Hugged more tightly

Executive Magazine - - Con­tents -

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.

An­other Eu­ro­pean bud­get air­line tar­gets Beirut

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