Air France-KLM CEO Ben Smith Talks Gulf Flights

Summary

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Bloomberg Talks – Air France-KLM CEO Talks Gulf Flights

Date: June 7, 2026
Host: Guy Johnson (Bloomberg)
Guest: Ben Smith (Group CEO, Air France-KLM)
Theme: Air France-KLM’s return to Gulf flight routes, operational strategy under uncertainty, competitive landscape, and upcoming market opportunities.

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Episode Overview

This episode centers on Air France-KLM's cautious return to key Gulf destinations amidst ongoing regional volatility, managing jet fuel constraints, the potential for future route consolidation, and the broader competitive challenges the airline faces post-pandemic and amidst potential price wars. The conversation also touches on industry M&A chatter, specifically speculation around EasyJet.

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Key Discussion Points & Insights

1. Resuming Gulf Routes & Security Concerns

• Cautious Return: Air France-KLM has resumed flights to Riyadh, working closely with the French state for security, but other regional destinations like Dubai, Tel Aviv, Beirut, and Dammam remain closed.

  • Ben Smith [01:02]:
    “Today we're very cautious in returning the cities which we've, we've pulled out of. So we've gone back into Riyadh, close cooperation with the French state from a security perspective... We have not reopened Dubai as of yet. Tel Aviv, Beirut are still closed...”

• Criteria for Reopening: No specific peace deal required, but the key factor is a reasonable confidence in operational safety for staff and passengers.

  • Ben Smith [01:52]:
    "It doesn't necessarily need to be a peace deal, but we need to have confidence that we're not going to see any danger around those airports."

2. Jet Fuel Availability & Capacity Planning

• Summer Assured, Future Uncertain: Fuel secured through August and full summer capacity maintained. However, the environment remains unpredictable beyond that.

  • Ben Smith [02:34]:
    "We secured fuel through the end of August… It's a little unfortunate that a lot of customers are still not confident that there'll be enough fuel. So we're seeing a late booking environment… As far as the fall goes... too early for us to have made a decision on how much capacity we keep in the market."

• Impact of Price Spikes: Sharp fuel price increases would force ticket price hikes, likely reducing demand and prompting route or frequency adjustments.

  • Ben Smith [03:30]:
    "If the fuel significantly spikes, we're going to have to raise ticket prices… So the need for the full capacity that we had planned is probably not going to be...the case."

• Flexible Strategy: No preset plan for route consolidation, but the company is adept at reallocating aircraft and adapting to shifting market constraints, drawing from experience during COVID.

  • Ben Smith [04:18]:
    "Depending on how the availability and price of fuel does evolve... we'll adapt. If it means removing frequencies, consolidating frequencies, we'll make do whatever comes of it."

3. Shifting Passenger Demand and Route Preferences

• Gulf Overflight vs. Nonstop Options: The Gulf remains critical for connecting traffic to Asia, but market disruptions have driven some travelers to prefer nonstop European routes, potentially altering long-term demand patterns.

  • Ben Smith [05:50]:
    "It's another example of how dependent Europe is and European customers are on flying over the Gulf... when full capacity comes back in the Gulf... 5%, 10% of customers that... would have flown over the Gulf to prefer to fly nonstop."

• Anticipating Price Wars: As Gulf carriers (notably Emirates) restore capacity, fierce pricing competition is expected, especially without a "level playing field."

  • Ben Smith [06:41]:
    "The three Gulf carriers, Turkish, they're extremely aggressive. That's not new for us... This is not, it's not going to be a surprise to us."

4. Pricing, Demand Resilience & Premium Trends

• Strong Post-Pandemic Demand: Despite higher fares, booking levels are robust, especially in premium cabins, though travelers now book closer to departure.
  • Ben Smith [07:26]:
    "Demand is holding. Paris is still a very attractive destination. Amsterdam is still a very attractive hub... strong demand, predominantly in the premium cabins. And we're not seeing customers avoid the trip..."

5. Industry M&A and the EasyJet Situation

• No Involvement in EasyJet Bids—Yet: Air France-KLM is not participating in acquisition talks but recognizes EasyJet's assets as undervalued and attractive. Maintains positive views of both EasyJet and Castle Lake, the private equity firm rumored to be making bids.

  • Ben Smith [08:24]:
    "No, we're not involved. Is there any interest? It's not something we've given much thought. I mean, EasyJet is a...very impressive airline...Their market cap is low. So it's no surprise...Castle Lake is an excellent private equity firm as well."

• Industry-Wide Interest Expected: Open to dialogue if approached, sees EasyJet's slot portfolio and strategic positions as highly valuable.

  • Ben Smith [09:52]:
    "For sure. And I would expect all of our competitors to do the same."

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Notable Quotes

• On route reopening and security:
  “We need to have all of our stakeholders aligned to put us in a comfort position to go.” — Ben Smith [01:35]

• On adapting to supply shocks:
  "Covid was probably the most challenging for us to manage capacity and frequencies..." — Ben Smith [04:18]

• On the competitive environment:
  "Without a level playing field, we're not flying non stop to many of the routes that...would be able to support." — Ben Smith [06:41]

• On mergers and acquisitions:
  "Their [EasyJet’s] portfolio is quite impressive...it's no surprise to us that there's a party...looking and, you know, buying them..." — Ben Smith [09:19]

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Timestamps for Key Segments

• 00:35–01:44: Air France-KLM's return to Riyadh and security requirements
• 02:21–03:56: Fuel security, pricing, and capacity adjustment strategies
• 04:18–05:34: Operational flexibility and intra-group route adjustments
• 05:34–06:41: Shifting travel demand and competitive risks in the Gulf region
• 07:00–07:49: Demand elasticity and premium travel trends
• 07:49–09:43: EasyJet’s M&A rumors and broader industry implications
• 09:52–End: Air France-KLM’s openness to possibily engaging with Castle Lake/EasyJet in the future

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Memorable Moments

• Ben Smith’s frank acknowledgment of price sensitivity:
  "If the fuel significantly spikes, we're going to have to raise ticket prices… there'll be less demand." [03:30]

• On industry challenges and adaptability:
  "Airplanes can move around relatively easy and quickly. We managed to do that over the last...few weeks..." [04:54]

• On being ready for a price war:
  "That's not new for us. As I said, without a...level playing field, we're not flying non stop to many of the routes..." [06:41]

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Episode Summary

In this concise yet wide-ranging conversation, Ben Smith of Air France-KLM outlines the airline's prudent approach to reopening routes in the volatile Gulf region, discusses the challenges of jet fuel supply and market uncertainty, and acknowledges the persistent threats and opportunities from both competition and industry consolidation. The dialogue reveals a clear-eyed strategy—flexibility, focus on safety, and an openness to future opportunities—with the airline positioning itself to adapt rapidly to whatever the next months may bring in a transforming global air travel market.

Transcript

[Indiana University Narrator]

Indiana University strengthens tomorrow's workforce with practical, real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu. Edu Impact,

[Ben Smith]

Bloomberg Audio Studios Podcasts Radio

[Guy Johnson]

News well, this morning the World Airport Transportation Summit is underway in Rio de Janeiro. Let's go live to our colleague Guy Johnson. He is co anchor of Opening Trade

[Michigan Business Representative]

and standing by with the CEO of Air France klm.

[Guy Johnson]

I certainly am. Good morning, guys. Thank you very much indeed. Yeah, I'm here with the group CEO of Air France klm, Ben Smith. Good morning. Okay, nice to see you. So the news overnight is that you have just announced that you're flying back in Syria, you're flying back into the Gulf. Is this the first of many steps or is this the first step you are taking? And then you're going to assess the situation and then you're going to look at what the rest of the Gulf is going to be looking like. What is the situation in the Gulf for an airline like you?

[Ben Smith]

Well, today we're very cautious in returning the cities which we've, we've pulled out of. So we've gone back into Riyadh, close cooperation with the French state from a security perspective with our cabin staff, with our pilots. We have not reopened Dubai as of yet. Tel Aviv, Beirut are still closed. Damam is still closed for us.

[Guy Johnson]

So any what would get you back into those, into those routes? What do you need to see in terms of the situation on the ground? What did you see in Riyadh? What do you need to see elsewhere?

[Ben Smith]

Well, I think we need, as I just said, we need to have all of our stakeholders aligned to put us in a comfort position to go. And right now we're not there on the destination we have.

[Guy Johnson]

But does it need a peace deal? Does it need a full cessation of hostilities? Does it need what kind of boxes do you need to tick?

[Ben Smith]

Yeah, I mean, peace deal, no peace deal as long as we're confident that it's not going to have an impact on safety at the particular airport. It doesn't necessarily need to be a peace deal, but we need to have confidence that we're not going to see any danger around those airports. Okay. So Riyadh, there never was and there doesn't seem to be any today. So we know as a precaution we pulled out when the fighting started, but now we're comfortable to go back in.

[Guy Johnson]

Let's talk about the situation when it comes to fuel I think you updated the market a couple of days ago. You talked about the idea you definitely got enough fuel for the summer. What happens after the summer? You get the summer and then what?

[Ben Smith]

So we've, we secured fuel through the end of August. We've got our full capacity in place. We've not, we have not pulled any of our capacity. It's a little unfortunate that a lot of customers are still not confident that there'll be enough fuel. So we're seeing a late booking environment a little, you know, people are booking a little closer than we've seen in the past. As far as the fall goes or the winter goes a bit too early for us to have made it decision on how much capacity we we keep in the market.

[Guy Johnson]

Okay, just in terms of that, that messaging you've had to deliver. At the beginning of the war there was this fear that there wouldn't be enough jet fuel. And the industry came out very quickly and said we've got enough fuel, the summer is going to be fine. If you went up significantly from here, say in July or August, you see a big spike in fuel, are you effectively guaranteeing that all the routes that you're committing to now you are going to fly? I'm going to get there and I'm going to get home.

[Ben Smith]

Well, first off, if the fuel significantly spikes, we're going to have to raise ticket prices to compensate for that. And when you raise ticket prices there'll be less demand. So the need for the full capacity that we had planned is probably not going to be going to be the case. So how we balance that out with the availability of fuel, the price of fuel, the willingness for customers to pay, we'll see how that.

[Guy Johnson]

So you might consolidate some routes. Is there a plan if you went up further to you would chase change Maybe some of the current routes, the frequencies kind of where you fly, maybe the overlap between Air France and KLM changes. Is there a plan in place if fuel goes sharply higher from here to kind of consolidate within the group?

[Ben Smith]

Sure. I mean we've, our, our companies are old, our global, our global brands and a lot of experience in adapting last minute, medium term, long term. Covid was probably the most challenging for us to manage capacity and frequencies. So yes, depending on how the availability and price of fuel does evolve over the next few months, we'll adapt. If it means removing frequencies, consolidating frequencies, we'll make do whatever comes of it.

[Guy Johnson]

But that's not a plan you've got ready to go. That's something you will do Effectively kind of on the fly.

[Ben Smith]

Correct. I mean the supply of fuel, price of fuel could be different in different parts of the world. So to guess what's going to happen, it's pretty difficult to do that. But you know, airplanes can move around relatively easy and quickly. We managed to do that over the last, the last few weeks where we've taken some capacity other parts of the region in our network and started to use it on routes overflying the Gulf where there was, there's been a lack of capacity. So to Southeast Asia as an example where a big part of the European traffic was going via the Gulf. Now we've been able to offer something that is important.

[Guy Johnson]

Let's just talk about that for a minute. How sticky do you think that demand is to go over the Gulf? That is, do you think people want to, will want to fly through the Gulf after this? Once, once there is a peace deal, do you think you may retain some of that traffic going out to Asia?

[Ben Smith]

Well, I think it's a, it's another example of how dependent Europe is and European customers are on flying over the Gulf to destinations that I think could support more non stop service with an unlevel playing field. You've got companies that are based in the Gulf that have been able to attract a big portion of the European demand via the Gulf. So when full capacity comes back in the Gulf, I would expect some, you know, is it 5%, 10% of customers that you know, in the past would have flown over the Gulf to prefer to fly nonstop. But the Gulf carriers are going to be, our expectation is they're going to want to get their full capacity in place.

[Guy Johnson]

The talk is possible, the talk is, is going to be a massive price war once they come back. Tim Clark's going to want his capacity

[Ben Smith]

back at Emirates for sure. For sure.

[Guy Johnson]

So you ready for that? What does that look like?

[Ben Smith]

Look there the, the three Gulf carriers, Turkish, they're extremely aggressive. That's not new for us. As I said, without a, without a level playing field, we're not flying non stop to many of the routes that under a normal scenario where there would be a level playing field that would be able to support. So this is not, it's not going to be a surprise to us.

[Guy Johnson]

Okay, just back to the issue of pricing and demand. Will the consumer take much more? The story post, post pandemic has been that I'm going anyway. I don't care what the price is, I'm going, I'm going to fly at the front of the plane. Demand has Been very strong. If prices get pushed much higher from here, does that still apply? Are you confident that the pricing won't affect demand? What are you, what are you expecting to happen?

[Ben Smith]

Well, we're pleasantly surprised that demand is holding. Paris is still a very attractive destination. Amsterdam is still a very attractive hub to, to flow over. So what we're seeing on the bulk of our network is strong, strong demand, predominantly in the premium cabins. And we're not seeing customers avoid the trip. Sometimes, as I said, they're booking a little closer in. But demand is.

[Guy Johnson]

That's so about M and A. Okay, let's talk about EasyJet. So EasyJet, for those that know, is a, is a low cost carrier based in Europe. Castle Lake, we understand, has made an approach. The details of it remain sort of fairly opaque at this point in time. You have some experience in working with them. We've obviously seen what the SAS deal did and how you, and how you manage that process. Air France was the first name that came to mind. When I heard that they were involved, you came to mind. Any conversations with Castle Lake, Any interest? Are you in any way involved in this process? What's happening?

[Ben Smith]

No, we're not involved. Is there any interest? It's not something we've given much thought. I mean, EasyJet is a, you know, it's a very impressive airline. They've had a fantastic, I would say history in how they've developed. They've got some great positions, you know, in Geneva, London, Gatwick, etc. So it's very attractive. And their market cap is low. So it's no surprise to us that there's a party or there's a group that's looking and you know, and buying them or buying a portion of them. Not a surprise to us. You know, Castle Lake is an excellent private equity firm as well. We've had, we had and still have a great experience with them. And as, as you've just said. So it's not surprising to us, but we're not involved in this transaction.

[Guy Johnson]

But your sense would be that the market is undervaluing that business right now, Undervaluing the slots in Geneva and places like that. Undervaluing the slots that they have for Airbus Aircraft in Toulouse. Your sense is that that is being undervalued at the moment, hence why we're

[Ben Smith]

seeing the interest for the spot. Portfol is quite impressive. The number of slots they have at Gatwick, I mean, they've got some new slots at Linate that they gained through the remedy slots that Lufthansa had to give up with their purchase of ita. And you know, even what they have at Orly in Paris is a little uncomfortable with the position they have in Orly. So it is impressive.

[Guy Johnson]

So if Castle Lake came to you, you're sounding like you would be. You think this could be an interesting opportunity if they came and wanted to talk to you, you pick up the phone?

[Ben Smith]

Oh, yeah, for sure. Y and I would expect all of our competitors to do the same.

[Guy Johnson]

Okay, but. But yeah, I don't think IAG would work very well, but I could see Air France may be working. Do you expect the call? Do you think they're going to come to you?

[Ben Smith]

I think. I don't know. I mean I think I asked that

[Guy Johnson]

question to fairly early stage in the process.

[Ben Smith]

I think so. Okay, so.

[Guy Johnson]

But it's great to catch up.

[Ben Smith]

Yeah. Thanks guy.

[Guy Johnson]

Really appreciate it. Thanks very much indeed for spending some time with us today. Ben Smith, the group CEO at Air France klm. Thank you very much.

[Indiana University Narrator]

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[Michigan Business Representative]

Edu Impact as industries evolve faster than ever, companies need an environment that accelerates strategic growth. And Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most. A resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work life balance. With our unified T Michigan approach, businesses scale faster and compete at the highest level. Michigan Pure Opportunity Seize your opportunity at michiganbusiness.org.