A deal between Air France-KLM and the Jetstar Group signed this week in Singapore is being touted as a “landmark” interline agreement.
Landmark because it’s the first for the European traditional full-service carrier to sign such an agreement with Asia-Pacific’s fastest growing low cost airline group and, for Jetstar, it’s the first signed with a full service carrier outside its parent company Qantas.
The deal brings together the old and the new on a major scale and will feed the entire Air France-KLM network from its Paris and Amsterdam hubs into Jetstar’s centre in Singapore, covering up to 60 routes across the region.
Acknowledging that “the walls are crumbling”, Marnix Fruitema, senior vice president, Asia Pacific for Air France-KLM, adds:
“We have a joint vision to connect two worlds – the world of Air France-KLM, the largest European airline group in the world, with the largest low cost operator in Asia-Pacific, Jetstar.”
That such an agreement can be signed between a full service carrier and a low cost airline group is driven by changes in customer behaviour driven by both technology and a more open airline environment, argues Chong Phit Lian, CEO of Jetstar Asia.
“Customers now have a lot of choices and they can make their bookings online. Tying up with a reputable partner in Europe makes sense for us and benefits our customers.”
Both airlines acknowledge that this agreement was more about choice, convenience and connections for their customers than it is about costs. “Increasingly, there is a growing need by passengers to connect,” says Fruitema.
For Jetstar, it represents a means to plug into the Air France KLM’s corporate travel customer base.
Fruitema sees an upside, too, in the leisure travel segment - as well as business travel - with Jetstar’s customers wanting to connect to Europe and the airline would work closely with the travel trade to maximize this interline agreement.
However the agreement, at this stage, does not cover Air France KLM’s frequent flyer programme.
Under the agreement, a customer booking on the Air France-KLM website will be able to book flights going on to Cairns or any other destination in the Jetstar network.
The same, however, will not be true on the Jetstar website at the moment – again, this is something both airlines say could be added later in the partnership.
In Singapore, close to 90% of Jetstar’s bookings come direct through its website, says head of commercial, Leslie Ng.
According to Paul Rombeek, general manager for Singapore, Indonesia, Australia and New Zealand at Air France-KLM, the airlines gets about 25% of bookings in Singapore online, “a high figure for a traditional carrier”.
The possibility of an agreement was first raised in Melbourne almost a year ago during a meeting between Air France-KLM and Qantas.
“We talked about an interline agreement and then somehow, someone said, 'What about Jetstar?', and our discussions grew from that. It was a organic process,” says Fruitema.
The European airline works with several partners in Asia-Pacific, including Korean Air, China Eastern. Vietnam Airlines will also be joining the SkyTeam next week.
Fruitema sadds:
"Asia Pacific is too diverse, too large, to have just one partner. Our agreement with Jetstar is to drive business out of Singapore, South-East Asia and Australia and New Zealand, where we see tremendous growth potential."
It also operates code-share flights with Qantas to five destinations in Australia and transfers 100 passengers each way, each day on these flights, adds Rombeek.
Fruitema says he is optimistic about the outlook from Asia this year.
Last year, the Asia-Pacific market held up for Air France-KLM in terms of volume, but not yield.
However in the year to date, the region is making a strong recovery and officials are optimistic about the next 12 months.