One of the most promising initiatives for Air Austral was the long-haul low-cost project, an innovative idea which aimed to make air tickets between La Réunion Island and France 30% cheaper all year round, without subsidies. Presented in 2007, backed by a partnership with Airbus to bring the 800-seat Airbus A380 into service and managed via a dedicated subsidiary, Outremer 380, this project seemed to be the key to a more competitive future for La Reunion’s airline. It would have enabled Air Austral to capture a large share of the intercontinental travel market while reducing costs.
However, this ambition came up against opposition from Air France, which was unable to compete with these low fares, and the political support of Didier Robert, then President of the Réunion Region. The latter’s clientelist policy, which consisted of financing territorial continuity through discount vouchers on plane tickets, hampered this project. In 2012, he replaced Gérard Éthève with an Air France executive at the helm of Air Austral. As a result, the idea of a long-haul low-cost airline was abandoned. This was a major blow for Air Austral.

The emergence of French Bee: a success story that Air Austral failed to grasp

Although the long-haul low-cost project failed to materialise on La Réunion, it has not disappeared for all that. Marc Rochet, a former Air Austral executive, joined Air Caraïbes and launched French Bee, a long-haul low-cost subsidiary which quickly made the Paris-La Réunion route a core part of its business. Using Airbus A350s, this airline democratised access to low-cost air tickets and quickly achieved a 20% market share on the Paris-La Réunion route.
The creation of French Bee has therefore achieved what Air Austral could not: the introduction of an efficient low-cost model adapted to territorial continuity. This success is all the more regrettable given that, had the project been carried out by Air Austral, the profits and jobs created could have benefited La Réunion directly. But these opportunities have been sacrificed by political choices and management that have pushed the company into decline.

Risky strategic decisions

In addition to the cancelled long-haul low-cost project, the Air Austral management appointed and supported by Didier Robert has taken several decisions that have weakened the company’s financial situation. Among these, the resale of one of its Boeing 777-200LRs, a strategic aircraft enabling a direct flight between Mayotte and Paris, deprived Air Austral of a significant resource. In addition, the entry into service of the Boeing 787 has proved problematic, with technical problems affecting the company’s credibility.
Even before the COVID-19 crisis, these decisions had led Air Austral to post structural deficits. The injection of public funds from Région Réunion enabled the company to keep its head above water, but the pandemic highlighted the fragility of its business model. The crisis exacerbated its losses and demonstrated management’s inability to recover without external support.

A missed opportunity

Air Austral is currently struggling to get back on its feet. The long-haul low-cost project, which could have been a lever for competitiveness and autonomy for the airline, has been stifled by political interests and a short-termist vision. While French Bee, the concrete version of this project, is succeeding where Air Austral has failed, La Reunion’s airline is lagging behind.
The decline of Air Austral, and the rise of French Bee, is a reminder of the missed opportunities and strategic decisions that could have given Réunion a more autonomous and prosperous airline business model. Today, the airline is at a crucial crossroads.

M.M.