KLM's recent agreements with Garuda Indonesia and Jet Airways in India reflect a wariness by the Dutch carrier over the future development of the industry in Asia-Pacific, but in Europe the carrier is still lacking a major partner.
As parts of Asia like Thailand and Vietnam develop rapidly there is uncertainty as to where the main centres and hubs will finally be, says Hendrik-Jan Boer, sector analyst with Rotterdam-based consultants I.R.I.S.
This uncertainty and the fragmentation of the Asian market mean KLM is right in looking for alliances with more than one Asian carrier, Boer adds. 'I see a lot of cooperation with different companies within the Far East for KLM.'
The strengthening of the Dutch carrier's ties with Garuda includes block space agreements on Garuda's domestic services to and from Denpasar, Jogyakarta, Padang and Ujung Padang. In return Garuda can hold seats on KLM's Amsterdam services to Berlin, Madrid, and Vienna.
The two carriers will also put double prefixes on all flights between the Netherlands and Indonesia, but KLM stresses the two carriers are not codesharing. 'The double prefix is used to indicate that the two carriers are working closely together and will appear on the existing flights,' says KLM. 'But this is not a codeshare deal like KLM and Northwest.'
The memorandum of understanding signed with Jet Airways at the end of August should eventually lead to a cooperation agreement, which will include schedule coordination and the linking of frequent flyer programmes. Other areas for cooperation are marketing, sales, advertising, air cargo services and handling and maintenance. The two carriers will also harmonise ground services with an automated check-in system recently purchased by Jet Airways from KLM.
The multi-partner strategy in Asia is consistent with KLM's alliance building in Europe, where the Dutch carrier cooperates with Air UK, Air Littoral and Eurowings, says Bouke Veldman, a consultant with Stratagem in Amsterdam. 'The only place KLM is missing an alliance is China, but I am sure they will link up with a regional carrier there, once the bilateral is finalised.'
While KLM continues to work with its European regional partners, president Pieter Bouw admits that in the future it may be necessary for the carrier to link up with another European major and make use of the partner's hub to reach its target of 15 per cent European market share. The need for a second European hub will become more pressing towards the end of the decade, he adds. Movements at KLM's Schiphol hub have been capped and Boer suggests growth at the home base may be restricted early in the new millennium.
KLM denies that it is looking to set up its own secondary hub, a strategy Veldman suggests could be viable. 'The time is right. They might start something and try to build it into something larger.' KLM is running out of suitable European majors to link up with. Apart from British Airways, the stronger carriers already have alliance partners and the southern European carriers and Air France are still struggling to restructure.
Meanwhile, Bouw is looking to order 18 aircraft in the 100-150 seat range for the group's European fleet. The carrier has converted its B747-400F orders to two Combis and is considering freighter conversions for two B747-300s.
Source: Airline Business
