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Air France continues long-haul drive with Vietnam Airlines joint venture

Stock MarketsOct 10, 2017 08:35AM ET
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© Reuters. FILE PHOTO: The Air France logo is seen on the Air France headquarters building at the Charles de Gaulle International Airport in Roissy, near Paris on the second week of a strike by Air France pilots

PARIS/HANOI (Reuters) - Air France (PA:AIRF) signed a new joint venture deal with Vietnam Airlines (HNO:HVN) and said it was in advanced talks with India's Jet Airways (NS:JET) over a partnership as part of efforts to boost its long-haul network.

The joint venture with Vietnam Airlines, due to start from November depending on approval from authorities, builds on code shares that have been in place since 2010 and will see the two airlines co-ordinating their flight schedules to offer customers better connecting flights.

Air France is also looking at working more closely with Indian carrier Jet Airways, with which it has had a code share since 2016.

"We are in advanced talks with Jet Airways to see how we can strengthen our co-operation," Air France chief executive Franck Terner told Reuters.

Parent company Air France-KLM is currently seeking ways to boost its position on long-haul markets and compete against Gulf carriers.

It is launching a new budget brand, Joon, to fly short and long-haul routes and in July rejigged its North Atlantic alliance in a three way deal with Delta (N:DAL) and Virgin Atlantic (VA.UL).

As part of that shake-up, Delta and China Eastern (SS:600115) have each taken a 10 percent stake apiece in the Franco-Dutch airline.

"There is still pressure on prices on routes heading east," Terner said. "The joint venture with Vietnam Airlines will help us to strengthen our position and better mitigate this pressure on prices."

Terner said a similar stake deal to that signed with Delta and China Eastern was not planned with Vietnam Airlines or Jet Airways.

Vietnam Airlines said it hoped the Air France joint venture would lead to similar partnerships with other airlines in the Skyteam alliance and with Japan's ANA (T:9202), which bought an 8.8 percent stake in the carrier last year.

"This is a model that when established will help Vietnam Airlines soon have similar contracts in the Asia region, hopefully including the U.S. as well," Vietnam Airlines' CEO Duong Tri Thanh told reporters.

Air France and Vietnam Airlines did not provide further details on the revenue sharing arrangements.

Air France continues long-haul drive with Vietnam Airlines joint venture
 

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