Air France will reduce capacity on its short-haul network in response to growing competition from high-speed rail and low-cost carriers.
The airline announced plans to cut short-haul capacity by 15 percent measured in available seat kilometers by the end of 2021.
Air France reported a $210 million loss on its domestic network last year and more than $779 million in losses in that segment since 2013. The company attributes a significant portion of this performance to the expansion of high-speed rail services such as the TGV, which have increased capacity across the country, shortened travel times and developed competitive low-cost offerings.
On routes where high-speed trains connect Paris to provincial cities in less than two hours, Air France says it has lost about 90 percent of its market share.
Low-cost airlines including EasyJet and Ryanair have further pressured the airline by establishing bases at major airports and growing market presence through aggressive pricing strategies. Air France argues that some of these carriers have benefited from local public policies while scaling up rapidly.
The carrier also highlighted structural differences in employment practices. While around 90 percent of Air France staff are based in France, many low-cost competitors rely on labor mobility within Europe and often base employees in jurisdictions with lower labor costs. Air France says this has allowed those carriers to expand without contributing as directly to regional employment where they operate.
Faced with these combined pressures from rail and low-cost air operators, Air France is adjusting its short-haul network and capacity to better align with current demand and competitive dynamics.