Northwest Gains Immune Ally As CO Trial Begins

<B>Northwest Gains Immune Ally As CO Trial Begins</B>

Northwest Airlines has taken a "business as usual" approach with customers as a U.S. Department of Justice lawsuit against the carrier's ownership in Continental Airlines went to trial last week (see story, page 4). One airline source said that while joint deals between the two airlines are not legally hampered by the suit, they are not going gangbusters either. At last check, the number of joint Continental-Northwest deals was approaching triple digits.

Meanwhile, Northwest expanded its network of international partnerships this month, when it was given the green light for an antitrust-immunized alliance with Malaysia Airlines, the first for a U.S. carrier in the Pacific. Fay Beauchine, Northwest vice president of sales and customer relations, said some U.S. corporations definitely will benefit. "There is plenty of business over in Malaysia and many companies will be able to take advantage," she said. "But it is still the beginning and we have just started formulating a sales plan."

Malaysia already counts among its corporate accounts Dell, Hewlett-Packard, IBM, Intel and Siemens and other larger U.S. companies with manufacturing plants in that country.

In a related move, Malaysia and Northwest partner KLM expanded their bilateral codeshare agreement by adding scores of beyond flights from KLM's Amsterdam hub and Malaysia's Kuala Lumpur hub. Carrier officials would not confirm Malaysia's possible inclusion in the more mature but still unnamed Northwest-KLM alliance.

Air China, meanwhile, which shares codes with Northwest, last month cemented a codeshare agreement with Lufthansa. Codesharing already began between Frankfurt and both Beijing and Shanghai. Additionally, Air China will add its code to Lufthansa flights between Frankfurt and Hamburg, Berlin and Munich. Lufthansa said the next step is code sharing on beyond routes from the two Chinese gateways to interior cities.

Air China is one of the few remaining unclaimed prizes for global alliances. None of the current partnerships--SkyTeam, Oneworld, Star Alliance or "Wings"--has a full-fledged Chinese participant, though all have acknowledged the region as a gap in their networks.

For its part, Alitalia, six months after being abandoned by KLM in a merger attempt, has had discussions with both Air France and Swissair parent SAirGroup. However, a European Commission investigation into possible discrimination by the Italian government at Malpensa airport could affect Alitalia's alliance search. The EC soon is expected to rule on complaints lodged by 14 airlines contending Italy showed unfair favoritism toward Alitalia as the carrier moves hub operations to Malpensa. Malpensa was one sticking point cited by KLM when it walked away from the Alitalia partnership.

North of the border, Air Canada took a huge step in its integration of Canadian Airlines when the two airlines merged computer reservation systems. Late last month, 1 million Canadian reservations were moved into Air Canada's Res III system. The carrier also launched a codeshare arrangement with fellow Star Alliance member Singapore Airlines, covering flights between both London Heathrow and Copenhagen and both Singapore and Toronto.

Other new codeshare agreements include Delta and Israel flag carrier El Al commencing March 25 for El Al flights between New York JFK and Tel Aviv, and Delta flights between New York and several domestic destinations. Domestically, American Eagle agreed to expand codeshare feeder service for Trans World Airlines. Operating as a TWA Connection carrier, Eagle next month will link New York JFK to nine new cities and expand service on five more. Eagle already serves as a TWA Connection carrier on the West Coast. A larger agreement between TWA and America West soon is expected.