Last week's news that Lufthansa will scale down cooperation with
fast-growing Turkish Airlines by terminating codeshare agreements and minimizing
loyalty program reciprocity probably did not surprise some European corporate
travel professionals. The two airlines during the past year went from
contemplating joint management to increasingly competing directly for the same corporate
business. Both publicly and privately, some travel managers have spoken of
Turkish's more preferable terms as compared with established carriers and its willingness
to negotiate separately from the rest of the Star Alliance, anchored in Europe by
co-founder Lufthansa.
At CAPA's Corporate Travel Innovation World Summit last week near
Amsterdam, Ikea global travel purchaser Yves Galimidi praised Turkish for being
prepared to strike a three-year agreement, which Galimidi described as "wonderful."
During a roundtable discussion with BTN,
conducted in October, Corrado Simontacchi, Huntsman manager of corporate
purchasing, goods and services in Europe, Africa and the Middle East said
Turkish "has a great product and it is being aggressive, so it has all the
ingredients to win a fair share of our business."
During the same discussion, Siemens head of global travel management
Jens Bäringhausen said Turkish is winning more long-haul business from his
company at the expense of European legacy airlines that use joint-venture
cooperation to push up corporate fares.
Turkish also is competing directly in Lufthansa's backyard. On Nov. 15,
for example, it announced new routes from Istanbul to German cities Kassel and
Münster. In total, the airline flew 40.6 million passengers during the first 10
months of 2013, up 24 percent from the same period in 2012.
Against this backdrop, Lufthansa said it will cease sharing codes with
Turkish on transatlantic and German domestic flights, effective March 29, 2014.
Additionally, from Jan. 1, 2014, flights on Turkish will earn only 25 percent
of the status miles in Lufthansa's loyalty program that they earn today.
"We evaluated our relationship and it has come to a point where the
networks have changed so much that the code shares are not really used," a
Lufthansa spokesperson told BTN. "Turkish
has such a big network now that it does not need the code shares any more. We
would like to welcome passengers on Lufthansa flights instead."
Asked if Lufthansa is disappointed with the increasingly direct
competition posed by its Star Alliance partner, the spokesman said: "Nearly
every airline is a competitor, even if it is in the same alliance but not part
of a joint venture. In the corporate segment, growing capacity in the Middle
East and southeastern Europe is making this environment even tougher. Turkish
has a strategy for growth, which is creating more competition, but we respect
that."
In November 2012, Turkish Prime Minister Recep Tayyip Erdogan made a
surprise announcement that he and German chancellor Angela Merkel had agreed to
establish joint management of Lufthansa and Turkish Airlines, involving
cross-shareholdings. Asked what has changed, the Lufthansa spokesman said: "This
was a political discussion raised by the Turkish government after a visit from
the German chancellor. We looked into it and came to the conclusion that we had
two very different business models that could not create a win-win situation.
But the door is not shut."
In a statement on its website, in which it claimed to act "with
fair competition conditions ... all over the world," Turkish condemned
Lufthansa's action on code shares and loyalty program reciprocity. "Turkish
Airlines provides its services to ... all passengers of Star Alliance member
airlines," the statement continued. "Codeshare flights and frequent flyer
program applications should be considered in this context. We do not approve
the unilateral decision of Lufthansa ... taken on these two issues and hope to
be reconsidered."