<B> Global Air Allies Abound</B>
By Jay Campbell
The airline industry seems this year to be moving to the brink of a consolidation wave, as American Airlines and British Airways attempt to expedite the approval process for their proposed alliance and as pilots for Continental and Northwest continue to mull the possibilities of a merger, investment, code-share or all of the above. Whether through codeshare agreements, alliances or actual investments, the lines of global alliance teams continue to be drawn throughout the world.
Just as the European Commission plans to make its position on the issue known in February, AA and BA reportedly are making headway in convincing the agency to permit a phased-in alliance over perhaps four years. Previously, it was thought that the next step in regulatory proceedings would be to find a middle ground between the EC and the U.K., which estimated that the two carriers would have to relinquish 350 and 168 slots, respectively, at Heathrow as a condition of approval.
Meanwhile, British Airways and LOT Polish Airlines earlier this month signed a strategic alliance plan to serve the "ever-increasing numbers of business travelers to and from Poland," said BA Chairman Robert Ayling.
LOT is a codesharing partner of American Airlines and theoretically would be rolled in to an alliance including BA, AA, Qantas, Canadian Airlines, Iberia, Aerolineas Argentinas and others, possibly including Japan Air Lines. That is, assuming AA-BA gets approval.
Meanwhile, in December, Ansett Australia, Air New Zealand and Singapore Airlines applied to authorities for a Pacific alliance. These carriers are likely to be involved with United's Star Alliance. TAP Air Portugal signaled its interest in joining Delta's Atlantic Excellence alliance by signing a codeshare deal with Brussels-based Sabena. This month, KLM and Malaysia Airlines said they will be exploring a deal.
Perhaps the biggest alliance news late last year came from Italy's Alitalia, which was known to be looking for a European partner. Although Air France and Swissair apparently were under consideration, Alitalia picked KLM to develop a "multi-hub system based at Schipol Airport, Amsterdam, Malpensa Airport, Milan, and Fiumicino Airport, Rome," Alitalia said in a press statement.
Northwest, meanwhile, sent out a congratulatory letter to Alitalia and KLM that made no bones about its intention to work with Alitalia. Oddly, though, Alitalia's U.S. partner is Continental.
Although neither carrier will comment on the possibility of a domestic deal between them, both Continental and Northwest are talking to their pilots about it. The Northwest pilots have a clause enabling them to reject such a deal. Continental's pilots do not have that authority, but are negotiating for it.
According to reports, Northwest is considering a 14 percent investment in Continental as well as a domestic codesharing relationship.
Whether businesses that pay for travel can extract benefits from these partnerships remains to be seen. The European Commission apparently is not so sure of this, as it continues to investigate a number of codesharing and alliance deals, recently adding codeshare deals between Air France and Continental and Delta to the list.