Business Travel

Air France-KLM to launch low-cost airline

By Sam Maguire
Business Travel
Published: 4 November 2016

Air France-KLM is going on the offensive with a new long-haul airline to compete against the Gulf airlines. The new airline is currently named “Boost”.

An Air France-KLM announced in a statement “This new company will constitute the Group’s response to the Gulf State airlines which are developing at low production costs on key markets where Air France-KLM is pursuing its growth ambition,.”

To compete with its cheaper rivals the company will recruit pilots and crew under different terms than its main business. The project is a concerted effort from the company to regain market share after years of turmoil including clashes with trade unions. The company has also been affected by terrorism and economic instability.

Boost is expected to have ten aircraft in the air by 2020 which will be in use more hours per day than the company’s main fleet but they will need Air France pilots to volunteer to work under the new terms.

Jean-Marc Janaillac, Chairman of Air France-KLM, unveiled the new project saying “It will enable us to capture our share of air transport industry growth by improving the competitiveness of our businesses. Our strength lies in the fact that we are challengers. The status quo is not an option. We must launch a new dynamic to return to a leadership position in our markets.”

Air France-KLM’s revenue fell 5.1% in the third quarter of 2016 and was down 3.5% for the year to $20.81 billion. Pilot and cabin crew strikes have cost the company roughly $144 million this year.