As state aid from European Members States to their national carriers is taking shape, the question arises under which conditions such financial aid should be granted. There are still many questions about the deal of 2 – 4 billion euro between KLM and the Dutch government, whilst the deal between Air France and the French government has already been approved by the European commission. Next to this, many have praised the French government for the clearly stated requirements: “In ten years’ time, Air France may only emit half of the CO2 it emitted in 2005”. CEO Ben Smith has confirmed that domestic flights, for which a two-hour and 30 minutes train journey can serve as an alternative, are being dropped.
Before the COVID-19 outbreak, margins on short-haul flights weren’t performing well according to Air France-KLM’s annual reports. In 2018, Air France suffered a loss on the domestic network of € 189 million, after which it was decided to reduce capacity on domestic flights by 15% by the end of 2021. It appears Smith has not changed his plan that much, since he was already busy restructuring the domestic network.
Due to the decision of the European Commission, companies no longer must use 80% of their slots to secure slots for the following year, unnecessary flights were cancelled. But what to do with the slot release when networks are being reinstated?
Looking at the top 10 aviation markets between cities in Europe with the highest number of passengers in 2018, we observe a lot of domestic movements. There are only 2 intra-EU routes, while 8 out of 10 routes serve domestic markets. A train journey is a realistic option for 6 out of 10 flight routes. The average duration of a train journey does not exceed 1.5 times the flight. The Madrid – Barcelona / Barcelona – Madrid route is still flown a lot with 6,758 passengers on average per day, while the train connection is faster or comparable to the plane.
The number 1 & 2, both French, are arguably a lot higher than the rest of the top 10. Number 1 is the route Paris – Toulouse/Toulouse – Paris. About 60 flights a day are operated on this route compared to 23 trains in 2018.
Suppose the capacity of a train is about 375 people, whist of a plane it is about 180 people. This indicates that there is a total capacity for 19,425 people on daily bases to travel between Paris and Toulouse by air or rail. But how many people normally travel on a daily basis between Paris and Toulouse?
An estimate shows that, excluding car, 14,000 people travel daily between Paris and Toulouse. The load factor of an aircraft on this route is about 80% and that of a French TGV train around 67%. About 28% of the total capacity was unused in 2018 and for the time being there is enough space to travel more by train and less by plane. Another example, Berlin-Frankfurt, estimated capacity between 17,475 travellers, whist only an estimated 12,000 people travel daily between Berlin and Frankfurt (excluding motorists). This implies and underutilization of 31%. The load factor of an aircraft is about 75% on this route and DB long-distance trains around 55%.
According to the basics of demand and supply, at perfect competition an equilibrium will be set, and overcapacity will disappear. However, Air France has lost about € 717 million on domestic routes since 2013. It seems that an equilibrium has never been reached.
If countries cannot manage to reduce the high number of passengers and capacity on domestic air markets themselves, how should this be executed in a European context? In any case, let the current tumble as a result of the Corona outbreak be a turning point in how EU member states deal with domestic and intra-European air traffic. Let Ursula von Leyen and Frans Timmermans return airport slots, which are now protected, only to those flights that serve markets for which the train is not a realistic alternative. Take this opportunity an give the train a prominent role in the future of Europe.
About the authors:
Floris de Haan and Susan Vermeulen are both researchers at the Erasmus Centre for Urban, Port and Transport Economics (UPT).