For SAS the search is over. But KLM now finds itself without any major European partner and is fast running out of available options.
The Scandinavian flag carrier solved its European partner problem by forging close ties - but no equity swap - with Lufthansa. The alliance is more comprehensive than those that Lufthansa has with either Thai or United. A joint venture will be created to offer Scandinavian-German services, which will use existing Lufthansa and SAS resources. Frequent flyer programmes will be fully integrated and ground services, lounges and terminals will be shared and through check-in offered. Additionally the carriers will co-ordinate all information technology services.
On the route networks, Frankfurt is to serve as the main intercontinental hub for European traffic. Copenhagen will manage Europe to Northeast Asia traffic as well as acting as the Scandinavia and Baltic hub. The move gives the Lufthansa/SAS alliance a 20 per cent share of the intra-European market.
The alliance must still obtain European Commission approval, but after initial informal consultation with Brussels, Jürgen Weber, executive chairman of Lufthansa, is confident.
The 30-plus unions at SAS could have more objections. In the short term Nicholas Fischer, chairman of SAS' white collar union in Copenhagen, says he has no concerns but admits that longer term the marriage could spell trouble for SAS workers. There have long been fears of Lufthansa absorbing SAS completely and Fischer says the unions must maintain pressure on the governments of Norway, Sweden and Denmark to avoid this. The unions would have preferred KLM or Swissair, says Fischer.
KLM is trying to put on a brave face, despite being left in the cold for a European partner. With Swissair partnering Sabena, KLM's two top choices for a European alliance have disappeared in quick succession. KLM compares the alliance strategies with a game of chess: 'The game has started but only the first moves have been made.'
One analyst thinks KLM still has time to make its move. 'When Alacazar failed, KLM realised it had more time to establish [European] market share than they had originally thought,' says Arjen Los, analyst at Smith New Court. He believes Alitalia could be one potential partner - after that the choices appear limited.
Source: Airline Business
