Air France: Olympics reduces summer traffic to Paris

Air France-KLM has issued a warning on Monday, stating that the Olympic Games are expected to cause a decrease in revenue of up to 180 million euros ($193 million) due to reduced travel to Paris during the summer. 

The airline group was anticipating a positive impact on its brand image and financial performance from the Games, but there are concerns that the influx of visitors for the Olympics may deter other tourists from visiting Paris, which is a popular destination in the summer. 

“International markets are showing a significant avoidance of Paris,” the airline’s statement indicated. 

“Travel between Paris and other destinations is also below the typical levels for June-August, with French residents possibly delaying their holidays until after the Olympic Games or exploring other travel options,” the statement continued. 

While the French aviation trade association Fnam could not confirm the avoidance of Paris by tourists, Air France-KLM’s statement aligns with recent data from the Paris tourism office, which predicted a decline in foreign arrivals in July compared to previous years. 

Additionally, hotel occupancy rates in Paris in early July are averaging around 60 percent, indicating a decrease from last year. 

The Centre for Law and Economy of Sport (CDES) forecasted that around 15 million visitors, including two million from abroad, will attend the Games in Paris.  

Air France-KLM stated that despite the projected negative impact on revenue for the June-August 2024 period, they have no plans to reduce their capacity. 

More details will be provided when the half-year results are presented on July 25th. 

The airline anticipates that travel to and from France will normalize after the Olympics, with demand levels expected to improve towards the end of August and in September. 

– Official partner –

In late morning trading, Air France-KLM shares dropped by 3.7 percent, contrasting the 1.5 percent increase in the Paris stock exchanges’ CAC 40 index, following relief that the far right did not secure an outright parliamentary majority in the weekend’s elections. 

The airline’s shares are currently trading at a 10-year low. 

As recently as April, Air France-KLM was optimistic about ticket sales for the summer and aimed to increase seat capacity by five percent compared to the previous summer. 

As an official partner of the Paris Olympic and Paralympic Games, Air France had plans to leverage the events to enhance its brand and showcase its services. The airline had hired additional temporary staff to ensure smooth travel for athletes and their equipment. 

Air France expects to transport approximately 20 percent of Olympic athletes and over a third of Paralympic athletes. 

In early June, the airline’s chief executive, Anne Rigail, expressed confidence in reaching pre-pandemic activity levels this summer for the first time. 

The June-August period is financially crucial for airlines in the northern hemisphere, as it is during the summer vacation season that they generate a significant portion of their profits. 

Last year, AirFrance-KLM reported a net profit of 931 million euros in the third quarter, almost equal to its record annual earnings. 

The warning issued on Monday comes as Air France-KLM faces challenges this year, with a loss of 522 million euros in the first quarter due to rising costs and geopolitical tensions, despite an increase in passenger numbers and ticket prices. 

The group has initiated cost-cutting measures, including a freeze on hiring for administrative and non-operational positions. 

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