Toulouse Blagnac Airport

European woes force changes for the better at Indian Ocean carriers, with Air Austral the latest

Hardest hit from the European economic situation, aside from the carriers that have collapsed, are far away from continental Europe in the Indian Ocean, which contains the self-proclaimed Vanilla Islands grouping of countries: La Reunion, Madagascar, Mauritius and Seychelles. These nations' carriers are largely dependent on European leisure traffic, which has evaporated in the dual threat of weakening economies and high fuel prices that provide no stimulation to whatever demand is left.

The starkness of the situation has been demonstrated most recently by Air Austral, which over the northern winter will reduce its long-haul network to a single destination and will postpone – or possibly cancel – its order for two Airbus A380s, following it being unable to pay for a new Boeing 777 awaiting delivery. Air Austral is also looking to partner with Air Mauritius to maintain a connection to Australia, a further sign that the situation in Europe is forcing the Vanilla Island carriers to make medium/long-term strategy changes that will finally strengthen them. Etihad Airways earlier this year acquired a stake in Air Seychelles and is now lending management oversight to the Seychelles flag carrier while the region's other carriers have conducted overdue network reviews.

Spiralling fuel costs trigger higher 1Q2012 loss at Air France-KLM

Incessantly high fuel costs and an unwelcome increase in employee expenditure, highlighting the urging need to restructure workforce productivity and pay, pushed Air France-KLM Group into a deeper loss for 1Q2012 despite a surprising rise in passenger unit revenue and buoyant passenger traffic. Operating loss for the first three months widened almost 50% from EUR403 million to EUR597 million in the year-ago period. Air France-KLM’s net loss remained flat at EUR368 million but benefitted from a one-off gain of EUR98 million relating to the sale of a stake in Amadeus.

Air France-KLM is not Europe’s only airline group to report worsening 1Q2012 results. Lufthansa Group, Europe’s largest airline group, has posted a EUR381 million operating loss for the first three months of 2012, compared to a EUR169 million operating loss posted in 1Q2011 and announced it will cut 3500 full-time jobs in administrative departments worldwide over the coming years as part of its SCORE programme. SAS Group also has reported a 1Q2012 net loss of SEK729 million (EUR82 million), doubling its 1Q2011 net deficit of SEK373 million (EUR42 million).

easyJet pushes further into France, throwing down the gauntlet to Air France

easyJet has announced plans to open two new and permanent bases in France, at Nice and Toulouse, which the LCC says will be operational by summer 2012. The carrier will base two A319 aircraft each at the airports, which will be the carrier's 21st and 22nd network bases, as part of efforts to strengthen its French domestic and pan-European network.

easyJet’s moves into provincial France mirrors those being made by national carrier Air France, which is desperately seeking to turnaround its loss-making short-haul business by pushing short-haul capacity out of Paris. easyJet’s plan could be a major headache for the French flag carrier as it aims to cement its dominance in regional France. As easyJet noted, with such a low LCC penetration, relative to neighbouring countries, the LCC onslaught is unlikely to ease anytime soon.

Air France looks to regional points to counter LCC, TGV threat

Air France has announced plans to move away from its Paris-centric strategy and moved into regional French market in a bid to counter the growing threat of low-cost carriers in its home market, which remains one of Europe’s few remaining spaces for growth in the sector.

Vueling to open first international bases in Amsterdam and Toulouse in new phase of growth

Vueling has, over the past month, announced plans to launch its first two international bases at Amsterdam Schiphol and Toulouse. The new bases represents a significant milestone in the company’s growth plan as Vueling enters a new phase of growth following the completion of its merger with clickair in Jul-2009.