Air France Partners with Two U.S. Carriers
<FONT SIZE="+3"><B>Air France Partners With 2 U.S. Carriers
</B>Air France signed letters of understanding for partnerships with both Continental and Delta this month, ending speculation that previously had USAir signing on with the French flag carrier.
The two agreements will allow the respective carriers to enhance interlining of passengers and freight, computer reservations systems, facilities and passenger handling, as well as commercial sales and marketing programs.
Lehman Brothers analyst Brian Harris praised the potential of both agreements, noting that "strategically, Air France is a fabulous partner-up there with BA and Lufthansa. And if you can't have London, Paris is probably the second best choice, kind of like the Chicago of Europe. Financially, Air France is pathetic compared to BA and Lufthansa, but over time Air France certainly has the potential to get better."
The agreements also will result in better-coordinated schedules and, subject to government approval, code sharing. However, sources were skeptical of whether code sharing will become a reality because of the rocky history of Franco-American bilateral talks.
"They'll coordinate their schedules and get some incremental traffic, but I don't know about code sharing," said Ray Neidl, airline analyst for Furman Selz. The chances of gaining antitrust immunity-which would allow coordinated corporate negotiating as the United-Lufthansa and Northwest-KLM partnerships do-is extremely slim, he said.
That's unfortunate, according to one travel manager. "It will be interesting to see if Air France still gives double upgrades," said Philip Dunphy, manager of corporate travel for Pfizer in New York. "They work hard for the individual traveler in order to circumvent the corporate travel department."
Continental, which recently indicated it was close to an agreement with Air France (<I>BTN</I>, Aug. 19), said the partnership will offer twice-daily service between Newark and Paris and will allow it to move Paris operations from Orly Airport to Charles de Gualle.
The deals are expected to bring Air France an additional $100 million in revenues, although that may not be enough as the airline continues to lag in the cost-cutting race before next year's deregulation in Europe. Meanwhile, BA-which owns one French carrier, TAT-is making a bid to purchase Air Liberté, further increasing the carrier's presence in Air France's front yard.