ASIAN AIR CARGO SUPPLEMENT – Asian Competition hits Air France – KLM

Increased competition from Asian carriers was one factor behind weak annual results for Air France – KLM, admits its spokesman Jean-ClaudeRaynaud. “Asian carriers have developed a lot, and have started offering very signifi cant capacities and frequencies to Europe, so we have entered a period of overcapacity which is not good either for fi lling […]


Increased competition from Asian carriers was one factor behind weak annual results for Air France – KLM, admits its spokesman Jean-ClaudeRaynaud.

“Asian carriers have developed a lot, and have started offering very signifi cant capacities and frequencies to Europe, so we have entered a period of overcapacity which is not good either for fi lling the planes or for yields,” he says. “It is not that business has declined from Asia and particularly China – it is still strong – but it is more diffi cult to make it profi table.”

The strong euro has also increased imbalances on Asian routes, something Raynamud says remains a cause of concernfor the carrier.

Overall, Air France – KLM saw cargo revenues rise less than one percent in the year to March 2007, on a 1.4 percent rise in traffi c. Operating profi ts fell by 62.7 percent to €62m. Asia was the only region to see a fall in revenues, with improvements for the Middle East and Americas, and a stable picture to andfrom Africa.

While the Franco-Dutch carrier is feeling the heat from Asian competition, this was not the only factor in the weak results, however. Raynaud also points to a big increase in belly capacity– something Air France is participatingin by deploying B777-300ERs on manyAsia routes – as well as a modal shift tosea freight.