British Midland's holding company has finally acknowledged a conflict of interests with its British Airways franchised regional operation and is demerging the latter as it tightens its links with SAS.
'The regional operators have all taken on a BA franchise and so it was a good moment to demerge the interests . . . from British Midland, which has a relationship with SAS - one of BA's main competitors in Europe,' says Sir Michael Bishop, chairman of holding company Airlines of Britain (ABH) and British Midland.
The split is linked to plans by SAS to develop its alliance with British Midland, which is to launch a major expansion into the Scandinavian market.
Route details were due to be announced at presstime, but one source says British Midland will add codeshare flights to UK routes currently served by SAS. A revenue sharing deal will be agreed, based on the arrangement with SAS on the UK carrier's only current Scandinavian route: London-Bergen. Bishop confirms the carrier is talking to SAS' main partner Lufthansa about a similar deal in the UK-Germany market.
The source says British Midland has enough capacity in its current fleet to cope with the Scandinavian expansion but is looking at acquiring higher capacity, longer range aircraft to launch new services to central Europe and beyond.
SAS retains its 40 per cent stake in ABH but has sold its stake in the regional operation for an undisclosed sum to ABH's majority shareholder, BBW Partnership (which is controlled by Bishop). BBW now has sole control of British Airways franchisee British Regional Airlines, plus Manx Airlines and Business Air.
Source: Airline Business
