AIR FRANCE KLM has a long established relationship with China. The group is the first carrier in terms of seat capacity and passengers carried between Europe, continental China and Hong Kong. Joris Holtus, AIR FRANCE KLM’s sales director for Greater China offered his insight on how the Olympics are affecting AIR FRANCE and the airline industry.
Q: How many flights does AIR FRANCE KLM have for China?
A: For this summer, we have 69 weekly flights between greater China and Europe. On top of that we have 17 code share operations, which totals 86 weekly flights. AIR FRANCE KLM serve five different gateways in China – Beijing, Shanghai, Guangzhou, Chengdu and Hong Kong. Out of all those gateways we operate flights to Europe, Amsterdam or Paris. Those are either AIR FRANCE KLM-operated flights or sometimes those are code shares with our partners China Eastern or China Southern. On top of that we have a few additional cargo operations.
Q: What is code sharing?
A: Code sharing refers to a practice where a flight operated by an airline is jointly marketed as a flight for one or more other airlines. Most major airlines today have code sharing partnerships with other airlines, and code sharing is a key feature of the major airline alliances. Code sharing is a standard way of partnerships within the airline industry because it allows networks for airlines, which are a key asset. You will see a KLM code share on a China Southern flight and vice versa. This way we can grow our network in quite an efficient way.
Q: What do you think the trends are in the airline industry in preparing for the games, and more generally for China as a whole?
A: The games is a very specific event where the airline industry and everyone is looking forward to. But I must say that over the years we have seen an increase from the European market coming to China for leisure and business purposes. So the growth and strong trends are already there. The trends will only further accelerate by events like the Olympics. So the Olympics will, let’s say, result in a peak for the month, but [the growth] is not exceptional because over the past years we have seen flights to China [from Europe] growing quite strongly.
Q: In terms of long-term growth, including the Olympics, how do you see the China market impacting the airline industry and AIR FRANCE KLM?
A: We expect the market to continue to grow. [We not only look at] the number of aircrafts and flights to put in the market. We are also dedicated to the service we give to our Chinese customers. In that sense, we put much effort in making sure our services are tailored to our Chinese customers. AIR FRANCE KLM have people in the cabins who speak Chinese, who are Chinese – to fully meet the [needs] of Chinese passengers during their flight. AIR FRANCE KLM have a contract with South Beauty restaurant in serving Chinese food on board – so those elements are very important to us, and we expect to further expand these elements in the next few years.
Q: There is a new e-ticketing system because of new airline structure changes, can you touch on that?
A: The world-wide organization for airlines (International Airline Transport Association) has committed to make the industry 100% operable on e-tickets by the end of this year. At the end of May 2008, it is expected that all paper tickets be abolished. This is purely to do with the efficiency of the industry with no relation to the Olympics. What is important to recognize in this aspect is that both AIR FRANCE and KLM are working hard. In China, all air tickets are issued via a specific global distribution system which is called Sky Travel. Both AIR FRANCE and KLM are working hard at the moment to make sure we can offer our e-ticket via the booking system, Sky Travel. Basically if you compare the Chinese market with the European market, you will see that in Europe, close to 100% of the tickets are e-tickets. In China that is not yet the case because the system travel agents are using to issue tickets are not fully up to the level of e-ticketing.
Q: AIR FRANCE KLM have operations with local Chinese carriers. Do these partnerships signify an increasing trend for investments in China?
A: Last year an agreement was signed, confirming that China Southern will join the Sky Team in the second half of this year. Both AIR FRANCE and KLM look forward to China Southern entering SkyTeam Alliance. That is a very important step for the SkyTeam. Recently, we also agreed with China Southern to have an exclusive discussion over the creation of a Cargo Joint Venture in China. We have an extensive technical partnership with China Southern, as well as code share agreements for their flights between Amsterdam and Beijing as well as domestic China and European flights. In terms of partnerships, it is proof of our confidence and the potential of the Chinese market. It is also recognition of the professionalism of Chinese carriers. We need these partners to further announce our service propositions.
Q: Were there challenges for AIR FRANCE KLM in the China market?
A: Of course, our first steps require agreements between the French, Dutch and Chinese governments. There are many airlines pushing for bigger growth than can be achieved. Second is the way Chinese passengers are required to travel – they [have to] apply for visas to go to Europe. These are all elements which are quite considerably different compared to other markets that specifically challenge our business.
Q: How has the relationship between AIR FRANCE KLM and China evolved over the years?
A: I think AIR FRANCE KLM has quite a strong track record in this market. In the past, we have invested a lot in the market and we have a very strong track record in terms of pioneering. AIR FRANCE was the first European airline to start operations in China, and last year, KLM was the first European airline to start flying to Chengdu. It really shows AIR FRANCE KLM are much committed to the Chinese market. Over the years, the commitment has translated to considerable growth in the capacity which we put in.