Medium-haul business is one of two areas that Air France-KLM identified as "still in trouble" when third-quarter results were unveiled on 31 October.

The other is cargo. But where cargo is seen as in need of group-wide attention, it is Air France, rather than the Dutch partner, that must reform medium-haul operations.

Why even bother? It's a question Air France-KLM chief executive Alexandre de Juniac addressed during the results briefing. First of all, he noted, the medium-haul network is a "very important" source of revenue, generating €7.5 billion last year. Secondly, it feeds the hubs.

Last year, hub feeding accounted for 59% of revenues from medium-haul, to which a total of 384 aircraft are allocated. There are two other subsectors within medium-haul, namely French point-to-point operations (30%) and the leisure business (11%), and their fortunes are sharply divergent.

The airline deems domestic point-to-point services to be "essential to maintain market presence", but acknowledges them to be "most affected by the economic crisis in Europe and the market shift". Leisure, on the other hand, is "the only part of the [medium-haul] market which is growing", says de Juniac.

So what is to be done? Air France has selected a specific strategy for each of the three subsectors.

In the hub-feeding categories, the focus is on Paris Charles de Gaulle, where both staff and aircraft numbers are now to be cut beyond what was previously envisioned as part of the Transform 2015 restructuring plan. Some 580 employees are to exit under a voluntary departure plan. The airline is also targeting flexible practices at the hub: "We have working rules that are too rigid and have to be adapted to the strong seasonality we face," says de Juniac.

Deeper cuts to the fleet assigned to summer services from Charles de Gaulle are to be enacted. Under the new plan, the total fleet will decline from 104 this year to 94 in 2015. The differential comprise eight aircraft cut from the fleet of regional subsidiary Hop, plus two eliminated A320-family jets.

Paris Charles de Gaulle medium-haul fleet plan (summer schedules):

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SOURCE: Air France-KLM

Air France also intends to boost medium-haul to medium-haul connections through Charles de Gaulle, mimicking what KLM does at Amsterdam, says de Juniac.

In the beleaguered point-to-point business, meanwhile, the airline sees an opportunity to cut flights on "multi-frequency" domestic routes with only "limited impact on revenues". Noting the density of Air France's French network, de Juniac admits: "Some of these frequencies are not totally full."

This year, daily frequencies from Paris reached, for example, 27 on the Toulouse route, 21 to Nice,18 to Marseille, 14 to Bordeaux and eight to Montpelier.

In this context, the airline is to extend planned reduction of its Paris Orly-based narrowbody fleet, reducing it by five aircraft rather than three. In the summer of 2015, 17 aircraft will be stationed at the airport.

Extensive staff cuts at the regional bases are ahead. The airline is seeking the voluntary departure of 180 employees at Orly, plus 370 across Marseille, Nice and Toulouse, and 220 from other bases. Station costs account for a total of 40% of the total for point-to-point, says the airline.

While 40% of regional base activity serves main bases, losses are concentrated in the other 60%: routes to the rest of France and Europe. Cuts to the summer 2013 schedule brought a 20% third-quarter boost to revenue per available seat-kilometre. The airline now plans additional fleet reduction at the regional bases – taking the inventory from 25 aircraft this summer to 18 in 2015 – plus further network cuts.

Fleet plan for regional bases:

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SOURCE: Air France-KLM

The group's Transavia arm, by contrast, is being primed to take full advantage of leisure-sector growth potential. "It is the market leader in the Netherlands and has to ramp up significantly to become a significant player in France," says de Juniac.

With a focus on Paris Orly, its fleet expansion is being accelerated: five aircraft are to be added per annum, rather than a previously planned three, and the fleet should reach 56 by 2016. De Juniac notes approvingly that Transavia France managed to break even with only nine aircraft, and says the goal, now, is to attain critical mass.

Transavia fleet plan:

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SOURCE: Air France-KLM

KLM's medium-haul operation, meanwhile, has the happy advantage of being "a feeding network, not point-to-point", says de Junaic. "We can accept, for a feeding network, very low level of profit knowing that it feeds our long-haul network, and the profit is concentrated in our long-haul."

The airline expects KLM's medium-haul loss to narrow by nearly €100 million, to €75 million, this year, with break-even following in 2015. KLM is planning to boost medium-haul capacity 11% over the 2012-15 period without increasing its fleet size. The Dutch airline has shaved 15min from turnaround times on its Boeing 737 and Emrbaer aircraft, says chief Camiel Eurlings, and it is targeting further efficiencies through "seat densification" and "smart boarding", which involves admitting passengers to the aircraft in a more logical sequence: window passengers first, following by middle and then aisle, for example.

Development of ancillary revenues is also targeted by KLM.

The overall picture, for Air France-KLM, is a 1% increase in hub-feeding capacity between 2012 and 2015, alongside a 27% cut to the French point-to-point network and a 30% boost in the leisure sector. Over the same period, the Transavia fleet total increases by 13, while the hub-feeding fleet thins by 21 jets and the French point-to-point inventory loses 42 aircraft, pending sale of Irish subsidiary CityJet, on which negotiations are ongoing.

Medium-haul capacity plans:

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SOURCE: Air France-KLM

De Juniac summarises it very simply: "It’s a shift from our traditional network operated by Air France or by Hop under the responsibility of Air France, to the leisure market operated by Transavia."