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Paris Airports/Air France… a couple on the verge of a nervous breakdown!

The chronicle of Jean-Louis Baroux, air transportation expert


The relationship between Paris Airports [ADP - French acronym] and Air France is akin to that of a couple. Indeed, neither of them can live without each other. I would even say that they only exist for one another. It is unthinkable to imagine ADP’s future without its vital client and it is impossible for Air France to live without the installations of its airport.



In the end, there lacks a common strategy between Air France and ADP. This is what made Dubai prosperous. - DR Aéroports de Paris - LUIDER, Emile - LA COMPANY
In the end, there lacks a common strategy between Air France and ADP. This is what made Dubai prosperous. - DR Aéroports de Paris - LUIDER, Emile - LA COMPANY
And here we are, after decades of the airline company being a dominant partner thanks to its size, along with its status and results, the situation has been reserved in the last ten years.

To such an extent that ADP, privatized in 2006 after being transformed into a joint-stock company in 2005, has become the couple’s main actor.

We can evaluate this through all of the available indicators: 2014 net income of €402 million for ADP versus a loss of €189 million for Air France/KLM, market capitalization of €11,168 million for ADP versus €1,916 million for the airline company.

Meaning that Augustin de Romanet, the CEO of ADP has to indulge in a difficult task: first of all, continue to make profits because its main shareholder, the State with 50.6%, demands so while pocketing large sums of money in the form of corporate taxes and important dividend distributions. Secondly, to not seem to build its earnings at the expense of airline companies. Finally - and most importantly - not be the cause of its main client’s difficulties.

An undertaking that requires experienced knowledge in financial communications.

The aviation aspect accounts for 53% of ADP’s revenues

In the end, Air France is right to point the finger to the airport’s results.

After all, the airport is comprised of airport charges paid by the airline companies and, must we not forget, by passengers along with additional earnings, such as levies on the revenues of businesses inside the airport and the operation of parking lots.

In total, the purely aviation aspect accounts for 53% of revenues and the fees paid by businesses represent 30%.

Yet, transporters demand a common account between APD’s entire expenditures and entire products to determine the fees that they will have to pay, while the airport operator stands firmly on a contribution based solely on aeronautical charges.

Yet the reality is that ADP’s traffic is at a very slight increase while the earnings of businesses are increasing strongly.

And the companies point out that without them, there would be no passengers and, in turn, no earnings.

They demand that instead of an increase of their fees planned for the next few years, they receive a decrease, as it was done in Schipol's airport, also an ADP shareholder by 8%.

The State is confusing the issue

Except that this isn’t the topic. It is all about the relationship between the two main actors, without mentioning the third thief, the State.

And the latter only confuses the issue every time it gets involved in air transportation affairs. In fact, we clearly witnessed this with the erratic comments made by political representatives during Air France’s latest social conflict.

However, it isn’t capable of providing the necessary infrastructures to link the Parisian platforms to the capital, even thought that is its role.

The famous Roissy Express is being talked about again, and we are guaranteed that it will be up and running in 2023 for an amount of €1.7 billion that no ones knows how to finance, while it should have been launched 10 years ago already for a cost of €800 million.

In fact, we could make similar comments for service to Orly. Admittedly, a train station will be set up within the project of the Grand Paris, in 2020 or later, but meanwhile there is still no direct train even though manufacturers had planned a train station in Orly South that was inaugurated in 1960, should we remember.

Is a common strategy between Air France and ADP lacking?

In the end, there lacks a common strategy between Air France and ADP. And this is what made Dubai prosperous.

Look no further for an explanation of Emirates’ success. Every time the company needed the construction of airport facilities, the DNATA built them.

Granted, the transporter and the airport authority belong to the same person: the Cheick Al Maktoub.

If Air France wants to pursue its growth with an operation based on a hub, Paris Airports will have to build an adapted terminal.

It isn’t with the current completely disparate tool that the company will be able to hold its spot faced with global competition.

A strong understanding between the two major actors is crucial. And we are still waiting for it.

Paris Airports/Air France… a couple on the verge of a nervous breakdown!
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.

As an Air Transportation Expert, he published at L'Archipel Publishers Compagnies Aériennes: la faillite du modèle [“Airlines: A Bankruptcy Model” – translator’s note], a must-read for all tourism professionals.

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 26/10/2015
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