KLM, still keeping its alliance options open, has been left in no doubt over the summer of the intent of Air France and the SkyTeam grouping to bring it within the fold.
KLM's long-standing transatlantic partner Northwest Airlines says that SkyTeam is the only workable option, the alternative being British Airways and oneworld. "From our point of view it can only be Air France," said Northwest president Doug Steenland, speaking in Detroit at the unveiling of the new Airbus A330-300, which will fly to Amsterdam when the type enters service later this year.
"There are procedures by which the pact between KLM and Northwest can be broken, but that is not possible before 2007," added Steenland. Northwest is linked to SkyTeam through its US domestic alliance with Delta Air Lines.
There has also been speculation in the French national press that the proposed privatisation of Air France would be tied into a KLM deal through a share swap between the two airlines. Andrew Lobbenberg, London-based analyst for ABN-Amro, says that an equity exchange might be a way of ensuring equal alliance benefits, without the need for complex profit-sharing models.
Allocating traffic flows between the Paris and Amsterdam hubs remains an issue, although Lobbenberg points out that there are only 34 cities in common out of a combined 104 long-haul destinations. He argues there is some natural linkage in the short-haul area, with KLM stronger in northern Europe and Air France in the south. But some analysts ask whether these two carriers, both with room to expand at their respective home hubs, will agree to share the spoils.
One analyst expresses surprise at the extent to which negotiations are taking place in the media: "I think there is a lot more going on than maybe we know." He suggests that BA would be the more natural fit for KLM, given that its London hub is not competing with Amsterdam for transfer traffic to the same potential degree as Paris. Connecting traffic makes up 60% of passengers for KLM.
The analyst says it is even possible that KLM could strike a deal with BA that would let the Dutch carrier keep its Northwest agreement - for a while at least. "They could gradually drift apart. There are plenty of examples in this industry of semi-detached relationships."
Source: Airline Business
