Two years after the third package came into effect, so-called competition came to the French domestic market with a bang - although some would argue it was a publicity-motivated whimper.
Air Inter and Air Liberté entered into a widely reported price war on the Paris/Orly-Toulouse route. But TAT European Airlines, the free market proponent that went to the European Court of Justice for the rights to operate from Paris/Orly to Toulouse and Marseilles, was notably absent from the route.
TAT refuses to comment, but one Paris-based consultant says start-up costs were high and TAT, with annual losses of around FFr400 million ($75 million), was not in a strong enough financial position.
A source close to the carrier acknowledges startup costs may have played a role, but says another factor in TAT delaying its entry onto the routes is the transfer of its operation to a different terminal at Orly airport.
However, obtaining the rights as soon as possible was important, says the consultant. 'They want the rights so they can keep them. If they did not ask now, they could not be sure when they would get them.' TAT is expected to begin services with the summer schedule, benefiting principally from the increase in seasonal trade.
Flamboyant Air Liberté chairman Lofti Belhassine's motive behind dropping fares on the Paris-Toulouse route was to create publicity, with prices as low as FFr360 ($70) for a restricted return. This was bettered by Air Inter with a fare of FFr280.
'We do not want a price war but we cannot let the competition do as it pleases,' says a source at Air Inter. 'We are not far from break even, but we must keep routes profitable.' Indeed, Air Inter closely controlled its exposure to the reduced tariffs, offering only 5 per cent of its total capacity on the Paris-Toulouse route at the lower rate.
Meanwhile on Paris-Marseille, French independent AOM began operations without fanfare or fare cuts. With its reputation already established on Paris-Nice it has less need to 'announce' itself to the French travelling public, says the consultant. 'AOM have a reputation for good service. On Paris-Nice they have taken 30 per cent of the market,' he says.
Meanwhile on Paris-Marseille, French independent AOM began operations without fanfare or fare cuts. With its reputation already established on Paris-Nice it has less need to 'announce' itself to the French travelling public, says the consultant. 'AOM have a reputation for good service. On Paris-Nice they have taken 30 per cent of the market,' he says.
Source: Airline Business
