduce newer planes that would assist minimize noise pollution.
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