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.
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?
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