The alliance structure of Europe's carriers is set for a dramatic reshuffle in 1995. Lufthansa appears to have succeeded in disrupting the European Quality Alliance of Swissair, Austrian and SAS. As SAS prepares to leave the EQA, the effects are likely to spread throughout the European airline industry.
Lufthansa confirms it is talking to the Scandinavian airline, but the extent and timing are unclear. 'We are right in the middle stages of discussion with SAS and realistically these will take some time,' says Stefan Lauer, senior vice president corporate strategy.
Publicly both SAS and Swissair say they are evaluating where they stand with the EQA, but privately Swissair expresses discontent with the lack of progress in the last two years. 'Are they [SAS] pulling out, or are they being kicked out?' asks one senior Swissair source. 'The time has come. SAS does see other partners and we are of the opinion that we do it better by ourselves.'
Austrian appears to regard SAS as little more than its northern European route-specific partner. 'Swissair is our main strategic partner and we intend to strengthen our ties,' said Wolfgang Prock-Schauer, vice president corporate planning, at an IIR airline conference in London. 'We must form a hierarchy of alliances - decide who our primary partners are, then the route-specifics.'
At the same conference, Peter Forssman, vice president corporate communications for SAS, said the carrier would decide by the end of 1994 between four alliance options: continuing with the EQA, or linking with Lufthansa, KLM or British Airways.
But one airline source is sceptical about the likely success of a Lufthansa-SAS pairing due to overlapping routes, and a London-based analyst points to an imbalance of benefits: 'SAS needs Lufthansa more than Luft hansa needs SAS.' However, Lufthansa feels a European partner is necessary. 'We have to extend our system in Europe and move the focus away from traffic over Germany,' says Lauer.
A SAS-Lufthansa linkup could spell trouble for several carriers, including Finnair and KLM. Lufthansa and ex-EQA member Finnair already have an alliance, which includes joint frequent flyer programmes and block space agreements on Stockholm-Berlin and Stockholm-Stuttgart. One analyst says Lufthansa has 'made it clear that its priority would go to SAS as the larger of the two northern European partners.'
Meanwhile KLM, which has been concentrating on its Northwest partnership after the failure of Alcazar, is watching nervously from the sidelines. As one Dutch analyst says: 'A SAS-Lufthansa link-up would certainly be hostile for KLM'.
One KLM source admits the carrier is nervous about the potential SAS-Lufthansa link. Still cautious after the Alcazar debacle, KLM is not about to jump into another European alliance, but admits it needs a greater European presence. 'If your share of the intra-European market is limi ted, and Europe-US and Europe-Asia is the traffic you are aiming for, you must increase the European presence,' says a senior KLM source.
Different US partners - the root cause of Alcazar's failure - will make it difficult for KLM to join the Swissair/Austrian camp. A more promising candidate is Sabena, which has talked to Swissair, has links with Delta, and has expressed frustration with progress with its Air France partnership.
Different US partners - the root cause of Alcazar's failure - will make it difficult for KLM to join the Swissair/Austrian camp. A more promising candidate is Sabena, which has talked to Swissair, has links with Delta, and has expressed frustration with progress with its Air France partnership.
Source: Airline Business
