The creation of a powerful private French competitor to threaten Air France's domestic dominance is closer to reality, following the signing of a cooperation agreement between Air Liberté and AOM.
Although the two medium-sized French airlines are limiting themselves to a codesharing agreement, Air Liberté admits that the deal is a 'probable' precursor to a complete merger. The carrier was linked to a bid for AOM earlier this year and Carlos de Pommes of dPA Consultants suggests Air Liberté will first have to put together a consortium if it is to try again. Air Liberté's shareholders were expected to approve a capital injection of FFr500 million ($100 million) before the end of July, but this is not near enough to finance a takeover, says de Pommes.
The alliance comes at a time when union problems have once again left Air France's domestic operations in disarray (see p6). 'We cannot deny that the strikes taking place at Air France are good for us,' admits Alan Beaud, vice-president of development at AOM. The deal gives both carriers time to prepare jointly for complete liberalisation of their home market in April 1997.
In mid-July the two airlines started codesharing on Orly-Montpellier and Orly-Nice, where they previously competed. This will allow the airlines to offer a shuttle service on both routes throughout the day, rather than individually in peak periods, countering plans by Air France Europe to launch an Orly-Nice shuttle service next year. Both airlines will increase frequencies between Orly and Toulouse, Strasbourg, Toulon and Perpignan, standardise fares on all domestic routes, and combine frequent flyer programmes.
The two carriers say the deal will deliver cost savings and help return both to profitability, but stress there will be no job losses. One benefit is more efficient aircraft scheduling domestically, but despite significant commonalities - both carriers operate MD-83s and DC-10s - there are no further plans on the fleet side, says Beaud.
The immediate focus is on the domestic market, but the carriers intend to extend the agreement to international operations. The partners have already decided to codeshare on common routes from Orly to the French Caribbean and La Réunion in September, leaving Air France as the only competitor.
Lois Jones
Source: Airline Business
