Air France-KLM warned that the Paris Olympics might not draw the crowds expected.
On July 1, Air France-KLM announced that the number of international tourists visiting the Paris Olympics may be significantly lower than expected and that flight reservations are seriously underperforming.
The Paris Olympics will start on July 26 and end on August 11.
According to the Financial Times (FT), Air France-KLM is concerned that the number of airline passengers leaving or heading to Paris is drastically lagging behind other major European cities ahead of the Olympics.
Air France-KLM warned that reservations for low-cost airline Transavia, a subsidiary of Air France and Air France-KLM, are low. The airline shared, “According to market trends, air travelers are seriously avoiding Paris.”
Air France-KLM explained that it seems that travelers are postponing their travel time after the Paris Olympics or looking for other alternatives.
Air France-KLM also cited data released by the Paris Tourism Office last month. This data predicted a decrease in Paris hotel reservations this summer during the Olympics.
As a result, it is expected that revenues for the second quarter from June to August will suffer a drop between $171 million to $193 million.
Investment bank Bernstein analyzed in a note that this indicates that Air France-KLM’s revenue this year will be 13% less than the average analyst estimate of $1.45 billion.
Air France-KLM was pessimistic that air passengers visiting Paris would only normalize after the Olympics.
Despite such pessimistic forecasts from the airline based on reservations, French tourism authorities are expecting a surge in tourists.
They are optimistic that 15 million people will visit the Olympics.
Authorities are recommending Paris residents to work from home or leave the city during this period due to concerns about traffic congestion caused by Olympic visitors. According to a public opinion survey, half of the citizens plan to leave Paris for vacation and other reasons.
However, the actual market trend is different.
Not only are airline bookings low, but accommodation bookings are also underwhelming.
It appears that there will be an oversupply of accommodations during the Olympic period. Rental prices for homes listed on Airbnb during the Olympics are also falling.
