Air France’s powerful SNPL pilots’ union dropped its years-long resistance to the expansion of Transavia and voted to allow the French unit of the Franco-Dutch group’s low-cost carrier to grow beyond 40 aircraft. Air France and the SNPL agreed to the cap in 2014 following a two-week strike by its pilots against plans by the group’s management—at time led by CEO Alexandre de Juniac—to expand Transavia into a pan-European LCC and double its fleet to 100 aircraft by 2017 to help fend off discounters like Ryanair and EasyJet. 

 Air France-KLM’s new CEO, ex-Air Canada executive Ben Smith, relaunched the talks on the touchy subject and the SNPL, which also changed management end last year, on July 13 opened a referendum on a draft agreement that would scrap the 40-aircraft limit for Transavia.  The ballot closed on Wednesday, and 78 percent of the SNPL Air France members who voted supported the proposal. Air France-KLM remains the only one of three big airline groups in Europe without a large in-house LCC. International Airlines Group has Vueling and Level, while Lufthansa has Eurowings. Transavia Holland and Transavia France operate 79 Boeing 737-800/700s, of which the French airline deploys 38 units.

“Transavia France will be able to grow in economically balanced conditions and without any restrictions on the number of aircraft for the Air France group,” Air France-KM said in a short statement released Wednesday. “The company will be able to accelerate its offensive in the highly competitive low-cost market, departing from Orly and regional French stations,” it noted, without releasing more details. Transavia France currently maintains its largest base at Paris-Orly Airport and secondary bases in Nantes and Lyon.

Although the new agreement will remove the cap on the number of aircraft, it also will ensure that Transavia will not impair the growth of Air France’s mainline activities, SNPL Air France vice-president Guillaume Schmid told AIN. Specifically, Transavia will not operate from Air France’s Paris-Charles de Gaulle hub, will not venture into long-haul or transatlantic services, and will not operate widebody aircraft. Transavia’s future network must also exclude domestic flights. Flights may not extend beyond 3,000 nm.  “We want to make sure that flights aboard new generation single-aisle aircraft, such as the Airbus A321XLR that can serve the U.S. East Coast from France, are reserved for Air France,” Schmid explained.

The agreement also calls for Air France to operate “at least” 110 narrowbody aircraft on its mainline operations, despite Transavia’s growth, Schmid revealed. A similar guarantee by management exists under the 2014 agreement, but that was due to expire in 2022 and now will extend to 2030. Air France currently operates 114 single-aisle jets—all A320 family aircraft— and on Tuesday announced an MoU with Airbus covering a firm order for 60 A220-300s as part of its medium-haul fleet replacement. The A220 will come configured with 149 seats, according to Air France-KLM’s first-half results presentation released Wednesday.

Management and SNPL have discussed fleet growth, said Schmid. “For the next four years expansion will be with 737-800s,” he noted, adding that in any case such a scenario represents the only short-term option for Transavia, which applies the typical LCC model using a single aircraft type. “The [Boeing 737] Max is the natural extension to the 737NG fleet but we’ll have to wait and see how this situation evolves,” he explained. “Even if the Max soon is recertified and allowed to fly, there are no Max aircraft available in the next four years.”

Schmid does not expect management will push for exponential growth rates or the acquisition of an independent LCC because Smith’s primary focus centers on improving the profitability and shareholder value of the Air France-KLM Group. Executives in the past have openly admitted the company’s onerous debt prevented it from buying another airline. Transavia (France and Holland jointly) reported an operating margin of 10.4 percent in second quarter, with an absolute operating profit of €52 million. It carried 4.9 million passengers, up 6.6 percent on the same period a year earlier.

The company’s objective calls for Transavia to grow to around 60 aircraft in 2024. The company would source the additional 737-800s from the leasing market aircraft or buy them outright.

The agreement between the SNPL and the company still needs formal signatures.