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France Klm Strategy Essay

501 words - 3 pages

Part one
Air France KLM
1.What drives this competitor?
'Making the sky the best place on earth'
AIR FRANCE KLM, the result of a merger between AIR FRANCE and KLM in 2004, is one of the leading European air transport groups.

2.What is its current strategy?
-Restoring competitiveness implying a reduction in costs
-Restructuring the short and medium-haul operations
-Rapidly reducing debt.

3.What does this competitor believe about its industry?
Its main activities are the air transport of passengers and cargo as well as aircraft maintenance.
In 2011, AIR FRANCE KLM carried 75.8 million passengers and 1.4 million tonnes of cargo. The group's fleet comprises more 586 aircraft, including 173 regional aircraft operated by its partners Brit ...view middle of the document...

This enables a high frequency of flights, whilst limiting the overlap of destinations served by the two airlines: 70% of long-haul destinations and 60% of medium-haul destinations are served by just one of the two carriers.

2) network - As aircraft are the main asset of its business, the Group invests in its fleet on a continual basis and operates one of the youngest and most efficient fleets in its category: 586 aircraft in operation, average age 9.7 years. This investment means that Air France-KLM is able to provide better passenger comfort and make significant fuel savings, in line with the Group's CSR commitments.

3) alliance - Air France and KLM are members of SkyTeam, the second largest alliance in the world in 2011 with a 19% market share, 15 member airlines and 926 destinations served in 173 countries. The arrival of China Airlines and China Eastern means that SkyTeam is now the largest alliance in China, which represents a key asset in this rapidly growing market. By optimizing synergies between each of its members, SkyTeam strengthens the Group’s product range in terms of its network and the services it offers to its customers, such as linked loyalty programme, new ground services for passengers and the SkyPriority programme.

W: the financial situation is worrying given its low level of cash and the trend in its debt

the group is not competitive enough to be profitable and the level of our unit revenues is insufficient to offset the increase in the fuel bill.

5. Does this airline belong to an airline alliance?
Air France and KLM are members of the SkyTeam alliance which has 18 member airlines, offering customers access to a global network of over 14,800 daily flights to 993 destinations in 186 countries.

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