Air France puts faith in KLM to serve Indonesian routes

While Air France no longer serves Indonesia directly -- a job that is now handled by its sister company, KLM, the French airline is still keeping a close eye on the country.

Air France vice president for Asia Pacific, Jean-Louis Pinson, spoke to The Jakarta Post about the company's business plan, including his assessment of the economic potential of Indonesia and other emerging markets in Asia.

Pinson was speaking on the sidelines of a recent media trip to the Satellite 3 at Charles de Gaulle Airport in Paris. The following are excerpts from the conversation:

Question: Which areas in Asia Pacific are expected to generate growth for Air France?
Answer: China and India are definitely the sub-regions of Asia that have growth potential for us.

For India, we tripled our flights from 2002 to 2006 and we opened two new gateways for Air France, to Bangalore in 2005 and Chennai in 2006. Meanwhile, KLM opened a route to Hyderabad. In total, Air France and KLM have five gateways to India -- we also fly to Delhi and Mumbai.

This year, we increased capacity by more than 20 percent while for the next three years the growth is expected at more than 15 percent per year. Currently Air France and KLM offer 45 weekly flights between Europe and India.

As for China, we increased our capacity by more than 12 percent in the past year, and the same will happen over the next three years. Air France opened a new route to Guangzhou in 2004 while KLM opened one to Chengdu. We are the first European airlines to do so.

Air France and KLM have 69 flights per week, including flights to Beijing, Shanghai and Hong Kong. KLM also flies to Taipei, being the only European carrier serving the route.

The first destination and market for Air France in Asia is still Japan. We have three daily flights to Tokyo and will add a fourth one on a code-sharing agreement with Japan Airlines (JAL). We also serve Osaka and have had another code-sharing agreement with JAL to Nagoya since 2005.

Japan is still the first market in Asia, but, of course, it is a mature market so that growth will not be as strong as in China and India.

What about Southeast Asia?
We have daily flights to Singapore, and achieved a 93.8 percent load factor this August, and a nearly 90 percent load factor from the start of the year. We expect annual growth of 15 percent.
Meanwhile, the load factor from Bangkok is 88 percent, and growth is running at 12 percent.

Do you have any plans to expand your destinations in Asia Pacific?
In the short term, Air France plans to open new code-sharing routes. Soon, we will open a Denpasar route with Qantas through Singapore. As you know, Qantas serves Singapore-Perth route via Denpasar.

We are also working with Bangkok Airways for code sharing services to Thai resorts in the northern winter.

With no direct flights to Jakarta, how do you serve your customers there?
In the past, we served Jakarta three times a week through Singapore. But when we merged with KLM (in May 2004), we decided to rationalize the network.

The demand of the customers was for daily, non-stop flights. We had only three a week with a stopover in Singapore. It was not a very good service to Jakarta and not very good economically for Air France. Because of the tag between Singapore and Jakarta, the flight is not full because the majority of the passengers are leaving from Singapore.

KLM was more implanted in Jakarta for historical reasons and they have daily flights. So, we decided to stop our flight in Singapore and to give up Jakarta as a destination.

For the moment, we are using KLM operations to Jakarta. We have no short-term plans to go back with Air France flights to Jakarta. Perhaps in the future.

We cannot say 'no' definitely, especially as Indonesia has very strong potential and is a very big country. We are very confident about Indonesia's potential, and Jakarta in particular. But for the short term and the coming years, we will rely on KLM operations.

Also we have many passengers going to Indonesia, not only Jakarta, but also other Indonesian destinations through Singapore. We have very good connections out of Singapore to many destinations in Indonesia.

For example, we have a lot of people from Total oil company to Balikpapan. They fly with Air France through Singapore because it is easier for them, rather than flying Balikpapan-Jakarta-Paris.

Any possibility of a code-sharing agreement with Garuda in the future?
Why not? We don't plan it in the short time. Indonesia is such a big country. In the future, we will have to rely on an Indonesian partner. But we are not involved in discussions with Garuda at the moment.

First published on The Jakarta Post on Monday, Sept. 24, 2007