Air France has announced that the 2024 Summer Olympic Games being hosted by Paris may harm its financial performance over the period, as tourists avoid traveling to the city during the Games. Rather than acting as a huge draw to France’s capital city, the airline says that the Games are a deterrent to many who might have otherwise traveled to Paris throughout the Olympics, being held between July 26 and August 11, 2024.
According to the carrier, the impact of the ‘lost’ revenue from tourists who decide to stay away is forecast to be in the region of €180 million ($193 million).
“International markets show a significant avoidance of Paris,” the company said in a statement released on July 1, 2024. “Travel between the city and other destinations is also below the usual June-August average as residents in France seem to be postponing their holidays until after the Olympic Games or considering alternative travel plans.”
Despite this downturn in traffic, the carrier has stated that it is not planning to scale back capacity during the June to August period on any routes and stated that it will provide further details when the airline presents its half-year results on July 25, 2024.
“Travel to and from France is expected to normalize after the Olympic Games, with encouraging demand levels projected for the end of August and the month of September,” Air France’s statement added.
The airline had been hoping for a boost to its brand image and bottom line from the Games. Indeed, as reported by AeroTime in April 2024, the carrier launched a dedicated advertising campaign highlighting its status as an official partner of the 2024 Paris Olympics.
As recently as April 2024, Air France was publicly commenting on a positive trend in ticket sales for the 2024 summer period and said it intended to increase seat capacity by 5% over summer 2023.
Air France had planned to use the events to boost its brand and show off its services. It has hired hundreds of temporary staff to help ensure smooth travel for athletes and their equipment at airports. The airline expects to transport around a fifth of the Olympic athletes and just over a third of the Paralympic athletes, being held between August 28 and September 8, 2024, following the Olympics.
However, as has been seen previously in other Olympic host cities while the Games are on, ambivalent tourists not interested in sports tend to avoid those cities to avoid crowds, congestion on public transport, and elevated accommodation costs.
While the French aviation trade association Fnam said it couldn’t confirm tourists were avoiding Paris, Air France’s statement corresponds with data released by the Paris tourism office. It recently forecasted a 14.8% drop in foreign arrivals in July 2024 compared to the same month in 2023 and a 16.4% drop from 2019. Additionally, hotel occupancy rates in the first ten days of July are on average 60% percent, a drop of around 10% percentage points from 2023.
Some 15 million visitors are predicted to attend the Games, including two million from abroad, according to the Centre for Law and Economy of Sport (CDES), which has been monitoring the Paris Games for the International Olympic Committee and the Paris 2024 organizers.
Financial outlook
The peak summer season is crucial for the finances of airlines based in the northern hemisphere as it helps generate the majority of annual revenues. This downturn will therefore come as an unwelcome distraction for an airline that was hoping to capitalize on the Games being hosted by its hometown.
In the previous financial year, the Airbus-KLM Group posted a net profit of €931 million ($996m) in the third quarter, nearly the exact amount of its record annual earnings. However, the warning over the summer 2024 period came as the group has struggled in 2024 so far, losing €522 million ($559m) in the first quarter on rising costs and geopolitical tensions despite a higher number of passengers and higher ticket prices.
To offset spiraling losses, the airline group has launched a cost-cutting strategy including a recruitment freeze for both administrative and non-operational staff.