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Returning to profitability, the world's largest airline group will reduce first-class seating as travel consumers look to trim costs

By Bruno Trevidic

SEATTLE – With Air France-KLM expecting a return to profitability in 2011-2012, the company has begun to revamp its long-haul fleet to reflect a new post-crisis, penny-pinching economic reality.

Chief Commercial Officer Bruno Matheu laid out the vision for the overhaul of the fleet during the delivery in Seattle of a new Boeing 777-300ER, the 56th of its kind acquired by Air France. The new "triple-seven" aircraft's arrival Thursday at Paris's Roissy Charles de Gaulle airport signals a shift in the travel industry following the global economic crisis of the past two years, as consumers continue to demand lower prices.

The aircraft, which is the first to be equipped with a new model for business class seats and video-on-demand systems, is also the first B777-300 to come with a new three-class configuration: the 383 passenger seats are partitioned between Business Class (42 seats), the new Premium Traveller intermediate class (24 seats) and Economy Class (317 seats). The new configuration marks a shift in emphasis away from high-income clients, as Air France's existing B777 fleet includes eight seats in First Class, 67 in Business and 28 seats for Premium Business travellers, with only 200 seats remaining in Economy.

The new configuration will also be built into three additional B777s to be added to the fleet by the end of next summer, reflecting the company's overall strategy to meet the needs of more cost-conscious travellers. "The crisis has accelerated a change in behaviour of our customers who increasingly choose lower prices over better schedules or convenience," says Bruno Matheu.

While overall traffic has returned to the pre-crisis level, Matheu says ‘high income" travel is down by about 10%. Christian Herzog, Air France's marketing director, points out that the lion's share of higher priced tickets are bought by business travels, who are proportionally travelling less often than before. "When you look over time, trips of a personal nature are increasing the most," Herzog said.

Beyond the new fleet of B777s, ten B777-200s will also be redesigned by next summer based on the new model -- minus the first class, with the Premium class to be extended to the entire long-haul fleet, including the A380s. Progressively, the new models of seats will be installed on fifteen Airbus A330s and A340s, as well as on the latest Boeing 747, which will also feature additional seats in economy class.

By no means is First Class being abandoned. "Even if our latest 777s don't have as many high-end seats, our First Class offer will actually grow by 30% by 2013," says Bruno Matheu. The number of destinations on which Air France offers First Class should also remain stable. "The market is highly concentrated on a few flights, for which there is a real demand," he says.

At the same time, Air France has postponed the replacement of older aircrafts. The seven remaining B747-400s will continue to operate for four more years in order to maintain the company's cash flow. To this end, the 777 delivered yesterday -- along with future deliveries of the same aircraft -- will immediately be sold off to leasing companies, while remaining available for hire as part of the fleet. Meanwhile, no new dates have been announced for the prospective order of new A350s or B787s -- two programs that continue to experience delays.


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