Air France says the Paris 2024 Olympic and Paralympic Games left a €160 million (US$172 million) dent in its finances during the third quarter as foreign tourists steered clear of the French capital during the two sporting spectaculars.
The airline, which is part of the wider Air France-KLM Group, had warned for some time that the Olympic Games were expected to have a significant impact on its operating results during what is traditionally its busiest and most profitable period.
Paris is regularly one of the top ten most visited cities in the world, with 14.4 million foreign tourists making a trip to the City of Lights in 2023 to take in iconic sights like the Eiffel Tower, Arc de Triomphe and, of course, the Louvre Museum.
The International Olympic Committee maintains that hosting the game can bring significant economic benefits to countries that host it, but Air France, like other airlines, had seen a slump in bookings in the lead-up to the games as the entire French tourism industry reeled from the unexpected negative impact of the Olympics.
“On the passenger side, less international inbound traffic to Paris and less travel from France as a consequence of the Olympic Games, resulted in €160 million less passenger unit revenue,” the airline as it presented its Q3 results on Thursday.
“The international markets showed a significant avoidance of Paris while travel between the city and other destinations was also below the usual summer average as residents in France postponed their holiday,” the airline explained.
Air France said that it tried to make up for the drop in passengers heading to Paris as their final destination by encouraging more transfer passengers connecting through its Charles de Gaulle hub but these customers have far smaller yields.
Despite the short-term impact of the games on the Air France-KLM Group’s finances, the airline remains optimistic about its long-term legacy, saying that it “provided a unique platform to demonstrate the Group’s operational expertise and capabilities while offering unparalleled visibility for France as a destination.”
The airline has also decided to pay a one-time bonus to Air France staffers totaling around €50 million as a reward for the “strong operational performance” shown during the Olympics.
Excluding the impact of the Olympics, Air France-KLM said its group-wide operating results for the period remained stable at €1.2 billion, but the Franco-Dutch company is still battling rising costs at KLM that are weighing on profits.
Last month, KLM announced drastic cost-cutting measures that could include mass redundancies as the airline attempts to improve its operating margin. KLM also faces challenges to building capacity at its Amsterdam Schiphol hub given the government’s desire to reduce noise pollution at the airport.
