Air France-KLM Could Operate Trains On Domestic Routes

In an attempt to reduce its environmental footprint, Air France-KLM group is looking at introducing trains instead of planes on short-haul routes across Europe. It announced the potential change at its shareholders’ meeting today in Paris. The group already works with France’s national rail service so passengers can use air miles on TGV train journeys.

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Air France’s domestic network has been operating at a loss for a few years now, so an overhaul is not a surprise. Photo: Getty Images

Financial and environmental benefits

Air France-KLM’s announcement comes just a year after it confirmed that it considered the TGV fast-trains its most prominent competitor on domestic routes in France. According to The Brussels Times, the airline said it was looking to adapt its short-haul offerings to be more competitive with investment in rail infrastructure. Air France claimed the lack of taxes and airport-charges means that trains offered low-cost options for passengers, against which it just could not compete.

The financial benefits to passengers are coupled with environmental benefits. TGV trains are considerably more environmentally friendly than short-haul flights. Trains in France are also high-speed and therefore don’t take any longer than flying by the time you factor in the laborious check-in process. Air France’s domestic network operated at a loss of €200m ($220m) last year.

Government intervention

While the airline has claimed environmental and financial benefits for its reason to overhaul its domestic network, it isn’t entirely a decision it can take on its own. Part of the reason for the sudden change is government-mandated conditions for state aid.

Air France, Airbus A380, Retirement
Air France has secured a €7 billion loan from the government to help it overcome the virus outbreak. Photo: Getty Images.

The French government has agreed to a loan of €7 billion ($7.7bn) for Air France. But part of the conditions of the loan is that Air France does not compete with the TGV services where the journey is less than 2.5 hours by train. This means Air France flights between say Paris and Lyon, Bordeaux or Nantes need to be adapted. Air France can still fly these routes as part of connecting flights to other destinations.

Group strategy changes

So while Air France-KLM is looking to make other environmental changes, including using more environmentally friendly aircraft, the motivation is not entirely a result of the group’s desire to improve. Both Air France and KLM will also switch to more environmentally friendly fuel to help lower emissions.

While Air France already knows how much support it will be getting, and the conditions that come with it, KLM is still negotiating with the Dutch government. It’s thought it may receive as much as €4 billion ($4.4bn). However, it could be as low as €2 billion ($2.2bn) and will, no doubt, come with conditions.

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KLM hasn’t yet agreed to loan conditions with the Dutch government. If the loan comes with further restrictions, this may affect the group’s strategy. Photo: Getty

The group will be able to form a more detailed strategy once it has a clearer picture of the short-term future of the aviation sector and is aware of any conditions on loans. At its shareholder meeting today in Paris, the group said it believed several airlines would not survive the current crisis. Therefore, the group would be ready to adapt its network as and when opportunities present themselves.

Conclusion

It’s not a surprise that Air France will be adapting its domestic network. The operating losses and the rise of the TGV means its just not a sustainable option, either financially or environmentally. The group is still looking at environmental issues and is prepared to make changes depending on other airlines going under. So we could see considerable changes in the group’s strategy in the coming months and years.

Air France-KLM is not the only airline that will have to adapt its strategies over the coming months. But what do you think of what we know so far? Do you think Air France is right to potentially offer train services? Should the group be focusing on environmental issues right now, or should it be looking at keeping more staff employed? Let us know your thoughts in the comments.

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