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Hop!: Could Air France save money with the creation of an actual low cost company?

Jean-Louis Baroux’s Chronicle


How is the Air France group going to restructure its regional branch? Jean-Louis Baroux, through this chronicle, will revisit this situation deemed “a bit inextricable”, with Air France, on one side, providing flights from Orly to large French cities, and Hop!, on the other, composed of 3 operating companies. What is the solution according to our air transport expert? Create a real “low cost” company with larger means and a rational operation. The regional pole is now under the supervision of the brand Hop!. This activity is composed of 3 operating companies that each has its own fleet characteristic, but also staff management policies, particularly in terms of piloting. Photo DR



The regional pole is now under the supervision of the brand Hop!. This activity is composed of 3 operating companies that each has its own fleet characteristic, but also staff management policies, particularly in terms of piloting. Photo DR
The regional pole is now under the supervision of the brand Hop!. This activity is composed of 3 operating companies that each has its own fleet characteristic, but also staff management policies, particularly in terms of piloting. Photo DR
On June 30th, Lionel Guénin turned in the report that the President of Air France, Frédéric Gagey, had requested concerning the future of the short-medium haul of the company.


Some information has already been leaked. The report recommended to keep under the Air France brand all of the operations linked to the “hub” in Charles de Gaulle and to transfer to Transavia some of the tourist lines.

As for the heart of the affair, meaning the operations leaving from Orly, the report remains a cautiously ambiguous.


Because in this case, in Orly, no solution can truly be offered to an already inextricable situation.

First of all, there is the important Air France operation, inherited from Air Inter that consists of flying to large French cities such as Marseille, Nice, Bordeaux etc… from a fleet composed of Airbuses from the 320 series.




What are the solutions?

And then, there is the recovery of the regional pole under the Hop! brand. However, this pole is composed of 3 operating companies that each has its own fleet characteristics and staff managing policies especially concerning piloting.

Meaning that Regional is operating with Embraers, Britair with the Bombardiers, and Airlinair with ATR, all of that commercialized through the brand of the HOP company and with the code-share of an A5, that of Airlinair.

But to make things even more complicated, the tickets are issued through the French BSP under the AF code. Yes, try to understand something.


It feels like we’re walking on eggshells.


At any moment a social conflict could erupt and that is what the company’s management wants to avoid at all costs.

Sure, the representatives are perfectly aware that this situation is preposterous, but can they act otherwise without risking a strike? Of which the consequences would be unpredictable and could lead the company into an even worse economic situation than it already is.

But if we keep going at this rate then no real solution is going to manifest itself. We could sit and wait for brighter days, but the passing time hurts the company more than does it any favors.


Towards the creation of a low cost company?

The debt may be on the road towards restructuring through the emission of new obligations over the next 7 years for an amount of €600 million, but that means pushing payment deadlines.

The Transform 2015 plan doesn’t seem to be providing fast enough results, even if it is heading in the right direction.

And competition will not decrease, on the contrary. For operations leaving from Orly, the true competitor is the SNCF and it will surely reinforce its promotional strategy to attract air-traveling customers.

So one day we will need to get to the heart of the matter.

This will probably mean recreating a truly “low cost” company with important means and a rational operation.

It could have around fifty aircrafts from the Airbus 320 series in addition to regional aircrafts coming from two manufacturers: one for the Bombardier or Embraer jets and one for the turboprops: ATR.

Of course, it needs to be independent from Air France even if the two companies should have transparent cooperation agreements.


It is necessary to make another Air Inter bis

With the strength of the French market and the development capacity in Europe, it is certain that the company could become as important as its Spanish counterpart Vueling, whose model it could imitate.

Of course this supposes the creation of a social plan with Air France in order to not hinder to start of this new company with social constraints that are incompatible with a healthy economic management.

And this will not be done easily. The main difficulties will come from the metropolitan stops that will not be able to sustain the overspending on which they survive and are subsidized, a bit mysteriously, by the mother company.

In fact, we need to, more or less, recreate an Air Inter bis, but that would be on par with the current economic situation, because let us refresh our memory, Air Inter was never confronted with an air transport competition as rough as today’s, and that needs to be taken into account.

Why not use HOP by sufficiently capitalizing on it, with around 1 billion euros and using some levers like the Deposit Office for instance and even Paris Airports?

The manager has been found. It’s Lionel Guérin who proved himself through his capacity to deal with his private affair, Airlinair, without losing money and who has the sufficient charisma to run an operation as complicated as today’s HOP.

Hop!: Could Air France save money with the creation of an actual low cost company?
Jean-Louis Baroux, is the former president of APG (Air Promotion Group) and the creator of the CAF (Cannes Airlines Forum) which became the World Air Forum.

Air Transportation Specialist, he signed at L'Archipel Publishers ''Compagnies Aériennes: la faillite du modèle” [“Airlines: A Bankruptcy Model” – translator’s note], a book that all tourism professionals should have read.

The copyrights will be donated to charity. It can be purchased at: www.editionsarchipel.com

Written by Jean-Louis Baroux translated by Joséphine Foucher the 07/03/2014
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