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Interview: French Bee Founder and CEO Marc Rochet on Airline’s Business Model and Competition
After my wonderful flight onboard French Bee’s inaugural journey from Miami to Paris’ Orly Airport, I had a chance to sit down and talk to the Founder, President, and CEO of the airline Marc Rochet, at the airline’s headquarters. The company’s offices are in a small building located right near their main hub in Paris’ Orly Airport.
The trip report article for the inaugural French Bee flight from Miami can be found here. A video recording of this interview can be found at the end of this article for those that would like to also hear his audio responses.
AirlineGeeks (AG): Before we start, I want to get your title 100% correct; you are the director and CEO of French Bee, am I correct in saying this?
Marc Rochet (MR): Just to be clear I am the chairman and CEO of French Bee, I started French Bee, and I also manage Air Caraïbes, which is the sister company of French Bee with the same shareholder which is Groupe Dubreuil.
(AG): You mentioned Air Caraïbes, what made you want to start another airline after Air Caraïbes and others you started before that?
(MR): It’s a good question. Air Caraïbes was built up on the long-haul idea in 2003, and it was a successful airline almost immediately because, at this time, the route to the French Caribbean was only served by Air France and Corsair with quite old airplanes, older 747s. We made a profit almost in year one, and the growth of Air Caraïbes was very powerful and very strong. In 2015 we began to think about the future, and we made two decisions, one was to buy and lease some A350s which is a very modern and efficient airplanes with new technology. We also decided to grow, buy and lease A350s for the future and to use this to grow. Air Caraïbes at this time was focused on the Caribbean area, like French Guadeloupe, French Guyana, Martinique, Santo Domingo, Punta Cana, and Cuba. In our view, this was our main thinking at this time. We could fly anywhere with Air Caraïbes. If we wanted to as it was a full airline, we could fly to Tokyo, and we could fly to China. But, we found that most of our cabin crew was based in the West Indies which made it very difficult to fly to other destinations around the world. The second point, which is more important, is that Air Caraïbes like many airlines has a cost base increasing slowly for sure every year, and we have been thinking about that for a long time, and it is not impossible, but it is very difficult in the French system to make restructurations for the future with the same cost base. When we told the people of Air Caraïbes that we were thinking about growing, but we need to review the cost, they were very reluctant. So, we were thinking about that, and then came the idea we had in other situations, ok, let us go with the Air Caraïbes system and built a new one, a totally new airline from scratch, a blank sheet of paper and built a different structure, different name, different product, everything different, and then we built French Bee. We achieved a new product, for example, Air Caraïbes is three classes with business, but there is no business class on French Bee because we were targeting another market using other routes and other destinations. That is why we built this airline, to have a different cost base and a different product, we could have done it with Air Caraïbes, but we would not have achieved the same cost base.
(AG): So, when people normally think of low cost, they usually think of lower service. What is French Bee doing to change this idea of low-cost flying?
(MR): We had a lot of discussion about this, and everything is in the wording. I don’t like the way this notion of low cost, because low cost means low product, less maintenance, whatever, it’s tricky and you won’t be successful. We prefer to say smart cost, which means we built something from scratch, totally new, but we decided not to use some low-cost practices on key subjects, and I will give you two examples. One, we decided to build from scratch French Bee with the best aircraft for long-haul [flying], which is the A350, the 787 is a good one but we chose the A350. New aircraft, new technology, and flying more comfortable than the previous one, and this is not low cost when you buy an aircraft like the A350, it costs quite a lot of money, which we bought and lease. Secondly, let us take a subject that is totally absolutely non-discussable which is maintenance, with French Bee we decided to do maintenance with Air France Industries, Air France industries is definitely not the cheapest, but we want to not make any discussions about that.
(AG): What are you doing differently that low-cost airlines like WOW and Norwegian had failed at?
(MR): The fleet, which is one of the main differences. I don’t want to be too tough on our competitors, but let us look at WOW for instance, and also Norwegian and so on. Norwegian was launched with a lot of fanfare and noise. Norwegian at this time before they failed had two fleets, one fleet was a 737 fleet which was quite huge, and they also had a 787 fleet. I can tell you when you have one company and two fleets you are not anymore low cost because the crew would want to fly on the big one [plane] and they wouldn’t want to fly on the small one [plane], you would need two maintenance, two operations, this is totally different. You are adding complexity, and complexity is cost, so here we are simple, we have one type of airplane which is the A350 of which we have two types, the -900 and the -1000, but still, one fleet and we are focusing on the cost base.
(AG): On the topic of your fleet, how many aircraft do you currently have and how many are on order?
(MR): We have four A350-900s, most of them are flying only to the US, and we have two -1000’s which are the biggest ones. The -1000 is very well suited for the Réunion Island route, which is a very popular route that sees 1.5 million passengers per year, we have had that route since 2017 and already have 20% of the market share. We have a good cargo position in that market and the -1000 is good for that, and the second one [A350-1000] was introduced a week ago in Toulouse, France and we bought this one, not a leased plane because our financial structure is a bit weakened due to the crisis [Coronavirus], but we are still strong. Now we are focusing on the -1000, we have some others on order, but we have not yet decided to send them to French Bee, Air Caraïbes or something else. We have different positions with the two airlines, which makes us flexible.
(AG): Airbus recently completed a 13hr test flight with the A321XLR, are you looking at this aircraft or will you try to stick with the single fleet type like you mentioned?
(MR): We are trying to stick to the single fleet. I am looking at the A321XLR which is a bit late to be clear. It was supposed to be introduced in 2023 and now it’s 2024 making it a bit complex. In the beginning, the A320 family was medium-haul, you can fly long-haul with it technically speaking, is it suitable for long-haul flying, we will need to see about that. Because it is a single aisle plane, it does not have the same comfort, or the same noise level, so we will see. What we think is that obviously, a smaller airplane is easier to operate cause there are fewer seats to fill and less of the market you need to catch, but we have to be sure the cost per seat mile is the same as the big ones [The A350] and speaking today, I am not convinced of this. For example with the A321 you have two pilots and let’s say 180 people behind, with the A350 you have two pilots and 400 people behind, it’s not the same economics. At the end of the day we will see, we are not in a rush, and we are very happy with the A350 so let’s stick to that for now.
(AG): Most airlines have the economy section on the A350 configured as 3-3-3, what made you come to the decision for the high-density 3-4-3 that French bee went with?
(MR): Its two things, one is an economy thing, the more passengers you put into an airplane the better the economy of it is for your operation, but it is also balanced by comfort and what we think is that we have seen such an improvement in the technology into the new big airliners like the A350 that we could put more passengers into the cabin. The pressurization system is much better on A350 than the A321, vibration, noise protection, humidity, airflow, and so on, are all much better than on previous planes like the A330 and other older planes from Airbus, that you can put in more passengers in with the same level of comfort and even better comfort which is why we made this choice. Second, we are targeting only VFR, leisure passengers, and passengers traveling alone, we are not targeting business traffic. But beyond the crisis, these types of passengers are traveling more, the business traffic isn’t strong and I don’t think it will be strong for a long time due to things like zoom, skype, and so on. I think we made the right choice at the right moment and the right choice for the right customers. As I mentioned, we are not targeting high-level people who want to travel in very luxurious conditions, this is the job of Air France, British Airways, Delta, and others.
(AG): In the US, you serve New York, Los Angeles, San Francisco, and Miami, which are all coastal cities. Do you have plans on flying to cities inland like Dallas or Chicago?
(MR): We are looking at every opportunity and as I said before, internally speaking my first and highest priority for 2023 is to make us profitable again, we were profitable in 2019 and we haven’t been since then due to the Covid crisis, fuel costs, inflation, the dollar to the euro exchange rate, and we have to be profitable again first which I feel we will get to in 2023 and I am confident about that. A second point about the network, we are serving big routes that are along the oceans, New York, San Francisco, Miami, and LA because they are the biggest ones. If you fly into Dallas, Atlanta, or Chicago it is much more difficult for us today because we are still a small airline and we have no big commercial agreements with big airlines, if you don’t have an agreement with let’s say American and you fly into Dallas, you’re dead, you just don’t start that cause they will kill you immediately, unless you have an agreement with them for connecting traffic. So, we are focusing on points where we immediately don’t need a strong connection, the third target for us is to build that connection in the future. We already have an agreement with Alaska Airlines, which is working well ad we need to improve that and expand beyond. Then we can see how we will extend our network in the US, but we don’t think the extension will be fully based on connection, let’s take a route like Washington D.C., it’s probably a very good thing to fly to Washington from Paris, but it’s seasonal for the summer for people traveling alone, but we won’t get the traffic from the French or US Government, that will all go to Air France or United.
(AG): What made you choose San Francisco as the stopover for your Tahiti flights versus other large cities along the west coast?
(MR): At the time we decided to fly Tahiti, which is a French Territory obviously, and we just made the decision to stop by San Francisco because of two things, at this time all competitors were flying it via LA as a stopover, Air France and Air Tahiti Nui, so we decided to do something different because to add another flight to Tahiti from LA was not very interesting for the customer, so we decided to do it via San Francisco. The other reason why is that if you look at the market share, the biggest demand for Tahiti is from northern California and not southern California, and as we were on a standalone basis, no connecting traffic with American, Delta, or United, and we decided San Francisco would be the best point at this moment and we still think so. Now there is United flying San Francisco to Tahiti, I would prefer to fly it alone but it is what it is and it’s not our customer basis, most of the customers flying United to Tahiti are burning miles to do it, and I cannot get them anyways as if you are a US customer with a stockpile of miles with United, then you will fly United, so we are not loosing that much traffic and we are focused on people that are paying on their own without miles.
(AG): How does French Bee plan to compete with low-cost airlines like Norse and JetBlue both of which have recently announced New York to Paris flights?
(MR): JetBlue is a serious competitor. They have a very good brand and product, smaller airplane, but they are flying into CDG [Charles De Gaulle], so I think the biggest headache of JetBlue will be to Air France not to us, because it is not the same segment or type of customer, I think they will be a strong competitor to Air France into CDG. We don’t see them as a big danger for us, we even think it could be better for us because JetBlue is a small competitor going into CDG so far and the competition is good. As far as Norse, we will see, I think they will fly the 787 and into CDG as well, but they are very Norwegian minded, to be clear Norwegian has not been successful in the past, they have the same weak points as the past Norwegian, so okay, competition is competition, we have to be better than them. We now have a good presence in the US market and in the summer 2022 market we had more customers coming to France from the U.S. than we had France going to the U.S., so we will see, so at the end of the day if there are more passengers that want to fly and more companies that want to fly these customers than it will work, and if it works for everybody than we will be happy.
(AG): What is the first thing you want passengers to notice when they step on your aircraft for a flight?
(MR): I think that first of all, we want to tell them two things, one, we need to tell them that you will be flying on one of the best airliners in the world today, the best technology, it’s totally new. When you look at the transatlantic market you see a lot of old triple-sevens [Boeing 777’s] so when you fly French Bee you will fly on only A350s, and I think this airplane is going to be a great success they will sell and build a lot of them. Second, we want to tell you that you are boarding a French airplane with a product that is not at all luxury, but it’s a product where you get the value for the money you paid, it is a denser plane but its new technology so one thing is balancing the other one. The saving you will get by flying French Bee will make your holidays in Europe cheaper and they will benefit from that price.
(AG): You already partner with Alaska Airlines, do you plan on partnering with any other airlines in the United States as you grow?
(MR): Yeah, we are trying to build something but it’s not easy because it’s a complex system where you need to build connections and interline systems. We now have a very good connecting system in France with TGV, the high-speed train and we can connect 17 stations in France, and we want to extend that in the U.S., it’s time-consuming and we need to do that but its one of our more important targets for 2023.
(AG): With the exception of Réunion, every destination of yours is international, how did Covid restrictions affect French Bee?
(MR): It was a big impact, but because we are a small airline and a private company with one shareholder we were among the ones that can react very quickly, we made immediate decisions to stop and make some airplanes grounded and make some airplanes only cargo with medicine. For instance, we have been chosen by the French government to operate some medical flights to take Covid people that were injured into Tahiti on a special medical flight from Paris, Guadalupe, and Martinique. We did that because we could react faster than the others, Air France could’ve done medical flights, but at the end of the day, we did most of them because the French Government called and asked when we could start and we said in five days, so our reaction time gave us the capacity to adapt along with our financials. We also didn’t furlough any people, we did reduce salaries and it caused some troubles, especially with the inflation here [in France] and other countries, but we didn’t furlough anyone. Since we didn’t furlough anyone we now have the capacity to fly new frequencies and routes to Réunion, New York, and now Miami. Second, we didn’t change our fleet plans, we took delivery of the -1000 variant of the A350 which is not a cheap plane, and we kept our order. We could’ve called Airbus and told them we are very troubled financially, and that nothing has been like this before and canceled the order, but we said no and kept the order, we did move the order back slightly, but we didn’t cancel our aircraft orders during the crisis.
(AG): Is French Bee looking at any leisure markets in Asia?
(MR): Today no, because Asia is still hit heavily by the virus, not only China. Secondly, flying to Asia can be very costly because of the very very sad dramatic issue with Ukraine, you cannot overfly Russia and a lot of other countries like Iraq and Syria, so today no projects but in the future, we are looking at this kind of thing but it will depend on the time they are totally open again. The kind of customer we are looking for is leisure, VFR, and families, flights to Asia can be very complex, you need a special visa, you need to get a Covid test, go to the hospital, no way. Asia is not on our list, our network goal for 2023 is to build up our U.S. network.
(AG): More than half of your destinations are in the United States, does French Bee plan on joining the TSA PreCheck or Global Entry program?
(MR): Yeah, we are working on that, people in the operations center are moving but it is complex and not easy. But, of course, we want to go to the most seamless possible way of entering and getting out of the U.S. when traveling, a lot of work needs to be done but we are working on it as we want traveling to be easier
(AG): Time for a fun question, if the airline had unlimited funds and capital with zero restrictions, what would you do with it?
(MR): Well, first off, I never dream about getting unlimited money, but I’ll answer, of course, it would never happen and anyone in business knows money is not unlimited and I think its better this way to be clear, as we have seen a lot of projects with huge money and they do stupid things and having limited money people tend to be more careful. But, for the answer, I would say if we had more financial capabilities we would secure more A350s cause its a huge success and if you order planes today you won’t get them off the line for four years. The second thing I would do is to improve our data system, we already sell on Amadeus, Expedia, and other sites but I think that digitalization is already done in air transport but can and needs to be extended, if we don’t invest in that with more money and more intelligence. Like Amazon or Alibaba, they will catch the market and decide who the customer is and where they belong, and that’s a danger for us. Amazon knows more about their customers than we know about ours, for example, if you buy a water bottle on amazon today you’ll get it tomorrow morning but immediately they will tell you, by the way, we have another bottle of water that’s better than this and would you like a new one, so they can better understand their customers than we understand ours. So, to make a long answer much shorter, if we had unlimited money we would invest in more airplanes, and invest in data resources to better understand what my customer truly needs.
Thank you to Marc Rochet for talking to me about the airline and giving me some very in-depth and great answers to my questions. A video account of this full interview can be found below for those that would prefer to watch it.
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