Competition in the airline industry have been increasingly tough for global carriers, especially those who cater to both long haul and short distance flights. Reports revealed that Air France KLM will be transfering a huge portion of its European flights to their low cost airline Transavia.Transavia Airlines is operating as an independent part of Air-France KLM group.
Other airlines such as Lufthansa have also transferred their short flights to their lower cost unit. This restructuring is done to save cost on short flights.
For short-distanced flights, low-cost carriers EasyJet (British airline carrier), Wizzair (Hungarian low-cost airlines) and Ryanair (Irish based low-cost airlines) still dominate the market. The cost of labor for these carriers are far lower than those big ones. Some of the routes of these global carriers do not touch their hubs which offers very little upside on their revenue. Thus, global airlines are trying to dissolve flights that do not touch their hubs and transfer it to their low-cost carrier partners.
For global carriers such as Lufthansa, Air France KLM and British Airways, the most strategic option is to transfer short flights to their budget airlines. For Air France KLM, they have a good view on their low-cost airline, Transavia. They expect the airline to have 100 planes by the year 2017, more than 100 percent growth from their current number of 41 planes. Air France KLM estimates Transavia to turn profit by the year 2018 with more than 20 million passengers estimated per year and around 100 million euros in sales. By the year 2020, the company envisions a "leading long-haul network at the heart of global alliances." Alexandre De Juniac, chairman and chief executive of Air France-KLM said in a statement.
British Airways on the other hand has not been steering in clear waters. The group's parent company, International Airlines Group, has cut around 1,400 jobs amid financial problems. IAG owns and operates Vueling, a Barcelona-based low cost carrier ehich flies to more than 130 cities accross Europe.
