Hugged more tightly
Another European budget airline targets Beirut
Their corporate identity and logo look like a crossbreed of Dutch over-the-counter laxatives and a new French social media
venture. The green color theme of its livery, interior seating, and uniforms is located somewhere between forest serenity and conservative living room furniture. They are Transavia. Their strategy and business model is that of a budget airline, and they have just entered the Lebanese aviation market with about 600 seats of weekly capacity in each direction (distributed over three flight pairs on a 189-seat Boeing 737-800) on the route Paris Orly— Beirut.
The last few years have seen gradual intensification of low-cost-carrier (LCC) or other similarly structured and affordable air-travel options between Lebanon and Eastern Europe and Turkey, with the most recent option being offered by Cyprus-based Cobalt Air, which opened its Larnaca—Beirut link at the beginning of the summer. Cobalt, which describes its business model as hybrid LCC, provides travelers from Beirut with options to go on to France, Germany, Spain, and the UK, and— supposedly starting in late 2017 and 2018—to destinations such as Russia and China.
Within this growing supply of flexibly priced seats, the market entry of Transavia as the LCC in the Air France–KLM Group adds to Lebanon’s integration into the European air-travel envelope. While LCC connectivity from Beirut mostly does not yet exist on daily schedules, or extend directly to important European aviation hubs, point-topoint LCC flight options to the EU core markets France and Germany (through AF-KLM’s Transavia and privately owned Germania), as well as Spain (through Vueling, a daughter of British-Spanish aviation group IAG) are now on offer with a higher flight frequency than ever before.
Executive conducted a brief interview with Herve Kozar, the deputy chief commercial officer of Transavia, who had just stepped off the carrier’s maiden Beirut flight and into a press conference to promote the airline to Lebanese customers.
Transavia is a low-cost carrier using single-aisle aircrafts all throughout its network. What is your rationale for adding Beirut to your list of destinations at this time?
As you rightly said, we operate only one type of aircraft, which is the [Boeing] 737-800 with 189 seats. We knew from the beginning that Beirut could only be a success. Traffic rights between [Lebanon and France] are regulated, and when we heard that [the process] to apply for rights was open, we were the first to apply. It’s
“Lebanon and France have strong links, and there are many Lebanese people who live in Paris and obviously fly between France and Lebanon”
nice for us to have Beirut in the portfolio: We have North African routes and because it’s a city-break destination as well. We have those kind of passengers on board Transavia flights, and thus, it made complete sense to us to open Beirut.
Service to Lebanon has not been the easiest in the past due to seasonal patterns
“Our business model is more point-to-point traffic. This is working quite well in tourist and leisure travel and also for business— we today have around 10 percent of passengers who are flying for business purposes”
and various external disruptions. Some European carriers entered this market, but had to pull out after one crisis or another. Given that the Lebanese government has recently decided to raise airport departure taxes and that latest euro exchange rates are moving against the US dollar, to which the Lebanese currency is pegged, where do you see the formula for Transavia’s profitability in the Beirut market?
We have the advantage in the community. Lebanon and France have strong links, and there are many Lebanese people who live in Paris and obviously fly between France and Lebanon. This potential [of bilateral Lebanese travel with France] may be higher than with any other European country. What we have seen just now was that the first flight [to Beirut] was completely full. We had 189 passengers on board. We launched sales on this route not long ago, at the beginning of July, and bookings that we’re seeing today are really dynamic. For September we’re close to a 90 percent seat-load factor. For us, this is one of the best starts on a new route, and we’re confident.
In going from Beirut to Paris Orly and vice versa, are you targeting mainly travelers whose destination is France, or are you aiming to feed passengers from Beirut into a European or global network?
What we think is that it’s mainly local traffic from Beirut to Paris, not connecting [traffic]. Air France is [offering] the connecting traffic to the world. We don’t. Our business model is more point-to-point traffic. This is working quite well in tourist and leisure travel and also for business—we today have around 10 percent of passengers who are flying for business purposes. Do you have business class in your cabins?
No, it is business passengers who have restrictions on their budgets and want to fly low cost.
What is the distance between the highest price point that one could see for a seat on Transavia and the standard economy seat on the same route in Air France or KLM?
We are starting at 109 euros for a one-way flight [from Beirut] to Orly and what we typically see in our network is a range from one to five [hundred euros], meaning that [the one-way ticket] is up to 500 euros maximum when demand is really high in specific peak periods, such as Christmas, but not much higher.
In Beirut, one often sees Air France round-trip flights to Paris advertised online for 350 or 400 dollars. That would make your 109 euro tickets, when multiplied by two for a roundtrip, appear not vastly lower in cost, especially if a passenger under your business model also has to buy luggage allowance separately.
I’m talking one way for 100 [euros], which on return basis is 200, versus 350 or 400 [dollars round-trip on Air France], but it’s not the same product. We fly the 737, whereas Air France has a 777 product that is really nice. It’s clearly two different segments, and that’s why we open [in markets] where our mother Air France is present. We think there is space enough for both of us. It’s a different set of customers, and we’re better and stronger together.
Are you mostly interested in marketing the new Transavia flights to Lebanese passengers, or are you also promoting Beirut as destination in France?
It’s both, and we are very happy that it’s sold already 20 to 25 percent here in Lebanon. We’re not known here, and we have a marketing budget to increase our awareness toward the Lebanese customer. It’s both: We are trying to promote Beirut in France, but also Paris here in Beirut.
Do you regard competition for Transavia more from the group perspective, such as AF-KLM and their daughters versus airlines in the IAG or Lufthansa groups, or do you see yourself competing mainly with LCC operators, such as Ryanair and easyJet in Europe?
When you look at the Transavia network, you see that there are low- cost carriers and also legacy carriers on all routes, so we fight with both of them. We, of course, benchmark with all [of our competitors], but we’re trying to have the right price for the customer, and our focus is more on the customer.
You started your Beirut service in September, at the tail end of the peak travel season for this city. Was that a strategic decision or an opportunistic one?
It was an opportunistic decision, [and made] because all our aircraft were busy this summer.