Air France-KLM CEO Talks Gulf Flights

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**SPEAKER_2** (0:07)
Well, this morning, the World Airport Transportation Summit is underway in Rio de Janeiro.

**SPEAKER_3** (0:11)
Let's go live to our colleague, Guy Johnson. He is co-anchor of The Opening Trade and standing by with the CEO of Air France-KLM.

**Guy Johnson** (0:18)
I certainly am. Good morning, guys. Thank you very much indeed. Yeah, I'm here with the group CEO of Air France-KLM, Ben Smith. Good morning.

**Ben Smith** (0:24)
Hi, Guy.

**Guy Johnson** (0:25)
Nice to see you. So the news overnight is that you have just announced flying back in to Riyadh. You're flying back into the Gulf. Is this the first of many steps or is this the first step you are taking? And then you're going to assess the situation and then you're going to look at what the rest of the Gulf is going to be looking like. What is the situation in the Gulf for an airline like you?

**Ben Smith** (0:44)
Yeah, well, today we're very cautious in returning to cities in which we've pulled out of. So when you've gone back into Riyadh, close cooperation with the French state from a security perspective, with our cabin staff, with our pilots, we have not reopened Dubai as of yet. Tel Aviv, Beirut are still closed, Dammam is still closed for us.

**Guy Johnson** (1:06)
So what would get you back into those routes? What do you need to see in terms of the situation on the ground? What did you see in Riyadh? What do you need to see elsewhere?

**Ben Smith** (1:18)
Well, I think we need, as I just said, we need to have all of our stakeholders aligned to put us in a comfort position to go. And right now, we're not there on the destination that we have.

**Guy Johnson** (1:27)
Does it need a peace deal? Does it need a full cessation of hostilities?
What kind of boxes do you need to tick?

**Ben Smith** (1:35)
Yeah, I mean, peace deal, no peace deal. As long as we're confident that it's not going to have an impact on safety at the particular airport, there doesn't necessarily need to be a peace deal, but we need to have confidence that we're not going to see any danger around those airports. Okay. So we add, there never was, and there doesn't seem to be any today, so we know as a precaution, we pulled out when the fighting started, but now we're comfortable to go back in.

**Guy Johnson** (2:03)
Let's talk about the situation when it comes to fuel. I think you updated the market a couple of days ago, you talked about the idea you've definitely got enough fuel for the summer.
What happens after the summer? You get the summer and then what?

**Ben Smith** (2:16)
So, we secured fuel through the end of August. We've got our full capacity in place.
We have not pulled any of our capacity. It's a little unfortunate that a lot of customers are still not confident that there'll be enough fuel. So, we're seeing a late booking environment, a little people are booking a little closer than we've seen in the past. As far as the fall goes or the winter goes, a bit too early for us to have made a decision on how much capacity we keep in the market.

**Guy Johnson** (2:46)
Okay. Just in terms of that messaging you've had to deliver, at the beginning of the war, there was this fear that there wouldn't be enough jet fuel. And the industry came out very quickly and said, we've got enough fuel, the summer is going to be fine.
If you went up significantly from here, say in July or August, you see a big spike in fuel, are you effectively guaranteeing that all the routes that you're committing to now, you are going to fly? I'm going to get there and I'm going to get home.

**Ben Smith** (3:13)
Well, first off, if the fuel significantly spikes, we're going to have to raise ticket prices to compensate for that. And when you raise ticket prices, there'll be less demand. So the need for the full capacity that we had planned, it's probably not going to be the case. So how we balance that out with the availability of fuel, the price of fuel, the willingness for customers to pay, we'll see how that plays out.

**Guy Johnson** (3:39)
So you might consolidate some routes.
Is there a plan, if fuel went up further to, you would change maybe some of the current routes, the frequencies, kind of where you fly, maybe the overlap between Air France and KLM changes. Is there a plan in place, if fuel goes sharply higher from here, to kind of consolidate within the group?