Veeren GowreaSWOT analysis of Air France
This is a detailed SWOT analysis of Air France. It aims to analyse the strengths and the weaknesses of Air France. It also aims to explore the opportunities and the threats facing the airline. Air France is a subsidiary of the Air France–KLM Group and a founding member of the SkyTeam global airline alliance.
Strengths of Air France
Strong brand names
Air France was created in 1933 as the national airline of France as a result of the combination of five smaller French airlines i.e., Air Union, Air Orient, Société Générale de Transport Aérien (SGTA), CIDNA and Aéropostale. In 2004, Air France merged with the Dutch flagship airline KLM. The Air France-KLM serves 308 destinations in 116 countries (Air France-KLM, 2021). KLM is simply the oldest airline in the world (1919) for scheduled flights, and Air France is one of the oldest (1933) as well.
Partnership
Air France-KLM is a member of SkyTeam Alliance, a global aviation partnership comprising of 19-member airlines and forming a global aviation network operating 15,445 daily departures to 1036 destinations in 177 countries (Skyteam, 2021).
Serving different market segments
Air France functions comfortably in the traditional full-cost carriers segment worldwide and achieved the 5th position of the ‘Top 20 largest airlines Europe, 2017’. The full-cost carriers offer First Class, Business Class, Premium Economy, Economy and Mini-economy. Air France-KLM has subsidiary airline companies which function in the low-costs segments in the European markets, namely HOP!, Transavia and JOON airlines. The three main areas of services provided by Air France are passenger transport, cargo transport and aircraft maintenance.
Financial positions
Air France-KLM generated 23 billion euros worth of revenue in 2019 (Statista, 2020). The vast majority of the revenue came from passenger transport service. The airline carried 104 million passengers in 2019.
Loyalty programme
Flying Blue, the Air France-KLM group’s loyalty programme, has 15 million members and 39 airline partners and more than 100 non-airline partners that aims to provide customers with more simplicity and flexibility to use the loyalty programme (Air France-KLM, 2021).
Weaknesses of Air France-KLM
Low-cost airline branding
There is evidence of poor branding strategy for the low-cost airlines of the Air France-KLM. Transavia, HOP! and JOOM are new companies and not well recognised by the customer base.
Strikes
The strike by pilots and other Air France members of staff had negative impact on the airline’s operating result. Strikes also demonstrate the airline’s weakness in maintain good employee relations.
Opportunities for Air France-KLM
Joint venture
Joint venture is worth exploring for Air France. Further growth is possible from Europe to Asia Pacific through joint ventures.
Code-shared flights
Code-shared flights strategy with the “Go Around The World With SkyTeam” gives Air France-KLM a strong penetration into lucrative markets like Latin America, China, and Africa (Air France-KLM, 2021)
Threats to Air France-KLM
Strong Competition
The main competitors in the long-haul full cost segment is Lufthansa Group which includes Eurowings, Swiss, Austrian Airlines, Brussels Airlines and the second biggest competitor is IAG Group which includes strong brands like British Airways, Iberia, Vueling, Aer Lingus. It has been observed by some analysts that they tend to imitate or replicate each other’s strategies and tactics. Strong competition from the middle-east airlines such as Emirates, Qatar Airways and Etihad needs to be considered as well.
Social unrest
The series of continuous social manifestation on the streets of French cities do not seem to end soon, and this has an impact on the tourism of the country, inbound, outbound and domestic flights as well. The main contention is pay rise and the 6% increase suggested by the 10 main labour unions might bring up the labour costs very soon. Labour cost is already higher than fuel costs for all major airlines like Air France.
Other threats
The year 2020 was very complex time for many airlines around the world. For some period in that year, Air France KLM was losing €25 million per day, and the situation was almost unsustainable (Whirter, 2020). If there was no financial support from the French government, it would have been absolutely drastic.
Conclusion
From the analysis and research, it is clear that AF/KL is in a strong position in Europe with more strengths than weaknesses. However, the threats are pertinent as well. There is evidence from an analysis of their accounts that this is not faring well as they made a loss in the first quarters of 2017 and 2018, although they did catch up by the end of the financial years.
We hope the article ‘SWOT analysis of Air France’ has been helpful. You may also like reading SWOT analysis of EasyJet. Other relevant articles for you are:
SWOT analysis of Singapore Airlines
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Last update: 10 February 2021
References:
Air France KLM (2021) Air France call for strike April 2018, available at https://www.airfrance.co.uk/GB/en/common/page_flottante/hp/news-air-traffic-air-france.htm (Accessed 09 February 2021)
Martin, (2017) Virgin Atlantic Sells Stake To Air France-KLM, Strengthens Alliance With Delta Air Lines, Forbes, [available at[ https://www.forbes.com/sites/grantmartin/2017/08/01/virgin-atlantic-sells-stake-to-air-france-klm-strengthens-alliance-with-delta-air-lines/#6def2d4a78e6 (Accessed 20th January 2019)
Skyteam, (2021) Air France, available at https://www.skyteam.com/en/about/ (Accessed 09 February 2021)
Statista (2020) Air France-KLM – Statistics & Facts, available at: https://www.statista.com/topics/6405/air-france-klm/ (accessed 05 February 2021)
Whirter, A. (2020) Air France KLM losing €25 million per day, available at: https://www.businesstraveller.com/business-travel/2020/04/11/air-france-klm-losing-e25-million-per-day/ (accessed 09 February 2021)
Author: Veeren Gowrea
Veeren Gowrea is a lecturer in Tourism & Hospitality management. He holds an MBA in Strategic Management and MSc in Human Resource Management from the University of Wales, UK. He also holds a Postgraduate Certificate in Higher Education (PgceHE) from Birkbeck, the University of London. He works as a visiting lecturer at a number of institutes in London.
M Rahman
