Crisis control is evident at Air France, which has opted to use its incoming Airbus A380 fleet to moderate capacity on its route to Johannesburg, and it has rethought the requirements of its dedicated cargo arm.

The SkyTeam partner had been operating 10 weekly Boeing 777 services to the South African hub but in late March cut frequency to daily, all of which will be A380 flights. Air France-KLM chief executive Pierre-Henri Gourgeon, speaking as the carrier introduced the 538-seat aircraft to Johannesburg, said: "In times when traffic is not growing, when you want to introduce an aircraft like that you have to avoid extra capacity.

"It's possible to introduce it on routes where you have two or three daily flights. We could have opened Tokyo, Shanghai or Beijing - we're still negotiating some traffic rights with Russia. Because of the World Cup, we thought it was good idea to give a slight priority to Johannesburg, and start it immediately," he says.

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Tokyo Narita will become the destination for Air France's fourth A380, he says, in the second half of 2010. The A380 will be deployed on one of the twice-daily flights. "Luckily this aircraft has arrived at just the right time, as a 'crisis buffer'," adds Gourgeon. Air France-KLM's summer schedule is virtually unchanged from 2009. Its marginal rise in long-haul capacity is offset by a 4% cut on the medium-haul network, adjustments which have led the airline to retire 16 aircraft from its medium-haul fleet.

While Gourgeon has lauded the A380 and the potential it offers the airline, the decline of the cargo sector has forced a rethink of its need for dedicated freighters. The carrier's cargo traffic over the current financial year is 15% down. "We're changing our minds about the size of the fleet we can have, especially the full freighters," says Gourgeon. "When you're in such a situation, you're not even paying for the amortisation of the aircraft. You're not creating cash, you're burning cash." Even before they are delivered, two of the five Boeing 777Fs it ordered are being sold instead to FedEx. Gourgeon says, given the economic slump, it is "unwise" to take brand-new aircraft to replace older ones.

Air France-KLM is also exercising tighter rein on its fuel-hedging policy, losses from which hammered its financial results over the first half. Gourgeon says it is introducing a "light, limited and controlled" policy, halving its hedging timeline. He condemns speculative "paper fuel" trading which generates strong fluctuations in the fuel prices and believes there is a case for authorities to act to limit the "indecent spiral" of fuel costs.

Source: Airline Business

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