BTN's annual answer book for business travel managers.
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XL's Laurent Magnin discusses:
XL Airways CEO Laurent Magnin sees the heated competition among low-cost carriers on transatlantic routes as validation. "Everyone told me 10 years ago that long haul, low cost is impossible," he said. "Ten years after, low cost is continuing to grow." Over that decade, XL also has explored the other side of the spectrum, merging with all-business class La Compagnie in 2016. While the two still largely operate within their own realms, Magnin, who spoke with BTN transportation editor Michael B. Baker, sees opportunities for cooperation and to grow corporate business on the XL side.
BTN: How has the transatlantic low-cost landscape changed since you came onto the scene?
Magnin: Competition is hard, but it is good for us because it proves that the model is on the way. The situation in Europe is really interesting. Now, the big carriers have their own low-cost airlines. That's the case with British Airways and Lufthansa, and it could be the case with Air France one of these days; Joon is not really low cost. Do we stay independent, or do we become a branch of a legacy one of these days due to the competition? For Europe, the long haul, low cost is a part of our life every day now. New York is continuing to do well because it's a renowned destination. We flew three, four or five months a year and more and more we extend now, but it's not a big airline.
When you look at Norwegian, it's giant, but the giant needed to recapitalize a few times in the last few years. It's big growth, and it's not the same game for us. It's more of a niche market. Low-cost airlines—you need to buy everything. If you put all the things in the basket from a normal long haul, some low-cost [carriers] are not really low cost. Now, competition, for XL, is to say, "Everything is included, but the price is low cost." I don't say that won't change one of these days if everyone moves this way, but today, for many consumers, it's a no-stress consideration with XL. It's exactly like a low cost, but the minimum is included: one luggage and one meal.
BTN: Are you codesharing?
Magnin: No, but tomorrow it could be. Look at EasyJet. When they started, they started with a pure concept of low cost and told everybody, "We will never work with the travel agency or offer something to the businessman." No other offer than the pure production of EasyJet. What's happened today? They work with the travel agency. They put an offer for the businessman. They sign agreements with other airlines to connect. La Compagnie signed an agreement with EasyJet. If you live in Marseilles and you want to go to Paris with EasyJet and continue with La Compagnie, you can buy it.
BTN: What are your growth plans with La Compagnie?
Magnin: We will bring two A321neo brand-new aircraft, not this summer but the next summer. We sell [business class for 40 percent less] than the competitors. Today, La Compagnie is 20 percent of the market between Paris and New York in terms of business class. It's just two planes, but it's big because the offer is only business class between Paris and New York today.
BTN: And your growth plans for XL?
Magnin: America continues to be a big goal for us. We are in Miami, in L.A., in [San Francisco] and New York. [Maybe after] two years, we will also be at other points in the United States. We also are questioning whether to start some things from different cities in France to New York. We tried to fly Marseilles three or four years ago. It was not unsuccessful. Our plane was too big. We use 400 seats, and starting from Paris it's no problem, but starting from the province, we need a little plane. Maybe a 321 will be next.
BTN: How much business travel does XL attract?
Magnin: The next winter, we will fly into January and begin again in March or early April. In the end of 2019, we will fly year-round. Until [then], business is not the big deal of XL. But at the same time, we tried in New York to touch the younger generation and one thing was interesting: All the young people who start businesses are our customers. The big company pays for the ticket and the [travelers] don't care about the money, [but] when you have a startup or a little company, you are concerned about the cost of your travel. And this is why XL is not an airline for the business but the numbers of people who are on board for business reasons are amazing compared with our expectations 10 years ago.
BTN: What is your distribution approach?
Magnin: Seventy percent of production is sold by the travel agency; that could be Kayak, but our direct sales is 30 percent. It's clear that the game today for many people is to compare the price. That's the fight: to inform the people that they need to be careful when they buy something—your final price versus what you see on the TV or newspaper. The price is more important. On this game, travel agencies are our partners.
BTN: What sort of integration is happening between XL and La Compagnie?
Magnin: One is in Newark and one is in Kennedy. During the summer, we fly every day. The big deal for La Compagnie in the last 12 months was to move to two flights a day. Not every day; 250 days we have the second flight. We are closer now to two flights a day all year. It was the deal for us at the time of offer. On XL, it's one flight a day on a really big plane. The only question for us would be to move from Newark to maximize something between the two companies.
BTN: Have you integrated the loyalty programs?
Magnin: Probably within the next 12 months, something will be pushed between the two companies, but it's more important for La Compagnie than XL to have this.
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