It ain't over 'til it's over," said Leo van Wijk, KLM Royal Dutch Airlines CEO, in an interview this month with Business Travel News, "but there is a time when you have to say, 'I will make up my mind.' Otherwise, you lose the ability to negotiate. This is the time to make the decision."
That decision for KLM likely will be to align with Air France and the SkyTeam partnership, rather than British Airways and the Oneworld alliance. Either way, it will represent a watershed event for alliance development in Europe—with reverberations in the United States—and a first step toward industry consolidation. Meanwhile, American Airlines and BA finally have begun code sharing
(see story), as the Star Alliance prepares to add more members and develop new alliancewide initiatives, including a payment and reporting system for clients
(see story).Van Wijk personally has been working on KLM's future alliance affiliations on and off for 14 years. The final round of internal deliberations is well underway, and KLM this autumn will announce its long-awaited choice. Air France and SkyTeam is the heavy favorite, with a potential share swap in the cards, but KLM at press time still had not made the announcement. "The Dutch are known merchants and master negotiators," said an airline executive knowledgeable of KLM's situation.
"The main issue for us is what our position will be within the alliance we choose. There still are a number of uncertainties we are working on," van Wijk said. "As long as we run a great hub with a good airline, considering our size, we will be a player, but you have to make sure you have government support for your decision." KLM's alliance development likely will be facilitated by regulatory changes within the European Union
(BTN, Sept. 8).The Star Alliance, meanwhile, next month officially will add LOT Polish Airlines, a carrier with which United Airlines recently inked a codeshare pact. US Airways also is in the process of integrating services with Star founders United and Lufthansa and is scheduled to join the partnership early next year.
Though Air China formally has not yet been invited to join the partnership, next month it will begin code sharing with United on several transpacific routes. Northwest Airlines this summer ended all commercial cooperation with Air China after a five-year partnership, freeing the Chinese carrier to align with United
(BTN, April 28). United hopes to capitalize on the expanding Chinese aviation market, which Eclipse Advisors COO Michael Boult predicted would be the "largest in the world by 2020."
Aside from adding new members, Star is progressing on a number of alliancewide initiatives, including a possible common reservation platform. "We can either connect existing res systems to the StarNet platform, as we have done with other systems, or choose one supplier," said Graham Atkinson, chairman of the Star Alliance management board, referring to Star's recent requests for proposals. "Ultimately, something has to give if we believe one supplier is better than three or four."
Other Star projects include co-locating at airports around the world, or, in some cases, building brand new terminals. A joint aircraft purchase and standardized inflight entertainment system also are in the works.
In other alliance news, Oneworld partners American and LanChile this summer began electronic ticket interlining. AA also interlines e-tickets with Oneworld ally Finnair. Oneworld by the end of 2004 plans to have in place complete e-ticket interlining across all eight alliance members.
For their part, SkyTeam founders Air France and Delta expect by early next year to activate e-ticket interlining.