LONDON – French bee has had quite the month with the launch of its brand-new services between New York and Paris.
As we know already, the airline launched services on July 14 on a four-times per week basis, operating on Mondays, Thursdays, Saturdays, and Sundays using its flagship Airbus A350-900 aircraft.
The airline has decided to take on the market by offering eye-watering fares from $139 one way.
AviationSource got to sit down with the airline’s chief executive officer Marc Rochet back in July to discuss the new route as well as how the airline is doing since the Editor-in-Chief James Field interviewed him two years ago at a different outlet.
JF: Marc, thank you so much for taking the time to speak to me the night before the route launch. A lot has happened since I last spoke to you! How has the airline accelerated growth and how have you approached the COVID-19 pandemic up to now?
MR: Let’s start with 2019 when you first spoke to me, James. 2019 was a particularly good year for our group. Flying into French Polynesia, San Francisco, and other destinations were working very well for us to the point that we posted a net profit, which for a start-up airline is a good signal that things are going okay.
The beginning of 2020 was particularly good, particularly in January and February, and was on the same line as 2019. We were on a good track to succeed until March 17, 2020, when French President Emmanuel Macron announced the lockdown, meaning that we had to stop a lot of our activity due to Paris-Orly being closed.
So we had to reduce our costs as much as possible, so that meant postponing the introduction of our new aircraft, reducing salary costs as well as making sure that we mitigated job losses through the unions. In order to generate some revenues as well, we operated cargo flights with our passenger fleet. Whilst it is not profit-tight, it did cover our variable costs, which at least is a good thing.
That is the advantage of our A350 fleet. Even with no passengers, it can handle around 26, 27 tons of cargo. Going into the Summer of last year, we had a profitable season, taking money in July and August before it came to a stop again in September. From then up to around when things were beginning to open up again, we weren’t able to move forward as much as we could now.
Macron spoke on the TV this week saying that if you want to travel, you need to be vaccinated. We believe that this step will take a bit longer than anticipated but we are optimistic for the future.
In 2020, we were around 43% down compared to 2019, but we were strong and robust enough to get through this. By the end of the year, we will be in a better situation.
JF: Without going too commercially sensitive, has the current restrictions between the U.S and France affected demand for the launch of the new route between New York and Paris?
MR: As an example, we have a lot of questions on the U.S side due to the restrictions. We have a team working in New York via a call center to enable people to travel easily. However, demand may suffer because of this crisis causing people to move to a digital world. For example, we are conducting this interview over video conference.
To give you a flavor of the first flight will carry from Paris to Newark around 125 passengers, but this is not good. However, on the return flight, we will be carrying 365 passengers. That being said, we will have around 10 tons of cargo being carried in the bellies of the aircraft. So at the end of the day, we will not make money.
In these stages, we need to move because when the U.S travel ban will be lifted, we will be in place, and with COVID, the route is meeting our variable costs. We think that this route can be successful and we think it’s time to stop the travel ban, but I don’t think that will change a mastermind and a President’s opinion of the travel ban.
JF: So with those numbers that you have given me regarding passenger numbers and cargo for this new route, is this the case that you remain optimistic for the long-term success of that route, and whilst COVID is still around, you are happy to take the hit?
MR: Yes of course, for us, it is an investment. There is another point I would like to add to this. When you look at before the crisis, the Paris to New York route serviced around 2.3 million passengers per year, but today if you look at 2019 and you compare with 2021, the number of seats being offered between the two big cities by the likes of Air France, United, American, the total number of seats available has been divided by two, which means that demand is not that good.
But when your total capacity is divided by two, let’s take Air France for example, they did 8 flights per day, two of which on the A380. Today they only have three per day which is a total reduction, so we think it’s time to come.
JF: Moving away from the Newark launch, the pandemic has caused a major shift in terms of what airlines are ordering going into the future, in terms of wide-body to narrow-body aircraft. You haven’t owned the A350s for very long, but will the aircraft remain in the long-term framework of the French bee fleet or are you open to considering narrow-body aircraft such as the A321XLR?
MR: Of course you can never say yes or no. We don’t know what will happen in the next decade. Things are tough at the moment. Business travel is almost destroyed at this point. Why do you need to travel when you can do a video conference, just like how we are talking right now? It will of course come back but not 100%.
With our current setup with the A350, we are almost quite sure of the fact that it is the best and the cheapest in terms of cost per seat mile. With people looking for cheap tickets, we are in a position where the market can be demanding for us, and that is good. Furthermore, unlike the A321XLR, the A350 only has to do one flight, which is what we want to do so then we can offer efficient and positive pricing in the market offering a good economy service.
On the cargo front, with the A350 still able to handle cargo, it will be more than what the A321XLR will be able to offer ultimately. Additional costs will come with adding a different aircraft to the fleet, such as maintenance costs, training costs. Most carriers want to go bigger with different aircraft and higher cost bases where we just want to keep it simple, and this is seen with what we currently offer to our customers.
JF: You touched on Vancouver because that’s where the flights on the way to Papeete stop currently, having previously been San Francisco before the pandemic hit. Has there been any level of higher demand out of Vancouver compared to SFO?
MR: No, not at all. Vancouver, like with San Francisco is just used as a technical stop. Our inability to operate in San Francisco was due to the U.S travel ban, so the transit has to happen through Canada instead. Traffic demand between France and Vancouver is very low either way, but once the travel ban is rescinded, we will return to San Francisco.
JF: With those particular flights in mind, with it being multi-stop if you want to go all of the ways to Tahiti, do you still feel there is a market demand for these types of services or do you think the pandemic is going to change this, with customers wanting more direct, flexible flights?
MR: Not at all. Because of the distance, you cannot go direct, you will have to stop somewhere. If you asked me the same question in 10 years, it may be different as we will have aircraft that have a good mix of longer-range capabilities and the ability to transport a greater load. It is the same concept with passengers flying to Noumea in New Caledonia, you cannot operate it non-stop.
So, you must stop either in Tokyo or at destinations close by. Whilst we don’t see the demand for this type of service to expand too much, we don’t see it disappearing either.
JF: With the pandemic causing legacy carriers to scale back their transatlantic operations, do you see this as an opportunity to expand into the saturated market and make a more aggressive stance for market share?
MR: We have to be careful now, especially with this crisis being very tough. We were lucky enough, financially speaking, to stay in business. Through our decision-making, we have been able to make positive strides such as launching the Newark route as well as potentially receiving another A350 by the end of the year. So we will try to focus on establishing our profitability to create a stronger tomorrow.
We need to add two more A350s to our fleet and we will probably fly them to the U.S because it’s a simpler world. We have a commercial team there, and we have been approved by the authorities to fly into the country. It’s easier for us, but I don’t see a big expansion into another region. Of course, things can change, competition can change and I think that with the legacy carriers, we have a lot more depth because of our flexibility to thrive.
But the focus, for now, is on recovery and profitability, and we will achieve this by careful planning when it comes to taking on this market.
JF: With that in mind, why don’t we look on the other side, in terms of the low-cost long-haul market. We have seen the likes of Norwegian pulling its transatlantic and long-haul wing completely. Do you feel this puts the airline in a better position to thrive as we come out of this pandemic?
MR: I think with Norwegian, that they became too complex. Whilst owning two different aircraft types may be perceived as easy, it really isn’t. It’s a huge complexity on the financial side, which is what we touched up a little bit on the A321XLR.
On top of this, expanding too quickly meant that the airline couldn’t enjoy the benefits and became more of a hindrance. When you are putting money on the table in terms of investment, it’s better to play the slow game. If you want to go faster, you can try, but be careful, as an airline can easily end up in the same situation as Norwegian.
JF: What would you say about Norse Atlantic Airways then? With this being the part brainchild of Bjorn Kjos with his involvement in the carrier, do you see them as a threat based on what you have seen from him in Norwegian?
MR: I think he has probably learned about the weak points as well as learning what was successful through which routes were making the most amount of money. With it being early days still, we have to see what they will do, but most people who want to come to the U.S with decent pricing, choose French bee.
Either way, with them, entering, it will be good for everybody as the competition will remain strong.
JF: With the Dubreuil Group running French bee and Air Caraibes, the airline operates A330s and A350s respectively. With Airbus advertising in the past about pilot commonality on the two aircraft types, has this given you the advantage you need in terms of cutting costs?
MR: Oh yeah! If you do things simply, then you will have simple costs. The benefit with this commonality is that you don’t have to go through additional checks that you would do maybe at Boeing or Embraer etc. So that, of course, saves us money in terms of that training.
Another benefit to this commonality is that we also have had approval from the European Union to run French bee and Air Caraibes on a multiple-licensed basis through our Air Operator’s Certificates (AOCs). Say, for example, if one plane at French bee is down due to maintenance, we can actually transfer an aircraft from Air Caraibes to French bee within two hours, which gives us incredible flexibility in the way we do things.
This means that we do not have to go down the route of ACMI leasing, which is what a lot of carriers do, which costs even more money on a weekly basis as well as more time in terms of transferring it from one AOC to another. So we are very happy with the way that we have our group set up.
JF: As we come towards the end of the interview, what does the French bee of the Future look like?
MR: We will be flying a fleet of just A350s operating into French territories and the U.S market, especially after the pandemic. We probably need to get to around six A350s in our fleet as well in order to expand in the way we want to.
We will aim to be more flexible, change a schedule if we need to change a schedule. Being more digitalized is something that we will work on going into the future and out of this pandemic, especially with the digital world accelerating every day.
Another area we need to look at is the environment and ecology. The management of airlines around the world needs to look at minimizing fuel consumption. It is our responsibility to be as green as possible, which is why we have the A350 in our fleet as well. If I am flying an A350 to New York, you will burn far less than any of the other aircraft types that are in the skies.
Whilst we have good technology today, there will be more advanced types one day, but not tomorrow morning. This is something that will take a while to do, but as long as we remain on top of things, we can do better things.
Looking ahead, it remains clear that the cool, composed, and calm head of Marc Rochet has not just steered the airline through one of the most intense crises in aviation history but is looking well into the future.
It evidently shows that the pandemic strategy has worked and that taking a loss on the Newark route in the short-term will be the right move when looking at the long-term potential prosperity of the route.
It will be interesting to see what steps French bee will take that may not have been mentioned in this interview. All we know is that Rochet is poised, primed and ready to take the airline into the next generation of its very young life.