Henri Hourcade: "There is a convergence between low cost and traditional airlines"

Amid the Revolution Henri Hourcade, Air France KLM's Senior Vice President for Latin America, the Caribbean and the Indian Ocean, says that he is not worried about the competition from


low cost
who are used to treating them in Europe (where they already capture 40% of demand) and that the way to overcome them is to adjust costs and improve the quality of service. But the French executive goes further and says: "There is a phenomenon of convergence between the
low cost and traditional airlines, because the former increased some of their products, so they became more expensive, and the latter had to reduce their costs. "

The Hourcade industry is in difficult times: Air France itself has had to cut 10,000 jobs in less than ten years The company now has 45,000 employees and, together with KLM it has charged 25,800 million euros in 2017. Its main costs are oil, wages and aircraft.That is why they started to reduce staff, streamline the use of planes, to save them less time and to turn to lighter vessels that save fuel.

– How is the Air France / KLM activity at the global and local level?

– At the level global our results were heavily impacted by 15 days of Air France strike, but now the activity has stabilized, with a very strong traffic.This is very important for us and we The latest devaluations have not affected our functioning, we have gained from the market and are con Let us continue to invest in the quality of our products.

– Will you start flying from the inside of the country?

-For the moment, we do not plan to open flights to other towns in the interior, but we are working with two partners, who are Gol (our
partner strategic in the region) and Aerolineas Argentinas, with whom we have code sharing agreements and a very important badociation, because it belongs to the Skyteam alliance. And we look forward to the transfer of flights from Aeroparque to Ezeiza, which would allow us to better operate our flights to Paris and Amsterdam

– How do you see the infrastructure that is here? Can it work as well as in Europe?

-The main difficulty we have is the separation of domestic destinations at Aeroparque and international at Ezeiza. In any case, there are investments planned to improve this and I think we are on the right track.

– What do you think of the elimination of the minimum rate announced last Tuesday?

– I think any measure to encourage tourism and travel to Argentina is positive because it will generate growth and opportunities for all.

– How do you see the competition with the
low cost and how do they compete with these airlines?

-The
low cost halfway is an environment that we are used to, because in Europe they took 40% of the traffic. We are used to working with this competition. The strategy to compete with them is to reduce costs and continue to invest in efficiency and service. What we see is that there is a phenomenon of convergence between the

low cost and traditional airlines. They improve the quality of their products, which increases their costs, while traditional costs make an effort on their costs.

– And how do they lower their costs?

-The main costs are the airplanes and the fuel and there it is very difficult to get off. What we are trying to do is to rationalize the use of aircraft, which have not been scaled up for a long time. And then, another very important cost is the payroll, and Air France made a big effort by reducing 10,000 people in less than 10 years (we went from 55,000 to 45,000), partly thanks to digital development.

The aeronautical guild is very confrontational. How do you plan to deal with this?

– In France, we have very active unions, it's normal, it's part of professional life. The results of recent years show that we are able to have a good social dialogue with the unions. On the other hand, in Argentina, the social climate in our company is very calm. Of course, we are much less here, we only have 65 employees

– Globally reduced roads

– No, on the contrary, we are increasing the roads, both at the middle level (in Europe) , and in the long run. . We do it in a more agile way than before, we are able to open routes over short periods. We open more routes and more opportunistic, by adapting the offer to holiday periods, for example. Especially in Europe, you can open flights for just two months, something that has not been referred to previously. We open up to four roads a year.

– And do they open new roads in the region?

– In Latin America, the last one we opened was in Fortaleza, Brazil. And in recent years, a route to this region has been opened every year, because it is a priority for us. We are also increasing frequencies, for example, now in November there will be daily flights between Holland and Argentina, with which we will have the largest offer in the history of this route, with 260,000 seats (15% more than in 2017)

-The other main competitors are the Gulf airlines. How are they competing with them?

– They are a very important competition, especially between Europe and Asia; but they are also strong between Latin America and Asia. In any case, between Latin America and Asia, we are leaders via Paris and Amsterdam because we take advantage of our advantages because we have fewer stops and we make night flights, who respect sleep better. On the other hand, there is a very big development between Latin America and China and we have good services in China, not only to Beijing and Shanghai, but also to other cities [19659012] – How do you see the economic context of Argentina? 19659009] – I am not an expert in economics, so it's hard for me to make a judgment. What I notice is that there is a steady dynamism from year to year, I see that demand is increasing on our flights and more than half of our pbadengers are Argentinian. We see this beyond the difficulties of the moment. There is a lot of dynamism in the business market, with Argentineans doing business abroad. And the tourism market is also very dynamic. Something that seems extraordinary is the adaptability that the Argentines have.

– What does it do to new technologies, what can advance what will come in your industry?

-There is a lot of pressure in part from the airlines compared to the aircraft manufacturers. Especially, with the question of fuel consumption. Because it's expensive and because it has a very strong ecological impact. It is said that the last drop of oil on the planet will be consumed in an airplane, because this industry is very far from finding a replacement for this fuel. That said, there is an improvement in consumption and new generations of planes consume 20% less than the previous generation. Beyond digital innovations, we see innovations in improving fuel efficiency, with lighter aircraft and more efficient engines. And we see more improvements than revolution.

Mini bio

• Education: Company Administrator (Essec Business School, Paris)
• Age: 52 years old
• Entry into the company: In 1988, in the Regional Establishment Martinique & Southern Caribbean