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Air France-KLM eyes Asia amid losses in Europe

Publication Date : 20-06-2012

 

The booming Asia-Pacific market is offering a ray of sunshine for Air France-KLM, Europe's largest airline group by revenue, as it grapples with the eurozone debt crisis.

While the situation in Europe remains difficult for the airline industry, the Franco-Dutch carrier is looking to emerging markets as a source of fast growth that could help compensate for its losses in Europe.

Marnix Fruitema, senior vice-president of Air France-KLM for Asia-Pacific, said the airline "will continue to see double-digit growth in the Asia-Pacific".

Air France-KLM reported revenue of 5.7 billion euros (US$7.6 billion) in the first quarter of this year. However, the company suffered a worse-than-expected operating loss of 597 million euros ($757.6 million) during the period, compared to 403 million euros ($511.4 million) in the same period last year.

"Despite the dark clouds in Europe, we see a ray of sunshine in the Asia-Pacific that has strong growth potential," Fruitema said.

One of the fastest-growing traffic streams of Air France-KLM is its flights between China and Latin America, thanks to active business and investment activities between the two regions, according to Fruitema.

While battling surging fuel, labour, distribution and airport costs, Fruitema said the airline will continue investing in key markets and will explore opportunities to add more destinations in China.

Intensifying partnerships with Chinese airlines and growing the airline's overall capacity are essential to ensure growth in the Chinese market, he said.

In the meantime, Air France-KLM is also boosting its effort to improve services and ground products by hiring Chinese-speaking employees and offering the Chinese language on airports' self check-in machines, and a Chinese entertainment programme on board.

KLM recently named its Boeing 777-300 aircraft after the Wolong National Nature Reserve in Southwest China's Sichuan province. The move illustrated the growth potential the airline sees in second-tier Chinese cities such as Chengdu, capital of Sichuan.

Growth in emerging economies is the most important part of KLM's international business, KLM President and CEO Peter Hartman said, adding that China will evolve into KLM's largest international market in five years.

The Franco-Dutch airline group is currently serving nine destinations in China, and it was the first European airline to offer direct flights between Wuhan, capital of Hubei province, and Europe in April.

The International Air Transport Association recently predicted that the global airline business will make just $3 billion in profits this year, while European carriers are expected to suffer losses of $1.1 billion.

Industry analysts said that European airlines will need to double their revenues in emerging economies in order to offset their losses in developed markets.

 

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