Air France Says Bienvenue To U.S. Corporate Market

<B> Air France Says Bienvenue To U.S. Corporate Market</B>

By David Jonas

<I>Paris</I> - With Delta as its new North American partner, as well as healthy transatlantic operations and a strong emphasis on negotiating corporate contracts, Air France has the United States in its cross-hairs.

Pascal de Izaguirre, Air France's COO and executive vice president for the Americas, said corporate deals in the United States are a high priority. Indeed, the airline has set targets for itself and reported a "sharp increase" in the number of such deals in the past 12 months. Furthermore, de Izaguirre said Air France and Delta are "studying ways to bridge corporate contracts in the U.S." Since antitrust immunity is, at best, a few years off, those joint efforts could include integrated discounting, a method being employed by other alliance pairs such as Continental-Northwest (<I>BTN,</I> Aug. 2).

Fueling those corporate agreements is a strong transatlantic presence that likely will accelerate as the Paris Charles de Gaulle hub expands and closer cooperation with Delta develops. Currently, Air France offers 162 weekly transatlantic flights, including codeshares, and 11 U.S. gateways. Dallas, Detroit and Philadelphia could be next.

"Air France intends to be a very key player in the American market," de Izaguirre said. "We will see seats increase to the U.S. by 16.5 percent during this year, more so in high contribution seats." An 85 percent July load factor to the Americas in part justifies that growth. Meanwhile, British Airways, a chief transatlantic rival, announced planned capacity cutbacks of up to 12 percent during the next three years.

The emerging alliance with Delta will further solidify Air France's U.S. commitment. The two carriers will increase beyond-hub codeshares, while Air France looks to include Delta Connection affiliate Comair, and Delta explores the possibility of accessing Concorde flights between New York and Paris.

"We're prepared to give block space on those flights, but the details are not finalized," said de Izaguirre. Delta already has indicated that those seats could be used by its high-yield customers and as frequent flyer upgrades. He added that, contrary to various reports, Air France has no intention to phase out the Concorde. In fact, the supersonic fleet may get a redesigned cabin in the coming years. Air France also might ask Delta to add early morning flights to New York JFK from Washington and Boston to boost Concorde load factors.

The partners also are considering exchanging and sharing cabin crews, coordinating schedules, improving the loyalty program and emphasizing Atlanta for further Latin American development. Of course, they will seek additional alliance members and some carriers already appear to be shoe-ins.

Air France chairman and CEO Jean-Cyril Spinetta said Aeromexico and Korean Airlines, carriers that already have relationships with both Air France and Delta, are the next likely members. Another possibility is British Midland, expected to make its choice in October between the Delta-Air France group and the Star Alliance.

Meanwhile, Delta's Atlantic Excellence partner Swissair was welcomed to join the global alliance "with open arms. However, they must choose between us and American Airlines. They can't have both partnerships," Spinetta said, referring to the recently announced AA-Swissair codeshare arrangement.

Spinetta said he would like to limit the alliance to "no more than six or seven members" to avoid complications. Meanwhile, the ongoing codeshare relationship with Continental, contracted through March 2001, could end sooner if both parties deem it appropriate.

In other Air France news, the carrier in July debuted Internet booking capability in the United States and opened new airport lounges in Chicago, New York JFK and Washington Dulles.

It also continues to freshen its fleet with new aircraft. New B777s and 747-400s are on the way, as are A340-300s. The last 747-100 will be retired in January. Despite the infusion of new Boeing planes, Air France remains largely an Airbus operator. "It is an asset to have commonality in the fleet, as Southwest has shown," Spinetta said. "It reduces costs and improves efficiencies.