What is the future of Air France & Air India?

What is the future of Air France & Air India?

Flying is perhaps the only larger-than-life experience that many indulge in. Alas, as irony goes, companies providing air travel walk on a thin-line of profitability. On one hand, we devour meticulously planned in-flight menus, on the other, these companies fear labour unions and the ever-changing air fuel price.

The airline industry also makes an interesting business story for another reason. It opened to privatisation a few decades ago. This ushered in private low-cost carriers (LCC) providing basic no-frill services at cheaper fares. The growth of LCCs and the threat they have posed to traditional airlines is probably the best example of practicality winning over prestige. However, not every LCC has had a happy ending. Some Kingfishers and Monarchs have ceased to fly.  

Traditional airlines have a deep history and many of them have a strong emotional connect with their flyers. Barring the United States, where they are called as Legacy Carriers, many countries have or had a favoured airline called the Flag Carrier. The government has a share-holding in flag carriers and hence many flag carriers embodied national pride. This seems a romantic fable, today, with many legacy and flag carriers gone bankrupt.  At present, dark clouds cover the sky for two flag carriers: Air France and our very own Air India.

Air France: Trouble is in the air

Founded back in 1933, Air France (now Air France-KLM after merger with the Dutch airline) has seen everything: from flying aircrafts in World War II to jetting glitterati to the coveted Cannes Film Festival. Unfortunately, all its glory and glamour seemed to be tarnished by a stretch of labour strikes and bad strategic decisions. The recent prolonged strike costing hundreds of millions led to the stepping-down of its CEO Jean-Marc Janaillac on 4 May 2018. This move reflected in a sharp share price drop. The government, which has a 14% stake in the airline, refuses to bail it out. Run currently by a stopgap management team, it is up to Air France to rise from its ashes.

Air India: Truly wounded

Recognised by many in the world by its Maharajah, Air India was founded by JRD Tata. The Indian government bought its majority stake in early 1950s. Since the late 1900s, the airline has been mounting losses. The losses have only increased due to bad strategic decisions such as over-purchasing of air crafts when not making profit and merger with Indian Airlines (which was also in loss at the time of the merger). Air India operations have also been marred by labour strikes. As of today, its debt is humungous, and it has sold/rented some of its assets. The Indian government is looking to disinvest in the airline, and if a private buyer will be able save this sinking boat remains a mystery.

Although things look bleak, many would say it’s not all over for these flag carriers. The dark clouds come with a silver lining. A change in high-level management, which is certain for both, could turn the tables. For example, United airlines (of USA) made some strategic changes to come out of bankruptcy and continues to operate till date. Whether Air France and Air India can restore their former glory and fly high, only time will tell. Until then, the loyalists shall keep their fingers crossed!

About Nandan GSE: Nandan Group manufactures airline ground support equipment (GSE) ranging from lifts to trolleys to belts and platforms. Our engineering prowess and experience enables us to provide customised solutions and excel in challenging projects. We help our partners improve performance and profitability through our quality and price focus. This has made Nandan GSE a trusted name with airlines across the world.