The downturn started??...now Joon.

[dboy]

https://www.bbc.co.uk/news/business-46829440

[Capt Scribble]

Looks more like rationalising a poor business model. The staff will prob be happy if integrated into AF.

[dboy]

Indeed, but it is showing already a trend. Companies (over??)invested in the booming period and now facing problems in the ‘starting downturn’.

keep your jobs gents rather than changing.

[racedo]

What was it ? What did it mean to consumers ? 2 basic questions that seem to have been missed by AF management when they launched it.

It was doomed to failure from the start but management will claim they had to be seen to be doing something.

[Mister Geezer]

The Joon brand has difficult to pin down. It's not a true low-cost operating model, but it was designed to 'feel' like one. It was launched as an airline for millennials but this seemed to have been quietly dropped. They even went on to adapt some of the center blocks of seats on the A340, as seats that can be converted into a bed for kids, which was obviously done to appeal to families. It would seem as if even AF were unsure of what Joon should be.

An ill thought out 'experiment'?

[Eutychus]

I unexpectedly flew Joon BOM-CDG a few months ago after an AF cancellation. I'd never heard of them before that. I was surprised to find an A340 done up as new sitting on the tarmac, but didn't notice any "low-cost" features at all. I would agree with the article that the brand message is hard to pin down, though.

[DJ77]

Originally Posted by Capt Scribble

Looks more like rationalising a poor business model. The staff will prob be happy if integrated into AF.

II agree. As I understand it Joon was just a tentative to hire cabin crews on a lower pay scale. The pilots were AF.

[ATC Watcher]

As I understand it Joon was just a tentative to hire cabin crews on a lower pay scale. The pilots were AF.

It is a bit more complicated than that ,in a nutshell the previous management wanted to create a new airline in between low cost and mailstream , and use their old 340s. This was in the middle of the dispute over salaries with SNPL so quickly the crews were going to be AF pure vanilla , with same salary conditions , Ground/ops/maintenance done by AF, so only saving cost was going to be on cabin crew, recruited specially at lower salaries/conditions.
The new Canadian boss inherited the baby , and decided ( wisely say some insiders) to stop the experiment. The CC will most probably be integrated into AF ( so the rumor goes) The only ones that benefit from that are the painters. The decision to stop was not as the title of this thread suggest, due to the downturn , but rather to a management decision to standardize. .
,

[DingerX]

They also saved a few pennies on catering. It was a bad idea; pitched as a "loco-ish" airline, Joon's longhaul part may have taken some of the holiday routes, but their European service did Holidayish routes. Barcelona, Rome, Budapest were routes that got largely Joonified.
I largely suspect Joon existed as a bargaining chip with the unions: cheaper cabin crew, but same AF pilots was undoubtedly a concession.
Maybe only the painters benefited, but everyone else will be happier without it.

[flyingmed]

I read an article recently about Joon, it seems like it was a flop from the get-go. I'd agree with the previous comments about this being a bargaining chip to lower pay scales given that they have just recently reached pay deals with staff and now the company is being shut down. Good deal if the workers are integrated into AF now.

[Rated De]

Originally Posted by ATC Watcher

It is a bit more complicated than that ,in a nutshell the previous management wanted to create a new airline in between low cost and mailstream , and use their old 340s. This was in the middle of the dispute over salaries with SNPL so quickly the crews were going to be AF pure vanilla , with same salary conditions , Ground/ops/maintenance done by AF, so only saving cost was going to be on cabin crew, recruited specially at lower salaries/conditions.
The new Canadian boss inherited the baby , and decided ( wisely say some insiders) to stop the experiment. The CC will most probably be integrated into AF ( so the rumor goes) The only ones that benefit from that are the painters. The decision to stop was not as the title of this thread suggest, due to the downturn , but rather to a management decision to standardize. .
,

For those interested, the "low cost model" is a blue print requiring adherence to strict operating criteria. These include, but are not limited to:

• Fleet commonality
• Point to Point flying
• Secondary airports
• Very specific flight time limits
• Very tight turns (allowing increased utilisation.

Europe has started and lost many Low Cost Airlines. Seed Capital usually equates to around $40-60 million, and the rush is on to ensure that the cash flow is quickly built to provide returns. That they struggle to adhere to the core requirements is likely in part to exuberance and competitive pressure such that the failure rate, even when using leased fleet is high. The successful models adhere usually to most if not all of the conditions, those like Southwest focus on the effective relationships between staff, with respect a cornerstone. That Southwest has done as well as it has for as long as it has, is the subject of many research projects. The factor missing in Ryanair is the focus on relationships, thus while it has lower unit cost, it lacks the TFP (factor productivity) multiples of Southwest. Focus on relationships and respect seems to add a factor that others have (largely) failed to replicate.


With the two cost items labour and fuel consuming 60+% of airline operating expense, given that any airline can initiate 'fuel saving measures' and given that the ICAO and IATA program both want CO2 reduction targets, most airlines do the same thing. It is therefore not surprising that airline management have 'cherry picked' the labour unit cost reductions the 'Low Fare Model" offers.

Qantas is without parallel growing a leisure carrier model to the fleet size of the parent. This is an interesting study.
The Qantas CEO Joyce was appointed to administer Jetstar. Upon his ascendancy to Qantas CEO he quickly grew its fleet from 36 aircraft to now operate more aircraft than the parent. Flying around half (48%) of the ASK (FY17) of the parent, this model produces only around 25% of the revenue of the parent.
The Qantas experiment is not replicated. The now convicted felon, former Qantas CFO Peter Gregg stated during a parliamentary hearing that the presence of Jetstar would "add competitive wage tension, across the group" There is the labour unit cost focus.
In the search for lower unit cost, given the scant detail provided about Jetstar, one only has clumsy accounting rules in Australia, with Qantas management very selective on the data they chose to release, chances are better than even that the sole focus was to lower the labour unit cost, replacing substantial numbers of Qantas services with Jetstar. Over time it was probably hoped the customer accepted the change. More nefariously a failure of "Qantas" could have led to a rise of Jetstar, repainted to resemble Qantas, with a lower cost base, but this is a digression! The "Low fare model" escaped the paddock with Jetstar destroying many premium routes in the drive to provide a solution to management perceived and fixation with staff costs. The problem with this approach is that it ignores the revenue component of an airline's profit margin. Borrowing form the late gentleman Herb Kelleher and apologies for the paraphrasing "you can have the lowest cost or highest revenue airline and still go broke, I focus on the gap between the two"

This is the 'Achilles heel' of the Low Fare model: Demand elastic consumers. Leisure consumers, stimulated at the margin by low fares are price not BRAND loyal.
As established airlines struggled with wave after wave of "low Fare Airlines" targeting them on specific routes, they did notice the pricing and yield management dimension to their business model. They adapted their own yield management strategies to eat into attempts to build yield the closer to departure a flight was. As an airline like Ryanair approached a departure date, seats became more expensive. The other airlines would add capacity at a close or slightly lower price. The result was erosion of ability to generate yield. It is not surprising that Low Fare Airlines needed to attempt to reduce the unit costs further, by stripping out weight, taking off fixtures, or stupidly announcing that passenger pay to use the restroom.

It is probable that the AF tried to lever some labour unit cost reductions, perhaps with the eventual aim of replacing higher unit cost Air France services.
To use the excess (older) A340 is admirable. Qantas had a government bought and paid for 'legacy' fleet prior to privatisation, that they could have made a 'Qantas-lite' using the surplus (fully depreciated) 737-400 and even 767, whilst re-equipping the Qantas fleet. That they chose to lever the Qantas balance sheet with over 100 completely different (labour tension) aircraft for Jetstar is suggestive that a prime driver was not cost but rather industrial relations.

That Air France struggled with branding and target markets in part is explained with perhaps as others pointed out, a desire to focus on labour unit cost.
That Air France have abandoned the experiment, rather like British Airways did with Go Fly is perhaps a realisation that it can destroy the Operating profit margins, however slim that a brand and product rather than just a price can deliver.

If only Qantas had the courage.

[racedo]

Originally Posted by Rated De

For those interested, the "low cost model" is a blue print requiring adherence to strict operating criteria. These include, but are not limited to:

• Fleet commonality
• Point to Point flying
• Secondary airports
• Very specific flight time limits
• Very tight turns (allowing increased utilisation.

Europe has started and lost many Low Cost Airlines. Seed Capital usually equates to around $40-60 million, and the rush is on to ensure that the cash flow is quickly built to provide returns. That they struggle to adhere to the core requirements is likely in part to exuberance and competitive pressure such that the failure rate, even when using leased fleet is high. The successful models adhere usually to most if not all of the conditions, those like Southwest focus on the effective relationships between staff, with respect a cornerstone. That Southwest has done as well as it has for as long as it has, is the subject of many research projects. The factor missing in Ryanair is the focus on relationships, thus while it has lower unit cost, it lacks the TFP (factor productivity) multiples of Southwest. Focus on relationships and respect seems to add a factor that others have (largely) failed to replicate.

.

Ryanair started and operated in a highly unionised, individual National airline govt supported model. It had to operate in a different way. US is a completely different market where airlines can just declare Chapter 11 and wipe out salaries and pensions and start again.

Every EU Govt was (still is) supporting its own "National" airline and doing this by various means like Slot control at major airport (LHR for BA, CDG for AF, FRA for LH), requiring Govt employees to only use a certain airline (all the previous), using ATC to discriminate on certain carriers and airports (NATS in UK for LHR), subsidising via various schemes like large payment in case needed to use them for military transfers (AF), PSO routes to prevent competition (Alitalia / Aer Lingus). In UK BAA had a monopoly in airports in London which was deemed never an issue until 1 day after Ferrovial bought BAA. Union rules and demarcation on what people could do. Apex fare rules that blocked lower prices. Competition rules that skewed to support home town airline................ Ryanair supposed monopoly when it attempted to buy Aer Lingus but BA can add more slots at LHR with little issue. There is more.

These are only some of the constraints used against any Airlines seeking to compete.

Low cost, high intensity model works but you need to tailor it to different markets and Ryanair laughed at and abuse because WTF wants to fly to Carcasonne, Hahn, Charelroi etc etc. The myopia that you will never fly to big airports showed that people hadn't really got a clue because as a business grows and evolves it will change. The ability to evolve and change quickly is how it became sucessful.

AF's Joon was always a bad idea as they lack the entrepreneurial ability to work and adapt quickly, same as most bureaucratic bloated old companies but made a half hearted attempt without really understanding what they are doing.

[Mr Angry from Purley]

Originally Posted by ATC Watcher

It is a bit more complicated than that ,in a nutshell the previous management wanted to create a new airline in between low cost and mailstream , and use their old 340s. This was in the middle of the dispute over salaries with SNPL so quickly the crews were going to be AF pure vanilla , with same salary conditions , Ground/ops/maintenance done by AF, so only saving cost was going to be on cabin crew, recruited specially at lower salaries/conditions.
The new Canadian boss inherited the baby , and decided ( wisely say some insiders) to stop the experiment. The CC will most probably be integrated into AF ( so the rumor goes) The only ones that benefit from that are the painters. The decision to stop was not as the title of this thread suggest, due to the downturn , but rather to a management decision to standardize. .
,

With the greatest respect to the Cabin Crew how much money was going to be saved by the use of "cheaper" CC?.

[fab777]

It is with noting that the cost cuttings were also done on the pilots, but shared with all AF flight deck crew, so there would not be a different contract and pilot group, thus allowing mainline pilots to fly both AF an Joon, and making the loss almost imperceptible for everyone. The CC at AF chose a different way: no change in the mainline contract, let the new hire pay for all the cost cutting.

Now all of it will be back home, aircrafts will be back into AF fleet, and the CC will be hired by AF, with a frozen pay scale for a few years.

It appears the the cost cutting accepted by the pilots in will not be given back, though...

[Aso]

The AF group had a great Low Cost Long Range operation in the group looooong before it became fashionable called Martinair... They flew the highest hour and cycle 767's, MD11 and even 747 on a long range VFR network... But just like KLM stopped Buzz by selling it to RYR before restarting a low cost again through Transavia the KLM/AF f@cked up Martinair and tried with AF pilots and management to start a low cost operation for Millennials

And now several millions later they figure out again that they are not even good at running a high cost airline let alone a low cost....

[SkyHawk1985]

Martinair? This company was bleeding money from everywhere. It was a total disaster. AF/KLM have Transavia right now and it shows that is working much better.

[Airone2977]

Now it's time for HOP to disapear

https://www.latribune.fr/entreprises...re-805631.html

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