Air France-KLM Marketing Study: Becoming More Competitive in Front of The TGV

Résumé du document

Today, AIRFRANCE-KLM is the largest airline company in the world in terms of total operating revenues and passenger-kilometers. The company's CEO is, since January 1st 2009, Pierre-Henri Gourgeon. With a turnover coming close to 24 billion Euros as on 31st March 2009 and having taken over 74 million passengers that business year, Air France-KLM is one of the world's biggest air transport leaders.

However, the airline industry's world is an extremely competitive market and between low coast companies that keep decreasing their prices and increasing the number of destinations and the rise of the Kerosene price, the competition is harder than ever. More precarious than this, is another competitor rising in the European market for medium-haul flights: the High Speed Trains. Indeed, train ticket prices are getting lower and high-speed train rail routes are becoming more numerous all over Europe. Moreover, at the time of global warming, it appears that the air travel growth contributes significantly to climate change: the world's 16,000 commercial aircrafts generate more than 600 million tons of carbon dioxide per year which is nearly as much CO2 as that from all human activities in Africa in a year; we can't say the same for high speed trains, and people are sensitive to this kind of information which makes the competition even more tough.

Representing the head of the Marketing Department of Air France-KLM, we are going to conduct a study to become more competitive in front of the high speed train competition: TGV, THALIS, EUROSTAR, ICE and others. We will first present the group AIRFRANCE-KLM, then look into its global figures and market opportunities, after that we will perform a Porter and a SWOT analysis. Starting from that, we will draw up comparisons, possible product improvements and alternative solutions. Finally, we will conclude with our recommendations to the board.

Extraits

[...] Among La Tribune.fr of December 8th 2010, it had been 11 months that Air France KLM started seeing its number of passengers falling down. In November it went down by but since its capacity has slowed down by only the group remains stable. Figure Passenger traffic in millions: Revenue Passenger per Km (RPK) Porter's and Swot analysis Porter's Analysis Figure 4 Porter The high speed trains and the low cost companies are the major threats but from a medium-haul point of view, the high-speed train threat is the most dangerous. [...]

[...] Air France KLM is a member of the Sky Team alliance with Aeromexico, Delta Air Line, Korean Air, Czech Airlines, Alitalia, Northwest Airlines, Aeroflot and China Southern Airlines. The group is the second largest airline alliance in the world–behind Star Alliance and front of Oneworld. Sky Team enables Air France-KLM to extend and consolidate its reach in all of the largest markets in the airline sector across 169 countries. Global figures World leader in terms of international passenger traffic, the group ranks second worldwide for its cargo activities and is one of the world's major maintenance service provider. [...]

[...] Also, the lines would help making the link between cities and the two major hubs of the company. However, this will only be possible after January 2010 when the European Union plans to allow competition for international passenger rail travel. Conclusion/recommendations to the board Air France-KLM, as we have seen previously, is the world leader of passengers transport and is fully dominant in the long-haul market. Nevertheless, with a European market much more diversified than the American one where high speed trains are inexistent, Air France KLM struggles with the ‘price war' opposing its medium-haul with TGV, Thalys, Eurostar, ICE, and even the new AGV and more European equivalents. [...]

[...] With a turnover coming close to 24 billion Euros as on 31st March 2009 and having taken over 74 million passengers that business year, Air France-KLM is one of the world's biggest air transport leaders. However, the airline industry's world is an extremely competitive market and between low coast companies that keep decreasing their prices and increasing the number of destinations and the rise of the Kerosene price, the competition is harder than ever. More precarious than this, is another competitor rising in the European market for medium-haul flights: the High Speed Trains. Indeed, train ticket prices are getting lower and high-speed train rail routes are becoming more numerous all over Europe. [...]

[...] Air France-KLM, since the end of the year 2006 has been succumbed to high speed trains competition. Air France-KLM has to seize opportunities. It is rapidly expanding and wants to become the leader in all its domains; but in spite of its strong evolution, the group has to pay attention to the durable increase of oil. Figure 5 SWOT The red points concern the TGV competition and we will see its will to develop in the next pages TGV vs AIR France-KLM price comparison Paris-Marseille Trains are much cheaper, against for planes. [...]