Passenger business

Long-haul

The current economic recovery underpins expectations of significant growth in transport demand. The Group plans to take advantage of this by implementing productive and targeted growth in capacity.

Productive growth

Since it benefits from 2 of the largest hubs globally, the Group can operate larger aircraft like Airbus A380s and Boeing B777-300s, meaning it can take advantage of economies of scale. The Group thus received its first 5 Airbus A380s between November 2009 and May 2011 and awaits the delivery of 1 more aircraft by the summer of 2011. In Amsterdam, KLM took delivery of its 5th Boeing B777-300 and converted 2 Boeing B747 combis into the all passenger configuration.

Reinforcing the leadership of the network

The Group plans to maintain its leadership position for the long-haul network out of Europe, whether in terms of the number of destinations served or its share of capacity. The Group thus accounts for 60% of the destinations between Europe and the rest of the world, far ahead of its direct competitors, and has a market share of 13.2% relative to 10.6% and 10.1% for Lufthansa and IAG (Source: OAG).

Rapid growth for SkyTeam, particularly in Asia

Partnerships and joint-venture agreements help to feed flights and reinforce the Group’s competitiveness on the routes covered by these agreements.

SkyTeam’s rapid development is a major asset for the Group. No fewer than 4 new airlines are set to join the existing 15 alliance members by 2012, all operating in markets with strong growth: Aerolineas Argentinas, Garuda Indonesia, Middle East Airlines and Saudi Arabian Airlines.

Increasing integration within the trans-Atlantic joint-venture

The leading strategic market remains the North Atlantic, representing more than a quarter of global premium revenues for IATA member airlines. Thanks to its joint-venture with Delta, the Air France-KLM Group has a major strategic position on these routes. Benefiting from more than a decade of experience acquired within the framework of the agreement between KLM and Northwest, the joint-venture was created in April 2009 and extended to Alitalia in April 2010.

Ongoing improvement in the product offering

The 2010-11 financial year saw the completion of the new Premium Voyageur class roll-out at Air France, launched in October 2009. In December 2009, KLM had completed the deployment across all its fleet of a comparable product, Economy Comfort, which sold as an option.

These products aim to meet the needs of business customers who usually fly economy or switch to economy due to the recession, and the needs of leisure customers looking for additional comfort at a lower fare than in Business class.

Reinforcing the flexibility and the balance of the network

In 2010-11, a series of exceptional events and the increase in the fuel bill led the Group to further develop the flexibility and balance of its network. The Group closely monitors the reaction of customers to these price increases and is ready to reduce its capacity growth if demand appears to be affected by the increases.

The transformation of medium-haul

The medium-haul network contributes more than a third of Air France-KLM’s passenger revenue. By consolidating the Group’s commercial presence across Europe, it plays a fundamental role in ensuring the power of its 3 marketing tools: the Flying Blue frequent flyer program, corporate contracts and contracts with the major travel agency networks.

A robust transformation project

Faced with the crisis that particularly affected the medium-haul network, the Group decided to respond by launching a transformation project dubbed the NEO, or New European Offer in 2009-10.

This project was based on 3 key pillars:

• an in-depth transformation of the commercial offering to produce a simpler product that is better adapted to customer needs, while preserving a high level of unit revenues,
• a re-engineering of internal processes made possible by this new commercial offer to reduce costs,
• a reorganization of the flight schedule.

Provincial bases: a new model

To return to profitable growth on the point-to-point medium-haul segment, particularly in its domestic market, Air France is currently working on a provincial base project reflected in a new production model, aimed at regaining market share on departure from cities in French regions.

Customers at the heart of the Embark enterprise project

By placing the customer at the heart of the enterprise project, the Group is engineering a real cultural change involving all its employees. Making the company more customer-centric not only consists of investing in in-flight services but also in developing a customer service culture.

Being the N°1 in service recovery

Service recovery is emblematic of this change. The Icelandic volcanic eruption in April 2010 particularly highlighted the fact that the ability to handle unforeseen events is a key service when it comes to differentiating the Group from its competitors. This is why the Group is investing in information technologies (the Air France-KLM Connect system) and mobile telephone applications.

The leader in mobile telephone applications

Technological innovation has already markedly transformed the air travel experience. In March 2011, more than two-thirds of Air France-KLM customers checked in using the internet (36%), self-service check-in kiosks (30%), or mobile telephones (1%). Taking advantage of the growing intelligence of mobile telephones is the next logical phase in this strategy. The new mobile websites launched in September 2010 enabled trips to be managed from A to Z using a smartphone.

Being attentive to and present on social media

The customer service culture also involves the Group's presence on social media. This shows that it can adapt to communication tools tailored to customer expectations and benefit from such innovation to provide customers with an improved level of service.

Flying Blue, a highly attractive frequent flyer program

This loyalty program, resulting from the merger of the Air France and KLM frequent flyer programs in 2005, now has 19 million members (+ 72% since its launch), 48% of whom are French and Dutch, 30% are other European nationals and 22% are from the rest of the world. Some 10% of members fly with both airlines.