Air France counts on Boost to attract new customers

CANCUN, Mexico (Reuters) - Air France hopes its planned budget long-haul carrier will attract business travelers as well as younger customers to a brand that is sometimes seen as too rigid, the chief executive of parent group Air France-KLM AIRF.PA told Reuters on Tuesday.

Jean-Marc Janaillac, Chairman and Chief Executive Officer of Air France-KLM and Chairman of Air France, addresses the audience during a meeting of the International Air Transport Association (IATA) in Cancun, Mexico June 5, 2017. REUTERS/Victor Ruiz Garcia

The new unit, with the project name of Boost, is due to launch this autumn and is Air France’s response to pressure from Gulf carriers. It will operate 10 long-haul and 18 short-haul aircraft at lower costs than its main brand.

“I think people have underestimated the ability of the big carriers and alliances to respond to the Gulf carriers, to budget carriers, to low-cost long-haul,” Jean-Marc Janaillac, chief executive of Franco-Dutch Air France-KLM, said in an interview.

He said he believed that pure low-cost rivals in Europe, which typically target leisure customers, would have trouble getting enough demand in the winter months, whereas Boost would attract business customers, who typically fly year-round, thanks to lie-flat seats, air miles and the Air France network.

“Studies show that Air France has more difficulty than others in attracting younger customers, because it’s seen as too stiff,” Janaillac said.

The project and other measures to reduce costs at the carrier are subject to approval from powerful pilot unions.

The SNPL union is due to meet on Thursday. Air France has not said what would happen should the union reject the plan.

“I prefer to give dialogue every possible chance and I don’t want to specify what will happen after that,” Janaillac said.

Air France-KLM plans to add capacity to Italy in the event that Italian flag carrier Alitalia collapses, but is not interested in acquiring the airline, Janaillac said.

Alitalia is a partner in the North Atlantic joint venture led by Delta Air Lines Inc DAL.N and Air France-KLM and Janaillac said he hoped the administration would find a solution to keep the carrier going.

“We are ready to strengthen our presence in Italy. But it’s not the outcome we are wishing for,” he said.

Reporting by Victoria Bryan and Tim Hepher; Editing by Richard Chang