Air France-KLM is expecting a revenue drop of up to 180 million euros ($193 million) due to the Summer Olympic Games leading to a decline in travel to Paris over the summer. There are concerns that the Games may deter other travelers from visiting Paris, a major tourist destination during the summer months. International markets are showing significant avoidance of Paris according to the airline, with residents in France also postponing holidays until after the Olympic Games or making alternative travel plans.
While the French aviation trade association Fnam cannot confirm tourists are avoiding Paris, Air France-KLM’s statement aligns with recent data from the Paris tourism office, which forecasts a significant drop in foreign arrivals during July compared to previous years. Hotel occupancy rates in July are also down, indicating a decrease in visitors to the city. Despite these challenges, Air France-KLM has stated that it has no plans to reduce its capacity and will provide more details on July 25th when presenting half-year results.
Air France-KLM is one of the official partners of the Paris Olympic and Paralympic Games, where it expects to transport a significant number of athletes. The airline had anticipated a boost to its brand image and revenue from its association with the Games but is now facing a financial setback. The June-August quarter is a critical period for airlines in the northern hemisphere as summer vacation season typically accounts for a large portion of their profits. Last year, the airline reported strong earnings during this period, but the current year has presented challenges, with rising costs and geopolitical tensions impacting its financial performance.
As of April, Air France-KLM had been optimistic about ticket sales for the summer and had planned to increase seat capacity compared to the previous year. The company had also hired temporary staff to support the smooth travel of athletes and equipment during the Games. Despite the current challenges, the airline remains focused on normalizing travel to and from France after the Olympic Games, with encouraging demand levels projected for the end of August and September.
The airline’s shares have experienced a decline, trading at a 10-year low, following the warning of revenue drops due to the Olympic Games. While Air France-KLM has faced difficulties this year, including losses in the first quarter, it has implemented cost-cutting measures to address rising costs and geopolitical uncertainties. The company’s commitment to maintaining its capacity and providing transportation services for the Olympic and Paralympic athletes remains unchanged, with hopes of recovering after the conclusion of the Games.
