The 2024 Summer Olympic Games will be hosted in Paris later this month. On the surface, you’d assume that this is great news for Air France, and that the airline is having a blockbuster summer, given that the airline dominates the Paris market. However, that’s not turning out to be the case.
In this post:
Why the Olympics is bad news for Air France
Air France-KLM has just issued updated financial guidance, warning that unit revenue in the period of June through August 2024 is expected to take a negative hit of €160m to €180m. This is due to both Air France and Transavia France (Air France-KLM’s low cost carrier) seeing weaker demand than expected over the summer months.
The problem is that traffic to and from the French capital is lagging behind other major European cities. This is due to a few main factors:
- People are avoiding connecting through Paris airports during and around the Olympics, presumably because they’re expecting the airports will be chaotic
- Paris doesn’t have its typical summer tourists during the Olympics, given hotel costs and limited inventory, and the average person traveling for the Olympics is staying longer than the average tourist (meaning fewer flights are needed)
- Residents in France are postponing their holidays until after the Olympics, or are considering alternative travel plans
The company states that travel to and from France is expected to normalize after the Olympics, with encouraging demand levels projected for the end of August and the month of September.
I suppose this isn’t really surprising
While the concept of an airline struggling due to massive demand to and from its hub seems counterintuitive, it actually makes a lot of sense.
Flights to and from Paris will likely be packed before and after the Olympics. However, it’s a different story during the Olympics. I’ve noticed this in my own flight searches, and have even seen a decent amount of award availability on Air France on dates during the Olympics.
The reality is that transatlantic airlines ordinarily need no help filling planes between North America and Europe in summer, even just on a connecting basis. Furthermore, airlines build their networks based on historical demand patterns, and for Air France, that assumes a healthy mix of people traveling to Paris, and connecting onwards.
But it’s not surprising that this is no ordinary summer for Air France, and it can be hard to plan based on that. Ordinarily, those in network planning and revenue management have great tools to plan their strategy, but something like the Olympics makes this infinitely more complicated.
Bottom line
Air France has warned that revenue will take a significant hit this summer due to the Olympics. The company is finding that people are avoiding Paris around the Olympics (unless they’re going to the event), and that French people are avoiding travel until after the Olympics.
It’s definitely funny to think that IAG and Lufthansa Group are benefiting more from the Olympics being in Paris than Air France-KLM is.
Are you surprised by the impact the Olympics is having on Air France?
Surprising Delta didn't lend Air France their premium revenue management strategies.
Tim Dunn, parlez-vous francais?
Qatar Airways saw an increase in passengers as well as revenue due to the FIFA 2022 which was held in Qatar. They even made a profit that year.
I think the point there is Qatar is a non-destination for tourists and so hosting an event there is free marketing. The Olympics is great for cities with low tourist volumes but I imagine for major global cities where hotels are already full of tourists in summer it just cannibalises existing revenue to an extent and replaces one set of visitors with another.
I think there is another reason. Athletes and teams have their partners already so if the Olympics were somewhere else, AF would presumably be a partner for the French team. Usually teams have a partner from their home country, I guess.
Well AF won’t really be flying the French team unless they are from Martinique Guadeloupe or Reunion. I suspect a majority of African countries will use AF.
Well AF should stop complaining and get the word out that CDG and ORY are quietish during the Olympics, to encourage transit passengers. The airports are not going to be any busier than peak holidays.
Honestly, this is the time for savvy "posts" on what people can do with AF during this time. Take advantage of what I'm sure will be some stunning upgrade opportunities. :-)
Transits are not affected. They don’t care about the Olympics so will travel irrespective of whether they are taking place or not.
It's July 2nd, people have already booked their August holidays. I think that's why AF is able to now advise their weak financial performance during the Olympic period.
Maybe they could have done something like that earlier, perhaps via forward thinking network pricing strategy (as opposed to just Paris promos)...but their hands have been so full, and things fall through the cracks.
It'll be curious what happens in Los Angeles in 2028. It...
It's July 2nd, people have already booked their August holidays. I think that's why AF is able to now advise their weak financial performance during the Olympic period.
Maybe they could have done something like that earlier, perhaps via forward thinking network pricing strategy (as opposed to just Paris promos)...but their hands have been so full, and things fall through the cracks.
It'll be curious what happens in Los Angeles in 2028. It was my long-time home until last month, and everyone with the means are talking about leaving the city due to the expected traffic nightmare. I am thinking that people will just change their work and driving habits, and you'll see a period of remote working again.
Brisbane 2032 will be a polar opposite of Paris and LA. Aussie have an out of this world passion for sports and will attend the events in droves, intense national pride, and the locals will want to volunteer and showcase their city (it was my most frequently visited work destination, and I know people on the various related committees), etc...so I'm confident that Brisbane is going to host a stunning Olympics.
But, first, Paris 2024!
In 1984 there was doom and gloom for months leading up to the games and yet everything in LA worked like clockwork and that was before the significant expansion of the rail network.
I was able to get to exposition park very easily and recall walking back to downtown LA via figueroa.
By 2028 new metro rail lines will have opened making it even easier to get around. The west side and downtown...
In 1984 there was doom and gloom for months leading up to the games and yet everything in LA worked like clockwork and that was before the significant expansion of the rail network.
I was able to get to exposition park very easily and recall walking back to downtown LA via figueroa.
By 2028 new metro rail lines will have opened making it even easier to get around. The west side and downtown are very well connected. Admittedly SoFi stadium ( which is beautiful) and the new Intuit dome are very inaccessible unless by car.
AF had also raised their fares obnoxiously, thinking people would bend over backward to go to Paris for the Olympics. I guess that was not the case. Now the fares are back to a more reasonable level, but people don't want to go now with all the commotion in France.
They didn’t raise the fares per se. Airlines use multiple booking classes and all the lower ones are gone hence only higher fares maybe available.
Ha, rough go of it for AF lately!
and, CDG is an airport I'd fly to IST to connect ... to avoid. Every prior experience has found the staff go way-out-of-their-way to be rude to Americans. "Now, go back to the end of the line." "Why?" "Because I told you to. Now GO!" And Paris was much the same.
Most of us ( and I’m not French ) don’t like Americans as many live up to their reputation of being loud and obnoxious. There are on the other hand, many who are not and who may speak French and other languages and don’t attempt to take 3 or 4 oversize cabin bags and argue when they are told to check them in and start filming employees because they are American and believe US law applies everywhere.
Interesting that Delta President Glen Hauenstein already commented on this during the analyst Q&A portion of the Q1 2024 earnings call back in April. He indicated that the Olympics are generally “not good for airline revenues and this year looks like it’s no exception. There are some “challenges for Paris” and “it’s actually going to be a bit of a headwind for us”.
The Olympics are a gargantuan waste of money, fueling an organization (the IOC) that thinks there's nothing wrong with staging them in any country, including those that have dubious human rights records, so long as they get paid. Having recently been in Paris and seen so much of the set up, all of which obstructs many beautiful views (Place de la Concorde, The Pont Alexandre, The Invalides) might make for good TV but is an...
The Olympics are a gargantuan waste of money, fueling an organization (the IOC) that thinks there's nothing wrong with staging them in any country, including those that have dubious human rights records, so long as they get paid. Having recently been in Paris and seen so much of the set up, all of which obstructs many beautiful views (Place de la Concorde, The Pont Alexandre, The Invalides) might make for good TV but is an enormous burden to locals, and to those wishing to visit the city during the Olympic run.
Wrong
Which Olympics have taken place in countries with dubious human rights records ? Apart for Russia 1980 and China 2008. I recall LA had a large arts festival alongside the sports in 84 and they are planning the same in 2028. So it’s not just sport and a huge amount of other events. The atmosphere in London in 2012 was great.
Icarus had a great response.
And let's also not forget the wonderful and meaningful benefit of the associated Paralympic games for the global community of mobility impaired, their families, and the promotion of greater understanding and appreciation for the challenges and successes.
It’s not really that much of a burden to locals. For one, the Olympics is held during a time when Parisians typically flee the city, so anyone that isn’t interested will be gone anyway. A few Metro stops are closed, which is mildly inconvenient, but beyond that the construction isn’t impacting day to day life much here. I can see how it may affect tourists more but my friends who visited recently thought it was...
It’s not really that much of a burden to locals. For one, the Olympics is held during a time when Parisians typically flee the city, so anyone that isn’t interested will be gone anyway. A few Metro stops are closed, which is mildly inconvenient, but beyond that the construction isn’t impacting day to day life much here. I can see how it may affect tourists more but my friends who visited recently thought it was cool to see some of the preparations.
Source: I live in Paris.
Transit passengers are unaffected. Yield management was changed as it was expected that more would stopover in Paris.
Given the geography and accessibility many can also stay in the U.K., Benelux or other parts of France and visit Paris for a day or two. Many neighbouring Olympic teams are also using trains. I believe Team GB is using Eurostar. Air France is also carrying a large number of Olympic teams.
The Olympics are usually only good for the Olympic committees because of the massive broadcast rights.
Many cities that host the Olympics spend a fortune on facilities that they never fully use and pay off the debt associated with them.
The only advantage is that AMS is still a good hub and the AF joint venture includes AF/DL/KL and VS so the pain is spread around.
Since DL is usually the first airline to report...
The Olympics are usually only good for the Olympic committees because of the massive broadcast rights.
Many cities that host the Olympics spend a fortune on facilities that they never fully use and pay off the debt associated with them.
The only advantage is that AMS is still a good hub and the AF joint venture includes AF/DL/KL and VS so the pain is spread around.
Since DL is usually the first airline to report its 2nd quarter financials and give 3rd quarter guidance, we will hear their commentary on the summer and specifically Paris on July 11.
So should the US airlines already be evaluating their plans for Los Angeles in 2028 or is it too early?
LA is one of the few cities that has made money on the Olympics because they have done it so many times and don't need to add many buildings.
Airlines do know what works and doesn't during special events.
Delta's LA 28 painted A350 is in flight test in France and should be delivered in the next couple weeks.
In the famous line from Steve Martin to John Candy in Planes, Trains & Automobiles…”and when you tell a story, Have a Point” :-)
Let us pray. Lord, please keep that Delta LA 2028 A350 in your thoughts. Shield it from unprofitability, mileage devaluations, and all the rest of the devil US3 airlines. Bless my sons all-knowing knowledge of every airline business management choice on the planet. Give his fingers strength to be the first to comment on other travel blogs. In your name, Amen.
"LA is one of the few cities that has made money on the Olympics because they have done it so many times and don't need to add many buildings. "
No more so than three of the last few cities (London, Tokyo, Paris) have. They're all on their third, as will L.A. be in 2028.
One good thing about the LA Olympics in 2028 - other than a few temporary facilities such as for beach volleyball, the region (plus using some facilities in Oklahoma) already has pretty much everything needed for an Olympics. Even the Olympic and media villages will just use existing housing at UCLA and USC.
@Jalian is correct. Every major required large facility already exists. UCLA/USC are perfectly placed in the city to host athletes in student dorms. Even if they use facilities outside of the LA core for smaller athletic events, there are still many many universities that can offer the same athlete housing.
And though traffic is a nightmare everywhere in the greater Los Angeles area, no matter what day or time, it's really the core area west...
@Jalian is correct. Every major required large facility already exists. UCLA/USC are perfectly placed in the city to host athletes in student dorms. Even if they use facilities outside of the LA core for smaller athletic events, there are still many many universities that can offer the same athlete housing.
And though traffic is a nightmare everywhere in the greater Los Angeles area, no matter what day or time, it's really the core area west of downtown (DTLA, as we say, or I used to say until I recently moved) that is critical. For athletes and VIP's, they will just block the required lanes for their transport and safety/security, it's normal in LA.
LAX is the big question until shown that the billions of dollars in investment have really offered a fix. Plus the rapidly expanding metro system. Plus plus plus the other challenges the city faces...but t there's enough money in the city to solve or just cover-up those problems...
Incorrect
Whom?
Why just a village in USC or UCLA when you have an entire town in Skid Row. All with permanent housing too.
NOt surprised at all. It was the same for British Airways when Olympics were in London, same for Delta when the olympics were in Atlanta. Not a new story.