Today, AIRFRANCE-KLM is the largest airline company in the world in terms of total operating revenues and passenger-kilometers. The company's CEO is, since January 1st 2009, Pierre-Henri Gourgeon. With a turnover coming close to 24 billion Euros as on 31st March 2009 and having taken over 74 million passengers that business year, Air France-KLM is one of the world's biggest air transport leaders.
However, the airline industry's world is an extremely competitive market and between low coast companies that keep decreasing their prices and increasing the number of destinations and the rise of the Kerosene price, the competition is harder than ever. More precarious than this, is another competitor rising in the European market for medium-haul flights: the High Speed Trains. Indeed, train ticket prices are getting lower and high-speed train rail routes are becoming more numerous all over Europe. Moreover, at the time of global warming, it appears that the air travel growth contributes significantly to climate change: the world's 16,000 commercial aircrafts generate more than 600 million tons of carbon dioxide per year which is nearly as much CO2 as that from all human activities in Africa in a year; we can't say the same for high speed trains, and people are sensitive to this kind of information which makes the competition even more tough.
Representing the head of the Marketing Department of Air France-KLM, we are going to conduct a study to become more competitive in front of the high speed train competition: TGV, THALIS, EUROSTAR, ICE and others. We will first present the group AIRFRANCE-KLM, then look into its global figures and market opportunities, after that we will perform a Porter and a SWOT analysis. Starting from that, we will draw up comparisons, possible product improvements and alternative solutions. Finally, we will conclude with our recommendations to the board.
[...] In fact, under the 3h of travel time[ii], such as Paris-Londres or Paris-Strasbourg lines, the TGV is ‘rival-free'. The costs linked to rail transport are simply much cheaper than those for air transport, where Kerosene prices soar and fixed costs are higher anyway. Figure Comparison of the travel mode function of the travel time: Train vs Plane Thus, after understanding that fact, Air France KLM is discussing the creation of a joint venture with Veolia Transport, Europe's leading private rail-freight operator, to launch all over Europe their own high speed trains company. [...]
[...] Figure 5 SWOT The red points concern the TGV competition and we will see its will to develop in the next pages TGV vs AIR France-KLM price comparison Paris-Marseille Trains are much cheaper, against for planes. Figure Price of the Paris-Marseille round trip during the day on Mondays Figure Price of the Paris-Marseille round trip during the day on Fridays Figure Price of the Paris-Marseille round trip during the day on a Week- End Paris-Amsterdam Détails du vol (Pays-Bas) Airlines Classe Economique. [...]
[...] Sky Team enables Air France-KLM to extend and consolidate its reach in all of the largest markets in the airline sector across 169 countries. Global figures World leader in terms of international passenger traffic, the group ranks second worldwide for its cargo activities and is one of the world's major maintenance service provider. Its key figures are: 107,000 employees throughout the world 73.5 million passengers carried 240 destinations worldwide in 105 countries world-wide Figure 2 Air France-KLM Company Figures in 2009 Turnover 23,970 Net profit -814 Passengers air transport 18,832 ( 78.6 turnover Cargo air transport turnover 2,857 ( 11.8 Maintenance activity turnover 974 ( 4.1 Other activities turnover 1,307 ( 5.5 Number of passengers 74.4 million Number of planes in use 621 The total passenger revenue accounting for close to 80% of Group revenues (in was 18,832 in March and raised up to 19,165 in March 2009. [...]
[...] Air France-KLM seems to develop loyalty among its customers thanks to the extension of its network of Hubs and to the dynamism of the Sky Team alliance in 169 countries which contributes for Air France-KLM to have a well-balanced network. Moreover, as an anecdote, Sky Team was again elected, in 2006, for the second consecutive year, ‘superior alliance of the year' by the readers of the American Global Traveller Magazine. Air France considers that the solution of these weaknesses is the establishing of low costs and the project ‘vision 2010'. [...]
[...] Representing the head of the Marketing Department of Air France-KLM, we are going to conduct a study to become more competitive in front of the high speed train competition: TGV, THALIS, EUROSTAR, ICE and others. We will first present the group AIRFRANCE-KLM, then look into its global figures and market opportunities, after that we will perform a Porter and a SWOT analysis. Starting from that, we will draw up comparisons, possible product improvements and alternative solutions. Finally, we will conclude with our recommendations to the board. [...]
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