Air France-KLM shares dropped 11% after the airline announced its Q3 earnings today, in part due to a warning that the airline’s costs this year will be higher than previously expected.
“Direct consequence could be higher fares which could make air travel less accessible to customers in our own market,” Air France-KLM CEO Benjamin Smith said in a statement.
According to Yahoo! Finance,
“Amsterdam’s Schiphol airport will increase its fees for airlines by 41% from April 2025, which KLM estimated would lead to an operating profit impact of 65-110 million euros next year.
Air France-KLM also said that France’s proposed hike of the solidarity tax on flight tickets could hit its operating result by 90-170 million euros in 2025.”
That said, there is some hope for fliers as Smith also noted that it could be difficult to pass these costs onto customers, and that the costs could instead cut into the airline’s profitability. There was also some good news for the airline — increased capacity and strongly underlying demand caused quarterly revenue to rise by 3.7%, to 8.98 billion euros.
My take
Both Air France and KLM offer a fantastic product (Air France offers my favorite business class product currently on the market) and Air France-KLM is, by far, my favorite airline loyalty program in the world right now, where I’m often able to get one-way business class tickets from Los Angeles to Europe for 50,000 miles.
I’m not surprised to hear that the added costs at Schipol are starting to take a toll on the airline’s profitability, and my main concern is that the added costs could result in Air France-KLM ditching the 50,000 miles business class ticket model, even if those fares are only offered for a few seats on each flight.
I’ll take this statement as a warning that getting business class flights from the U.S. to Europe for only 50,000 miles might have an expiration date that’s sooner rather than later, and will book as many flights as I can with them to take advantage of the pricing while it lasts.
