Air France Enters 'Crisis Mode' Amid Unstable Tariff Policies, CEO Warns
/https://aviacionlinecdn.eleco.com.ar/media/2022/10/IMG_6400.jpg)
Benjamin Smith, CEO of the Air France-KLM Group, has announced that Air France is now operating in “crisis mode” as it navigates what he described as “uncharted territory” resulting from the Trump administration’s unstable tariff policies.
In an interview with Bloomberg, the Canadian executive—who in 2018 became the first non-French CEO of the Franco-Dutch group—said the airline is seeing a decline in demand for transatlantic economy class.
Smith explained that while premium cabins remain relatively stable, there are signs of weakness in economy class.
“On the transatlantic sector, we’re seeing relative stability in premium cabins but a slight softening in economy class,” he said during the interview, which aired Wednesday.
Asked about the potential impact of President Trump’s tariffs on operations, Smith acknowledged that the travel industry is among the first to feel the effects of a recession, as reported by our partner outlet, AEROIN.
“I think that post-COVID, travel was repositioned as a top priority for many consumers. But with falling fuel prices, we’re assessing how this period of uncertainty might impact our financial results. Relatively speaking, we are already in crisis mode,” Smith added.
Despite the warning, he stated that there is no current reason for Air France to reduce capacity on its North American routes. If needed, the airline could shift that capacity toward Latin America or Asia, as well as advance or delay aircraft orders and implement cost-cutting measures.
Smith also emphasized that Air France is not pursuing aggressive growth, unlike some of its competitors.
On the bright side, the company is benefiting from declining oil prices, one of its largest operational expenses after labor costs. Late last month, Virgin Atlantic became the first international airline to express concern about weakening transatlantic demand from North America to Europe, although CFO Oliver Byrns did not provide specific figures on the slowdown.
Earlier, Delta Air Lines—one of the industry’s major players—announced it was “actively managing costs and capital expenditures” in response to a cooling trend triggered by widespread economic uncertainty.
Nevertheless, Delta noted that demand for premium and international services remains strong, despite a dip in domestic travel demand.
As for Air France, Smith said the airline is currently managing to fill economy seats on transatlantic routes by lowering fares, while premium cabin demand remains strong, especially from U.S. passengers, who account for up to 50% of those bookings.
Para comentar, debés estar registradoPor favor, iniciá sesión