Issues & Trends – April 2011
AF-KLM pay agents commission on fuel surcharges
AIR France-KLM has joined the ranks of carriers paying agents commission on fuel surcharges on published airfares.
The move, which comes as world fuel prices hit record levels, recognises the role of agents, according to AF-KLM’s national sales manager for Australia Maurizio Fabrizi.
“In this marketplace, agents are a major distribution channel and we want to grow our partnership with them,” he said.
Fuel surcharge commissions will be payable on AF-KLM’s published long-haul fares, including Australia-Asia and Asia-Europe. (From Australia, AF code shares with Qantas to Europe over Asia while KLM code shares with Malaysian Airlines.)
However the commissions will only apply to short haul fares (intra-Europe, trans-Atlantic, Europe-Africa) when combined with Australia-Asia-Europe fares.
Fabrizi reports improving market conditions out of Australia after the GFC-related slump of 2009 – “a year which should be wiped from the calendar”, he quips.
“We saw good growth in 2010 and a further small increase so far in 2011 bringing us back to 2008 levels,” he said. “In the first two months of this year Bank Settlement Plan revenue was up between two and three per cent, and our results are very much in line with that.”
But he added: “At the end of the day the market is still very much price-driven and we are always
looking at ways to increase yield.”
A business class price war between Qantas and Singapore Airlines, pre-sumably driven by an excess of capacity, has made life more difficult, Fabrizio admits, but he adds: “In some ways it is a plus for us. It has stirred up the market and we have very competitive offerings.”
He said AF-KLM’s “huge” Europe network gives the airline a powerful edge in the corporate market.
Overall, he said, AF-KLM has seen “quite a bounceback” in the corporate market with Air France’s premium economy (Voyageur) class experiencing “great demand, particularly out of Sydney and Melbourne”.
He has no doubt that this demand is overwhelmingly fuelled by economy passengers upgrading rather than business class passengers downgrading.
At the same time, he said, Air France has also seen a solid increase in first class bookings and has a healthy share of this end of the corporate market.
Meanwhile AF-KLM is seeing its leisure sales steadily increasing. Early bird sales were healthy and “we have captured that traffic”, said Fabrizi.
The interline agreement that AF-KLM finalised with Jetstar last year – the first such deal negotiated by the Australian carrier outside the Qantas Group – is proving a leisure market asset for the European carrier.
The arrangement has, for example, opened up Darwin and Cairns as Australian gateways for AF-KLM and Fabrizi said the airline has noted a big increase in backpacker traffic through those ports. (He points out
the euro still remains “reasonably strong” against the soaring Australian dollar.)
