Air France to cut prices, revamp European service

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PARIS -Air France said Thursday it plans to cut fares on European flights as part of a wider move to revamp its medium-haul service and stem losses.

The airline, part of the Air France-KLM SA group, said the price cuts, which reach up to 24 percent off the most expensive current fares on flights to Copenhagen and Frankfurt, are a response to changing customer requirements. It said the fare cuts don't amount to a shift in its strategy to a "low-cost" model like those of rival airlines Ryanair and easyJet.

Customers "now want reliable, efficient air transport, with an appropriate service, at the lowest possible price, while retaining the Air France touch," the airline's chief executive, Pierre-Henri Gourgeon, said.

Air France's medium-haul flights account for 40 percent of its revenue, and the airline has been slashing capacity faster than competitors in an effort to counter falling traffic and losses, which amounted to euro426 million ($641 million) in the April-June quarter.

Gourgeon said the revamping will allow the airline to cut its operating costs, for example by increasing reliance on internet bookings and serving simpler meals, and to increase market share by allowing customers greater flexibility to change reservations and offering them a "grace period" when reserving tickets.

"All this has the goal of returning the short and medium-haul business to profitability," Gourgeon said.

2009-11-12 06:28:42