Air France/KLM Faces Obstacle to Launching Low-Cost Airline

Air France A380

With plans to begin passenger service in the fall of 2017, Boost has a potential obstacle in its path. To launch as planned, Air France needs the approval of its pilots union early next week, and Skift is reporting that this may be a tough sell.

What Is Boost?

Boost is a new project of Air France/KLM. This new airline within an airline will be based at Paris Charles de Gaulle Airport (CDG). Air France/KLM hopes that Boost will help them regain market share from Gulf carrier competition and reduce losses on their less profitable long-haul routes.

Boost is not likely to be the final name for the new airline but is being used to refer to the project for now. Air France/KLM plans to announce a new name later this summer.

This new name, as well as the other customer-facing aspects of the airline, will be targeted toward millennials. Air France/KLM expects this new airline to be more like a Virgin Atlantic and less like a Ryanair or WOW Air.

Their goal? Reduce costs without taking away too many passenger comforts.

Air France Needs a “Boost”

Like many legacy carriers around the world, Air France/KLM is finding it difficult to consistently turn a profit year after year. In the European market specifically, ultra-low-cost carriers provide passengers with no-frills flight options for significantly lower costs.

EasyJet
Air France/KLM hope Boost will compete with EasyJet and Ryanair for younger travelers.

Many passengers, especially the younger generations, are taking those options so they can save on their travel costs. Flights within Europe on carriers such as EasyJet and Ryanair can often be less than $50 one-way (and even lower than $25 at times).

Although Boost will not be an ultra-low-cost airline, prices will be somewhat lower than legacy carriers, and the airline will be specifically targeted to younger passengers.

In addition to the low-cost European market, Boost will be used by Air France/KLM to go after long-haul routes that they see as highly competitive.

Gulf carriers have eaten away at their market share on many routes that are typically a mix of business and leisure travelers. One of the goals of Boost will be to take that market share back and return those routes to profitability. Air France/KLM hopes the lower operating costs of Boost will help this become a reality.

Pilots Control What Happens Next

The cockpit crew for Boost will be exclusively Air France pilots, so it’s no surprise that Air France/KLM needs the approval of the Air France’s pilots union (SNPL) to move forward with the launch.

In February, SNPL reached an agreement on compensation and has since agreed to take steps that will save Air France/KLM over $40 million starting in 2020. The past several months have been spent trying to work out the rest of the details of the final agreement.

The main topic of concern for SNPL is job prospects at Air France. Air France/KLM has previously moved several flights from Air France over to KLM to save on airport costs, and SNPL wants a guarantee that this won’t continue to happen.

Ideally, they would like to see a firm commitment on flight volumes for the new airline. This commitment would provide job guarantees for SNPL pilots, and the agreement may not be approved without it in place.

Air France presented a final agreement to SNPL in June, and a decision is due on July 17. SNPL can either accept the agreement as is, reject it completely, or push for additional changes. Either of those last options could potentially delay the launch of Boost.

What Boost Means for Passengers

Europe has a strong low-cost airline market. Lufthansa already has a lower cost airline, Eurowings (formerly Germanwings). British Airways and Iberia recently launched Level as their entry into the lower cost market.

Major ultra-low-cost airlines EasyJet and Ryanair provide incredibly cheap fares. When you add Boost into this equation, passengers get yet another competitor, and we can only assume this will lead to increased flight options with decreased prices.

On the long-haul side of things, Boost is set to provide alternate options for flights, with a new hard product marketed to millennials. It remains to be seen how this will affect the market, but increased competition is almost always a good thing for passengers.

If Air France/KLM can get Boost launched on schedule, we may see decreased fares on both short-haul and long-haul flights.

Chase Sapphire Preferred® Card

Chase Sapphire Preferred® Card
  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Apply Now

Leave a Reply