Air France-KLM Chief Welcomes Coming Surge in Transatlantic Travel

When the Biden administration last week announced it would relax stringent requirements for Europeans to come to the U.S., it took Air France-KLM Group CEO Ben Smith by surprise.

“It was a pleasant shock to get that news,” Smith said Wednesday at the Skift Global Forum in New York. The U.S. is far and away Air France-KLM’s largest market, generating 40 percent of the group’s revenue. Before the pandemic, Air France and KLM together flew 64 flights per day to the U.S.; during the depths of the crisis, that fell to four daily flights, all carrying cargo. “We are still far away from our peak,” he said.

But it wasn’t unqualified good news for Smith. “We were hoping this type of announcement would come out earlier in the summer,” he said. The worry in Paris was that the European travel ban would extend into fall and possibly next year, resulting in another lost summer. Political considerations were a factor too, Smith said, with the worry that the U.S. midterm Congressional elections in 2022 could cause further delays, Smith said.

It’s still too soon to say if bookings have increased as a result of the U.S. border reopening, but Smith is hopeful that the yearend holidays will be strong for the group. Next summer could see a surge in travel. Air France bookings to Greece in August surpassed 2019 levels, he said, and this could augur well for transatlantic demand next year.

“There is a huge pent-up demand for travel to places that are open,” Smith said. But whether that surge is sustainable in the near- to medium-term is “unclear,” he said.

Regionally, intra-European travel is growing again, with high vaccination rates fueling demand. “Africa has remained resilient,” despite testing and entry requirements being confusing to passengers. Australia could reopen by the end of the year. But South America and Asia remain the biggest challenges, Smith said. The booking curve remains shorter than it was before the pandemic, so how demand will hold up for the balance of this year and into 2022 is hard to predict. “I can’t give you the clarity that I would have liked to have given you,” he said.

No mandates

KLM last week made news when it said it would not mandate its employees be vaccinated against Covid-19. Smith said Air France would not do so, either. “Nobody likes to be mandated to do anything,” he said. “Our position on mandates is a controversial one.”

The company instead is putting its trust in the adoption of a universally accepted vaccine passport and the continued use of masks on board. “This combination gives people comfort,” he said.

A greener Future

Air France has committed to halving its greenhouse gas emissions by 2030 for its international operations, and by 2024 for its domestic flights. A law passed earlier this year in France bans flights if the route can be operated by a train in under two hours. As a result, Air France cut back its French network, which will help it meet its domestic sustainability goals, Smith said.

The group is in the process of adding newer, more efficient aircraft to its fleet and retiring less efficient planes, like the four-engine Airbus A340 and Airbus A380. “We have made big decisions to invest in new aircraft,” Smith said. “This is within our control.”

What is not in Air France-KLM’s control is the development of new forms of propulsion, like electric aircraft, or wider adoption of economically viable sustainable aviation fuel. “We support alternate ways of powering airplanes,” Smith said. “But this is not something we can fully control.”