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Sun 3 May 2009 04:00 AM

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Talking capacity

Air France-KLM commercial director for the Gulf, Iran and Pakistan, Bas Gerressen explains why the future is rosy for the airline group.

Talking capacity
Talking capacity

Air France-KLM commercial director for the Gulf, Iran and Pakistan, Bas Gerressen explains why the future is rosy for the airline group.

Like many European carriers, you've upped capacity on your Gulf routes. Is there a danger of over-capacity?

If you look at the results to other parts of the world, there is a big decline [in load factors and traffic] and the only region that is performing well is Africa and the Middle East so everyone is putting more aircraft here. But with all airlines adding capacity in this region, which isn't immune to the economic crisis, this could prove challenging.

We would love to be the sales force for Alitalia here.

I think there will be overcapacity in the GCC market, particularly in a place like Saudi Arabia where you now have BA reinstating flights to Riyadh and Jeddah, plus flights with Lufthansa, Austrian and bmi. Air France flies direct to Paris from Riyadh (daily) and Jeddah (five times weekly) and KLM, direct to Amsterdam from Dammam (five times weekly).

Is there enough demand in the KSA market to soak up this capacity?

We already have come good contacts there because we have operated from Saudi Arabia for years. BA had a strong presence, so it is bound to have a loyal following too. Demand is still growing year on year, but demand will not keep pace with capacity.

What about capacity versus demand on the Dubai routes?

For Dubai there is not a big change for all [European] carriers, but there is definitely a decline in passenger traffic. However, up until February, on all our Gulf routes, we saw an incline in load factors and Dubai is holding up strong at the moment. There is a shift to the economy cabin because we are seeing more tourism traffic as airfares and hotel prices come down.

There is definitely an overcapacity on the Dubai-London routes and with Emirates flying eight times daily, operating its A380 for one flight, this is a market that is definitely under pressure when you consider how badly the UK - one of Dubai's key source markets - is impacted by the current financial crisis.

What is your strategy for Dubai routes?

I expect demand to shift from business to economy, but this will create a balance as we used to have so much demand for premium that we would not always have enough seats [to cater to that demand].

We have kept our summer schedule for Dubai the same as last year - 10 flights weekly with KLM and 12 flights weekly for Air France (compared to 13 and 14 weekly respectively for winter 2008-2009).

A380 and premium economy to wing their way to the Gulf?Air France has revealed that its new premium economy product will be rolled out on aircraft serving GCC routes within a year.

In addition, Air France-KLM commercial director for the Gulf, Iran and Pakistan, Bas Gerressen, has revealed that the new Air France A380, which will be delivered at the end of 2009, could be deployed on the Dubai route.

"It's one destination under consideration," he said.

What are your predictions for summer traffic performance on your Gulf routes?

I predict that up until July, it will be good for travel. Of course, Ramadan, (which this year is in August/September), is always a slow traffic month. Performance depends on when the crisis will end. I am hoping things will pick up by the time the winter schedules are out.

Do many KLM passengers end their journey in Amsterdam?

The majority of business is ongoing traffic to the US and places like Scandinavia. We (Air France and KLM) offer 253 onward destinations between us. When Holland is promoted here it's done in a pragmatic way - with one or two people - whereas the French come here in big delegations. We have a lot to learn from our French colleagues in that respect. The Netherlands has a lot to offer.

With Air France-KLM taking a 25% stake in Italian flag carrier Alitalia, what will be the impact in the Gulf region?

With the deal done, we are now at the strategic stage and we have to work out what it means for us and how we can support Alitalia as a brand and how we can benefit from the deal as a whole.

In terms of the impact on GCC operations, we are just as eager as you to know and find out. We would love to be the sales force for Alitalia here. Alitalia is no longer flying from Dubai, but it still operates to Iran - I don't know why because it can't be a profitable route for them. Maybe it's VFR traffic with many Iranians living in Rome?

With airfares taking a tumble, what are your predictions for revenue growth for Air France-KLM in the Gulf region in 2009?

Budget-wise, we are not really slowing down. We still hope to get a good revenue this year. The prices will go down per ticket so that means we have to work harder and sell more tickets. It will be tough for Dubai routes, but for the entire region we expect to reach the same level of revenues as last year, with very positive results from Oman, Iran, Qatar, Bahrain and Abu Dhabi in particular.

How important is the travel trade to Air France-KLM?

The trade is still very important in the Middle East and agents still account for a big majority of our business. There is not much consolidation and there are a lot of small agencies.

What is your distribution strategy?

We need to use all distribution channels as we need to make sure that all customers' requirements are catered to. Some customers prefer to book and check-in online, while others, particularly in the Middle East, prefer face-to-face contact. Our online sales [for this region] are increasing a great deal (around 5% in 2008 compared to 2009) and when you look at Amsterdam's Schiphol Airport, more than 80% of people check-in online or at one of our KLM kiosks. We are also looking into check-in via mobile phone for passengers flying from both Paris and Amsterdam.

Air France-KLM ups its GCC capacityAir France-KLM has increased its capacity on Gulf and Iran routes for its summer 2009 schedule. The airlines will operate 75 flights out of 10 stations in the Gulf region - a 4% increase in weekly flights compared to its 2008 summer schedule.

The number of flights out of Muscat will increase from five to six weekly, operated with a short stop in Abu Dhabi, while frequencies from Kuwait will move from five to daily and from Tehran, from four to five weekly.

The Bahrain service will run daily, three of which will operate via Kuwait instead of Abu Dhabi.

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