Air France-KLM Group exec Angus Clarke is shaking up the skies

Air France-KLM Group exec Angus Clarke says it will take up to three years for airfares to return to normal and the aviation market is ripe for consolidation.

Keen on aviation since he was a child, Angus Clarke now chairs Air France-KLM’s commercial committee based in Europe. Picture: Jane Dempster

Angus Clarke, the Sydney-born chief commercial officer of Air France-KLM Group, says it could take three years before airfares return to normal given labour, supply chain and aircraft maintenance capacity shortages.

The son of the late David Clarke, co-founder and executive chair of Macquarie, Mr Clarke was expected to follow his father into the world of banking.

Instead he divides his time between Amsterdam and Paris, overseeing 10,000 staff at Air France-KLM, an airline expected to record more than €26bn ($38bn) in revenue for 2022 – approaching pre-pandemic levels – some two and half times that of Australian carrier Qantas.

Mr Clarke, a specialist in aircraft asset finance and vice president of Air France-KLM, said a perfect storm – including a combination of high inflation and interest rates, lack of labour and the possibility of major recession following the European summer – had hit the industry.

“Global airline operations will struggle to grow beyond 2019 numbers and the other thing is the manufacturing of wide bodied aircraft in particular has been cut in half,” said Mr Clarke, who is in Sydney for the holiday break.

“You would have to say by the end of the third year we could be back to normal, whatever normal means anymore. It could be the end of 2025. Sounds like a long time doesn’t it?”

Mr Clarke started with Qantas in 1996 under the airline’s then chief executive, the late James Strong, as manager network development. Keen on aviation since he was a child, Mr Clarke now chairs Air France-KLM’s commercial committee.

Angus Clarke says the performance of Australia’s airlines post pandemic is repeated across the globe. Picture: Jane Dempster

Since September he has overseen pricing and revenue, distribution, loyalty, digital and e-commerce, joint ventures and network strategy for the airline which services Europe, southeast Asia and the Americas.

With 25 years of aviation experience under his belt Mr Clarke also looks after group fleet strategy for Air France, KLM and the group’s budget carrier Transavia.

But Mr Clarke does not believe the performance of Australian airlines during the pandemic, particularly high ticket prices, loss of baggage, long call centre delays and cancelled flights, was different from what consumers have grappled with elsewhere.

“I think it’s quite positive to be honest with you. I think the short term problems that they are having (in Australia) aren’t dissimilar to what a lot of airlines are experiencing,” he said.

“And we’ve all got high ticket prices right now. We’ve all got tight capacity because we have struggled to bring the planes back quickly. I think Qantas and to a lesser extent Virgin have struggled … because of the same issues, the supply chain of parts and the lack of labour in the maintenance organisations.”

“There’s just a general labour shortage and maintenance capability right now. All this pre-Covid capacity is out of the market and that is what’s driving high fares. Operational performance generally across the globe has been a little bit inhibited by letting people go and people taking voluntary retirement packages,” he added.

Around 8000 Air France staff left the airline voluntarily during the pandemic but crucially the company kept its pilot recruitment program going, leaving it in a better position than others to reinstate capacity.

“So we still have luckily, which is a good thing, a mature, experienced workforce,” Mr Clarke said. “I just think it was different out here in Australia, you saw Virgin go into bankruptcy, so they had to restructure, and Qantas had to fight for survival.”

Air France planes parked on the tarmac at Paris Charles de Gaulle Airport in 2020. Picture: BERTRAND GUAY / AFP

While Qantas was handed $2bn in taxpayer funded wage subsidies to get it through the pandemic, Air France-KLM was given around €10.4bn in state aid – which they are now paying back.

Mr Clarke told The Weekend Australian that the aviation market was ripe for consolidation.

“There’s nothing imminent but we are looking at stuff,” he said.

“So what is obviously out there is at the moment the budget carrier Norwegian and Finnair, which was crippled by the lack of Russian overflight rights.

“We might not be rushing there … then you also have TAP Air, the Portuguese airline and easyJet. I wouldn’t say any of them are in play in particular, but that’s what’s left to consolidate with.

“If you can generate a positive business case out of doing something with any of them, that’s where the opportunity is most likely going to be.”

Mr Clarke says there has also been a turnaround in labour relations at Air France since the start of the Covid-19 pandemic.

So what’s Clarke’s next move?

After 12 years offshore, Mr Clarke says he would like to return to Australia, adding that he would want to complete the turnaround of Air France-KLM including its fleet renewal which will peak in 2025 and start tapering off in 2026.

“My next ambition is to run a decent sized airline but I am committed to assisting Ben and the team with turning this around,” Mr Clarke said. “Covid in a strange way has got us to rethink everything. Covid has sharpened the focus a little bit.”

“Ultimately I would like to return to Australia but the immediate focus is on improving the financial performance of Air France-KLM in my new role,” he told The Weekend Australian.