Click below for data links:
STM-2006-09 - SAL-ONW-A
STM-2006-09 - SAL-ONW-B
STM-2006-09 - SAL-ONW-C
STM-2008-03 - NEW RECRUITS
STM-2009-12 LHR T4
STM-2012-05 - SAUDIA SKYTEAM A320 AND 777
Formed in 2000. SkyTeam (STM) is the 2nd largest airline alliance in the world (behind the Star Alliance (SAL)) partnering 14 carriers from 4 continents, with 2 pending members. (STM) also operates a cargo alliance called SkyTeam Cargo with all (STM) members except for Continental (CAL) Cargo.
Amsterdam, The Netherlands
The Kingdom of the Netherlands was established in 1581, it covers an area of 41,473 sq km, its population is 15.5 million, its capital is Amsterdam, and its official language is Dutch.
June 2000: The SkyTeam alliance (STM) was launched.
May 2007: China Southern Airlines (GUN) will join SkyTeam (STM) formally by year end, Group Managing Director & (GUN) Chairman Liu Shaoyong announced at a summit between Chinese civil aviation leaders and the alliance in Sanya. "As we are accelerating the process of conformity to (STM) requirements, plus the dense domestic network we already have, China's air transport industry will certainly enhance service levels and operating standards, which in the meantime will also attract more foreign passengers to our airports and hence improve Chinese airports' international reputation," he noted in his speech at the event. (GUN) signed a letter of intent with (STM) in August 2004. Last year, it agreed to initiate improvement and restructuring of its Information Technology (IT), loyalty program, and sales & marketing procedures, as well as human resources training.
(GUN) and Air France (AFA)/(KLM) have entered into exclusive talks to launch a joint venture (JV) cargo carrier in China, (AFA)/(KLM) Vice Chairman & (KLM) President & (CEO) Leo van Wijk revealed recently in Beijing. (GUN) previously said it expects to launch a cargo (JV) by the end of 2007. The carriers currently are negotiating ownership share and where to base the (JV). Earlier this year, (GUN) Vice Managing Director Xu Jiebo said a foreign airline would hold a 49% stake in a cargo (JV), the maximum allowable foreign investment under (CAAC) (CAC) regulations. "As an important member of (STM), (AFA)/(KLM) is one of the Western carriers we are in talks with," he acknowledged at the time.
Copa Airlines (COP) is on track to become an associate member of (STM) later this year.
June 2007: Air France (AFA)/(KLM) is in talks with its USA SkyTeam (STM) partners regarding slot exchanges, to permit the USA carriers to operate to London Heathrow (LHR), when the USA-(EU) "open skies" agreement takes effect next spring, Vice Chairman, Leo van Wijk confirmed. Speaking to media in Vancouver at the (IATA) (IAT) Annual General Meeting (AGM), van Wijk said (KLM) is talking with Northwest Airlines (NWA), and (AFA with Delta Air Lines (DAL). They also have agreed in principle that Continental Airlines (CAL) will participate. "London Heathrow will become an additional transatlantic hub for (STM) partners," he stated.
Because (KLM) and (NWA) operate as if they were 1 airline on the North Atlantic, transferring the slots is a simple matter. "(KLM) and (NWA) have a long and successful joint venture, and we could let (NWA) fly with our slots and put our code on," van Wijk said. Having (NWA) operate from (LHR) to its Detroit and/or Minneapolis hubs is "a no-brainer," he remarked, although he noted that (KLM)'s slot times "do not necessarily easily fit into a transatlantic operation." (AFA) and (DAL) do not have a similar arrangement, so some form of compensation probably would be involved.
Turning to possible future alliance partners, he said (STM) is moving forward with searches in Latin America, Asia and India, but denied speculation the alliance already has settled on Air India (AIN).
(STM) named van Wijk Chairman of its governing board. He is also President & (CEO) of (KLM), posts he will relinquish next month. He will continue as Vice Chairman of (AFA)/(KLM) and he stressed that his appointment to (STM) "should not be seen as building superstructure" at the alliance; "I will be the only permanent fixture."
China's traditionally isolationist flag carriers are taking the initiative to ally with foreign counterparts in order to take advantage of increasing liberalization and maintain their competitive position. Among the 3 principal carriers, China Eastern Airlines (CEA) is the only 1 uncommitted to a global alliance, preferring to seal its partnership with Singapore Airlines (SIA) 1st. (CEA) President Li Fenghua said that (SIA)'s investment does not tie his carrier to the Star Alliance (SAL), nor does the fact that Oneworld (ONW) has yet to secure a Chinese member, render that alliance the only option. "We are leaving all the options open, as the point is to identify which airline alliance is the most suitable for us to boost growth," he said.
Meanwhile, Air China (BEJ) and China Southern Airlines (GUN) are restructuring various departments to meet requirements established by Star Alliance (SAL) and (SKT), respectively. (BEJ) expects to join the (SAL) formally in December. "Our top priority is to join the (SAL), as we will be able to optimize our network through deeper cooperation with other (SAL) members to earn profit," Managing Director International Affairs & Cooperation Lou Yongfeng said at the recent (IATA) (ITA) Annual General Meeting (AGM) in Vancouver. Lou said boosting airport infrastructure is key to meeting the Star Alliance standards. To that end, (BEJ) convened a conference in Sichuan Province at which leaders from 33 domestic airports committed to supporting (BEJ)'s effort.
China Southern Airlines (GUN) expects to join (STM) this year as well, which domestic industry analysts predict will help shore up the carrier's thin international network. Chinese airlines also are keen to cooperate on cargo operations. Domestic carriers' share of the international cargo market plummeted from 65.6% in 1995 to the current 23.8%, and they are looking for foreign partnerships more frequently in order to reverse that trend. For example, Air China (BEJ) expects to launch a Shanghai-based cargo carrier with Cathay Pacific Airways (CAT) this year, while (GUN) has confirmed it is talking with (AFA)/(KLM) about a cargo joint venture.
With China's big 3 committed to finding support abroad, industry analysts are indicating that smaller domestic carriers may be unable to compete unless they take similar steps.
Continental Airlines (CAL) and future (STM) partner (GUN) unveiled a "strategic partnership" under which the carriers will offer loyalty program and lounge reciprocity and "extensive code sharing." Frequent-flier programs will be linked in September, with lounge access to become available when (GUN) joins (STM) later this year. From November, (CAL) will place its code on (GUN) flights connecting to the USA carrier's daily Newark to Beijing service as well as (GUN)'s Guangzhou to Los Angeles (LAX) service. (GUN) will place its code on (CAL) flights from (LAX).
(STM) members (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM) and Northwest Airlines (NWA) filed an application with the USA Department of Transportation seeking antitrust immunity on transatlantic routings. The carriers withdrew their previous application in January 2006 after the Department of Transportation (DOT) issued a tentative decision denying the request. (DAL) currently has antitrust immunity with (AFA), (ALI) and (CSA), while (NWA) has antitrust immunity with (KLM).
"Included in the application is a joint venture agreement between (AFA), (DAL), (KLM) and (NWA), that would create a comprehensive and integrated partnership among the 4 (STM) members across the Atlantic," (NWA) said in a statement. "A more integrated (STM) alliance offers significant advantages to consumers, including more choice in flight schedules, travel times, services and fares." The carriers are attempting to take advantage of route opportunities made possible in the (EU) - USA "open skies" accord that goes into effect next year.
September 2007: Air Europa (ARE), Copa Airlines (COP), and Kenya Airways (KEN) officially became SkyTeam (STM)'s 1st "associate airlines," which the alliance said grows its network by 47 additional destinations and nearly 500 additional daily flights. (STM) associate airlines will enjoy many of the benefits of full membership, such as linking loyalty programs, sharing airport lounges and "seamless" flight connections to (STM) carriers. But the associates will operate under the direction of a sponsor member, that represents their interests in all decision-making regarding the alliance and serves as the liaison between associate and alliance members. "Our entry into (STM) effectively increases the reach of our network across the globe," Copa (COP) (CEO) Pedro Heilbron said. "Our passengers will connect seamlessly between (COP) and our (STM) partners using a single ticket."
October 2007: SkyTeam (STM) partners Air France (AFA)/(KLM) and Delta Air Lines (DAL) announced a wide-ranging agreement on the joint operation of transatlantic flights, including a number of flights from London Heathrow (LHR) to USA destinations, as the carriers seek to challenge British Airways (BAB) directly, when the (EU)-USA "open skies" accord takes effect at the end of March. (DAL) executives conducted their 3rd-quarter earnings conference call from Paris and promised a major announcement in conjunction with (AFA)/(KLM). (DAL) (CEO) Richard Anderson spoke of the "enormous amount of value" resulting from "the opportunity we have with (AFA) across the transatlantic." He noted that (DAL) and (AFA) enjoy antitrust immunity. According to several analyst reports, the new transatlantic plans involve flights under the (AFA) code from (LHR) to nine USA destinations, including a Los Angeles service operated by (AFA). Currently, (DAL) does not have the right under Bermuda II to operate transatlantic flights to and from (LHR). (AFA)/(KLM) and (DAL) also reportedly plan to launch a daily Paris Orly - New York (JFK) service next summer.
Barcelona International Airport's new Sur terminal will be used by 42 airlines, including Oneworld (ONW) members and "associates" Clickair (CLK) plus Air Nostrum, and Star Alliance (SAL) members plus affiliates Air Comet (APZ) and Aerolineas Argentinas (ARG), Spanish airports operator (Aena) announced. Vueling Airlines (VUZ) also will operate from the new terminal. (STM) carriers, which requested to operate out of T Sur, instead will have exclusive use of the existing Terminal A, while other low-cost operators and airlines without intercontinental flights, will operate out of the B and C terminals.
The European Commission (EC) is seeking comments from interested parties on commitments proposed by (STM) members hoping to obtain antitrust immunity, including the ceding of slots at certain European Union (EU) airports to competitors. In mid-2006, the (EC) said cooperation among the carriers: AeroMexico (AMX), Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM), Korean Air (KAL), and Northwest Airlines (NWA) is unlikely to have negative effects on the majority of the routes operated, though it raised concerns about several key city-pairs. In response to the Statement of Objections, the 8 (STM) partners proposed to make slots available at appropriate (EU) airports to allow competitors to operate new or additional services, and to share their frequent-flier programs. They also proposed to conclude interlining agreements with new entrants, enter into special prorate agreements for behind and beyond traffic on the intra-(EU) routes and facilitate inter-modal services. The European competition watchdog now is seeking comments from competitors on these commitments. "If the result of the assessment of 3rd parties' observations showed that the commitments offered would not be apt to remove the concerns expressed in the Statement of Objections, the Commission (EC) could pursue the procedure with a view to adopting a prohibition decision under Article 7 of Regulation 1/2003 requiring the parties to end their cooperation in its current form on the affected markets," the (EC) said in a statement. (NWA) released its own statement on the alliance's application for expanded immunity to the USA Department of Transportation (DOT), saying it "welcomes [the (DOT)] scheduling order establishing a time line for consideration of (NWA)'s application" and that it is "confident the (DOT) will act expeditiously so that carriers can take full advantage of the new "open skies" agreement."
November 2007: Kenya Airways (KEN) reported a +KES1.97 illion/+$29.5 million profit in the 6 months ended September 30, down -18.8% from the +KES2.43 billion earned in the year-ago semester. Revenue rose +6.4% to KES30.3 billion, while costs climbed +10.3% to KES26.88 billion. Operating profit fell -16.3% to +KES3.42 billion from the +KES4.09 billion reported in the 6 months ended September 30, 2006. "(KEN) continues to focus on improving its operational integrity, including addressing its manning shortages for the balance of this financial year, as well as investing in training for its future engineer and pilot (FC) needs," it said, adding that its September approval as a SkyTeam (STM) associate member, will "strengthen its market credibility in the worldwide airline sales systems." Passenger numbers rose +10% during the semester to 1.4 million on a +12.2% climb in (ASK)s, (KEN) said. Load factor slipped -2.5 points to 72.7% LF. Yield lifted +4.8% year-over-year in USA currency, but fell -2.6% in KES owing to the weakness of the dollar. (KEN) said it "remains optimistic that the company will continue to grow during the remainder of the financial year," but expressed concern over fuel costs and "new and increased levels of competition." (KEN) said it will respond by investing in its fleet, systems and staff, in order to create "an even more competitive product."
China Southern Airlines (GUN) became the 1st mainland Chinese carrier to gain full formal membership (became the 11th member) in a global alliance, when it signed a "Global Airline Alliance Agreement" with (STM) on November 15, Vice Managing Director He Zongkai said. (GUN) signed a letter of intent (LOI) with (STM) in August 2004, followed by a "Global Airline Alliance Adherence Agreement" in June 2006. 9 working experts from (STM) members gave (GUN) its final appraisal earlier this year. Besides (GUN), Air China (BEJ) and Shanghai Airlines (SHA) are scheduled to join the Star Alliance (SAL) on December 12, and China Eastern Airlines (CEA) President Li Fenghua confirmed (CEA) has had contact with Oneworld (ONW). But he stressed that the carrier is leaving all options open. Hainan Airlines (HNA) also has expressed interest in joining (ONW), of which Dragonair (DRG) became a formal member last month.
"We are pleased to take the lead in joining a global airline alliance in China, which will play an important role in improving our brand value and enhancing our core competitiveness and continuous profitability," Chairman Liu Shaoyong said at a ceremony in Beijing. "(STM) is known for its unrivaled global connectivity and as a member we can better serve our customers, especially as the 2008 Beijing Olympic Games approach." He added, "In order to optimize our international network, we plan to add more long-haul routes starting from Beijing and Guangzhou. In the next 5 years, we will open new international routes to New York, London and Detroit, starting from Beijing and to Moscow and other foreign cities starting from Guangzhou." With the addition of (GUN), (STM) now will serve some 428 million passengers annually, through a worldwide system of 16,400 daily flights, covering 841 destinations in 162 countries, according to governing board Chairman Leo Van Wijk. "We are excited to welcome (GUN), one of Asia's largest and leading carriers, into our network. Offering the highest flight frequencies in China, (GUN)'s membership strengthens the alliance's position in serving the world's fastest growing markets," Van Wijk noted at the ceremony. Air France (AFA) is said to be lobbying China Eastern Airlines (CEA) to join the alliance as well, but (CEA) President Li Fenghua has said he is leaving all options open. Air China (BEJ) and Shanghai Airlines (SHA) are scheduled to join Star Alliance (SAL) on December 12. Hainan Airlines (HNA) and Shenzhen Airlines (SHZ) also have shown interest in joining an alliance.
(STM) Governing Board Chairman Leo van Wijk believes alliances will be around for years to come "because it is clear that a global airline with a single ownership is not yet possible" owing to regulatory issues, nationalism and the complexity of combining carriers. However, he does not think they will retain their current form. In a speech to the European Aviation Club in Brussels, he said alliance composition will change along with the intensity of cooperation between alliance partners. "It is increasingly difficult for an airline to survive without an alliance," he said. But van Wijk also warned carriers that alliances will not solve all their problems. "Look at (ALI). They have been a (STM) member for years, but it is very possible they will not overcome their problems," he said, adding that it should not be taken for granted that (ALI)'s eventual partner will be a (STM) carrier. (AFA)/(KLM) holds 2%, and regularly is cited as a possible candidate to take over the Italian government's 49.9%, which is up for sale.
He also mentioned Varig (VAR), which was a Star (SAL) member, when it collapsed. "Now they are part of Gol (GOT). It is not certain that Gol (GOT), a Low Cost Carrier (LCC), will end up in (SAL)," he said.
Regarding Iberia (IBE)'s membership in Oneworld (ONW), van Wijk stated it is "not certain it will be the same, a year from now" considering the pending changes in ownership. 2 consortia have confirmed interest in acquiring (IBE), 1 that includes (ONW) partner, British Airways (BAB), and the other comprising Spanish investors. The (AFA)/(KLM) Vice Chairman refused to confirm that his airline intends to launch a formal bid for either (IBE) or (ALI).
Referring to recent rumors of a Delta Air Lines (DAL)/United Airlines (UAL) merger, van Wijk admitted a tie-up would have a "significant" impact on the alliance landscape, and stressed he does not know what will happen. "The players [hedge funds] are outside the industry, and the only thing that interests them, is that this will happen, not what the outcome [for the industry] is." Yet he believes that further consolidation in the USA is "inevitable." Whatever occurs there, he concluded, "will mean the end of (AFA)/(KLM) as the largest carrier in the world." But not for long: "We intend to play a further role in the consolidation. We will not just sit and wait."
January 2008: China Airlines (CHI) will be announced as the next full member of the SkyTeam (STM) alliance this year, a source close to the carrier said. Talks between (CHI) and (STM) members started last autumn.
While attempting to hold off Air China (BEJ)'s drive to replace Singapore Airlines (SIA) as a strategic partner and purchase its own sizeable stake, China Eastern Airlines (CEA) found a domestic ally in China Southern Airlines (GUN), with whom it signed a cooperation agreement in Shanghai. The accord outlines a partnership that includes airplane purchasing, ground handling services, marketing and sales, network synergies, loyalty programs and other elements, but does not reference the attempted stake sale to (SIA), nor (BEJ)'s counteroffer. "Our domestic route network is complementary with (CEA)'s, as ours is mainly concentrated in the south, while (CEA) has a broad route network in the east," (GUN) Chairman Liu Shaoyong said. (CEA) Chairman Li Fenghua said, "This cooperation can lower both carriers' operating cost and provide better service to passengers." Liu also noted that (GUN) wants to recommend (CEA) as a future member of (STM), which (GUN) joined 2 months ago. Industry analysts saw the agreement as a sign that (CEA) and (GUN) intend to compete against (BEJ), rather than cooperate or cede to its apparent "super carrier" ambitions. "(CEA) has sent a very clear message to (BEJ) that the latter is not its cooperative partner and (CEA) can cooperate with other domestic carriers besides (BEJ)," China Securities Co aviation analyst, Li Lei said. Industrial Securities analyst, Xia Fulu agreed, saying, "If (BEJ) successfully won its (CEA) bid, and gains more control over the latter, then its next target will be (GUN). That's why (CEA) and (GUN) have vowed to deepen their cooperation now, in order to boost their own growth as they don't want to be merged into (BEJ) in the future."
(GUN) deepened its cooperation with (AFA) by signing a memorandum to sell a 20% stake in its Nanlian Air Catering Co to (AFA) subsidiary, Servair for €7.3 million/$10.8 million. Launched in 1989, Nanlian has registered capital of CNY120 million/$16.7 million and previously was held by (GUN) (75%) and Hong Kong Ruilian Investment (HKRI) (25%). In addition to its purchase from (GUN), (AFA) will take another 5% from (HKRI), giving it a 25% stake in Nanlian. (GUN) Vice Managing Director Xu Jiezhong said the deal "is just a start in stake cooperation between (GUN) and (AFA)." The (STM) partners already are code sharing and have linked certain ground handling operations. In addition, (GUN) and (AFA) are planning to launch a cargo Joint Venture (JV). Xu revealed that negotiations are underway and progressing very well, but that "it's not the time to sign a formal agreement right now."
February 2008: Consolidation speculation is rampant in the world's biggest air transport market, but the widespread talk about possible USA airline tie-ups generally breezes past or altogether ignores the multitude of obstacles faced by carriers attempting to form complicated combinations. In June 2007, US Airways (AMW)/(USA)'s failed $10.2 billion hostile takeover bid for Delta Air Lines (DAL) highlighted the myriad issues associated with attempted airline mergers and that proposal didn't even reach the point where the USA Department of Justice (DOJ) was forced to render a judgment. The current speculation centers on (DAL)'s reported talks with Northwest Airlines (NWA) and, if such a tie-up were to be formed, a subsequent follow-up deal between Continental Airlines (CAL) and United Airlines (UAL). "That scenario seems less likely than popular perception," (AMW)/(USA) Chairman & (CEO) Doug Parker recently argued. "(DAL) and (NWA) getting together makes lots of sense [based on their route networks], but taking (CAL) out of the [SkyTeam] Alliance (STM) doesn't make sense. There's more behind all these transactions than just looking at 2 route maps. It's a lot more complicated than that." (DAL), (NWA), and (CAL) are all (STM) members, and a merged (DAL) - (NWA) obviously would be a (STM) carrier. But presumably, (UAL) is not leaving the Star Alliance (SAL), of which it is a founding member, and therefore (CAL)'s Newark and Houston hubs would become part of Star (SAL) under the (DAL)-(NWA)/(CAL)-(UAL) consolidation scenario. "Why would you go through all the trouble [of a merger] to lose [Newark and Houston] from the alliance?" asks Parker, wondering aloud whether non-USA (STM) members would be ready to embrace a merger that could cost them (CAL)'s network.
(NWA) currently holds a "golden share" in (CAL), that allows it to block the latter from entering into a merger. But once (NWA) enters into a merger agreement, (CAL) has the right to buy back the golden share for a mere $100 and would be free to pursue its own merger deal (even if (NWA)'s merger ultimately was rejected). "If the golden share would become redeemable, that would change our circumstances," (CAL) Chairman & (CEO) Larry Kellner said. While (CAL) is content with "our position relative to the industry today," Kellner said, it "won't hesitate to act" if the industry landscape changes and rivals combine to form a mega-airline. "We do pay attention to [our] relative size," he said. "Size is important in a network business." In terms of traffic, (CAL) ranked 4th among USA airlines in 2007 at 84.31 billion (RPM)s, trailing American Airlines (AAL) (138.45 billion (RPMs), (DAL) (122.07 billion (RPM)s, including regional operations), and (UAL) (117.4 billion (RPM)s). However, it had the most balanced network in terms of international and domestic services and the best service reputation among network carriers.
USA airline executives continue to argue that the industry is too fragmented and that 6 legacy carriers will be unable to grow capacity and keep costs down absent consolidation. "I cannot see any logic in [that argument] whatsoever," Avitas Senior VP Adam Pilarski, a longtime industry observer, said. "If you can't grow capacity with 6, I don't see how going from 6 to 3 changes it in any way. 6 becoming 3 doesn't create more Americans that want to fly." And the problems associated with mergers would create operational difficulties, that could push passengers to Low Cost Carrier (LCC)s and new entrants, Pilarski contends: "I don't see any synergies that get translated into cost savings or revenue enhancement. Yes, a few consultants, a few banks, a few executives will make money off of mergers, but the negatives for the industry are obvious. You are trying to merge 2 different cultures, which never works well. You are talking about airlines that may belong to two different alliances, that have very different fleets, different operating systems. How do you integrate the pilot (FC) lists? There are a lot of headaches that could cost you a lot in productivity. I'm fairly confident that [mergers] will be problematic."
While (AAL) Executive VP Finance & Planning & (CFO) Tom Horton believes that consolidation could "lead to greater efficiency," he acknowledges that "there are a lot of challenges to consolidation in our industry." Of course, any merger agreement will face scrutiny from the (DOJ) and members of Congress, several of whom already have vowed to fight consolidation on the grounds that it will result in lost jobs and diminished service. While USA airline officials appear to believe that the (DOJ) is more likely to approve a merger than in 2001, when it blocked (UAL)'s proposed acquisition of then-USAir (USA), the fact that a new President (and a new attorney general) will take office next January may be driving the latest round of talks. "Since there is going to be a change in administration, there will be some delay" in clearing a merger unless an agreement is submitted by the end of this month, Parker says, predicting that any later submission likely would get caught up in the changeover. But he adds that such approval would still come: "It's more of a timing issue. Irrespective of the administration, the arguments for consolidation are so compelling that I'm not overly concerned that the next administration is going to be against mergers." Other factors affecting potential mergers are the ongoing decline of USA airline stock prices and the credit crunch. Airline shareholders are unlikely to be enticed by the prospect of "cashing out" under-performing stocks in a merger, though Parker insists that they would be interested in moving their shares "to a stronger airline." And the state of credit markets means a carrier will have more difficulty raising money to finance an "acquisition" of another carrier. "It doesn't change the likelihood of mergers, just the structure," Parker said. "The structure will move from debt financing to equity financing" and merger agreements will be "equity-equity transactions."
(NWA) may face an additional hurdle on its way toward a merger with (DAL). While (NWA)'s hometown paper, the "Star Tribune," quoted a source calling the merger agreement "ready to sign" as soon as the respective pilot (FC) unions resolve issues concerning seniority, "Reuters" reported that $445 million in loans and lease concessions provided to (NWA) prior to its exit from bankruptcy, are contingent upon its maintaining a hub and headquarters in Minnesota. "They have a legal commitment to this state, and we expect them to uphold it," a Minneapolis Airports Commission spokesperson told the news service, while Minnesota Governor, Tim Pawlenty reportedly wrote a letter to the (CEO)s of both carriers saying, "We trust and expect these commitments to be honored." A spokesperson for Pawlenty told "Reuters" that the airlines would discuss the issue "at the appropriate time, after a merger is announced."
The "Star Tribune" reported that (AFA)/(KLM) will invest $750 million in the combined (DAL)/(NWA). It is a (STM) partner of both USA carriers.
March 2008: SkyTeam (STM) priorities for 2008, including the recruitment of new members and consolidating its operations at London Heathrow (LHR) are described in the attached article: "STM-MAR08."
The USA Dept of Transportation (DOT) and the European Commission (EC) announced a "joint research project" to determine the impact of airline alliances on competition and the potential impact of transatlantic "open skies." The bodies will interview airlines, travel agents, analysts and consumer groups, in addition to performing data analysis. A report will be published in mid-2009.
FlyLAL Lithuanian Airlines (LIJ) has been invited to join (STM) as an associate member, the carrier announced, joining Spain's Air Europa (ARE), Panama's Copa Airlines (COP), and Kenya Airways (KEN) in the alliance's associate program. Tarom (TRM) of Romania and Beirut-based, Middle East Airlines (MEA) also are potential associate members. (LIJ) said the invitation followed a 2-year negotiation and that "final criteria for admission" and a join date "will be confirmed in the short run." It currently operates 3 737-300s, 5 737-500s and 4 Saab 2000s. It plans to introduce a 737-200 on April 1.
April 2008: Delta Air Lines (DAL) and Northwest Airlines (NWA) announced a merger agreement to create a mega-airline, that would be the world's largest, absent divestitures with aggregate annual revenue of >$35 billion, a fleet of >800 airplanes and 75,000 employees world wide. Following months of speculation, the carriers unveiled a proposed combination in which (DAL) essentially would acquire (NWA) in a stock-swap transaction. (NWA) shareholders would receive 1.25 shares in the new carrier for each current (NWA) share, a 16.8% premium based on current prices. The new airline, to retain the "Delta" (DAL) name and be based in Atlanta, will have an enterprise value of $17.7 billion, according to the companies. (DAL) (CEO) Richard Anderson would be (CEO) of the combined entity. "The transaction is expected to generate >$1 billion in annual revenue and cost synergies from more effective airplane utilization, a more comprehensive and diversified route system, and cost synergies from reduced overhead and improved operational efficiency," the airlines said in a statement. "The company expects to incur one-time cash costs to not exceed $1 billion to integrate the two airlines." The merged carrier is expected to have liquidity of nearly $7 billion at closing. The merger must be approved by both companies' shareholders and gain required regulatory approvals, including antitrust clearance from the USA Department of Justice. "It is expected that the regulatory review period will be completed later this year," the carriers said.
(DAL) Chairman, Daniel Carp would become Chairman of a new board of directors that would total 13 members, comprising 7 current (DAL) directors, 5 (NWA) directors and 1 representative from the Air Line Pilots Association (ALPA). (NWA) Chairman Roy Bostock would become Vice Chairman and current (NWA) (CEO) Doug Steenland would be a member. (DAL) President & (CFO) Ed Bastian would have the same roles with the new (DAL).
The new airline and its regional partners would have a network of 390 destinations in 67 countries. "We're announcing a transaction that is about addition, not subtraction, and combines end-to-end networks that open a world of opportunities for our customers and employees," Anderson said. Steenland added that the "new carrier will offer superior route diversity across the USA, Latin America, Europe, and Asia and will be better able to overcome the industry's boom-and-bust cycles. The airline will also be better able to match the right planes with the right routes."
The new (DAL) plans "no hub closures" and will feature "improved international access to benefit small communities," the carriers said, adding that consolidation is necessary because "record fuel prices have fundamentally changed the economics of the airline industry." Fuel costs have "significantly [eroded] the financial benefits of restructuring" gained during both carriers' Chapter 11 processes that ended last year. A key to the accord is a tentative agreement with (DAL)'s pilots (FC) to extend their existing collective bargaining agreement through 2012. (DAL) pilots (FC), represented by (ALPA), would gain a 3.5% equity stake in the new company if the agreement is ratified. (DAL) said it will "use its best efforts to reach a combined Delta (DAL)-(NWA) pilot (FC) agreement, including resolution of pilot (FC) seniority integration, prior to the closing of the merger." USA-based non-pilot employees of both companies additionally would be provided a 4% equity stake in the new airline upon closing. No "involuntary furloughs" of front line workers are anticipated, according to the airlines, which promise to keep current pension plans intact.
The merger agreement is likely to spark negotiations between Continental Airlines (CAL) and United Airlines (UAL) regarding a potential tie-up. (NWA)'s "golden share" in (CAL), which allows it to block its rival from entering into a merger, now can be bought back by (CAL) for $100. (UAL) repeatedly has voiced its support for industry consolidation.
The announcement of the merger agreement between (DAL) and (NWA) rippled across the USA commercial aviation landscape as the respective pilot (FC) groups took opposing sides and the identity of future consolidation candidates was scrutinized. Initially the principal roadblock to a (DAL)/(NWA) combination, the respective pilot (FC) groups represented by the Air Line Pilots Association (ALPA) remained at odds, with the (NWA) Master Executive Council (MEC) announcing that it "strongly opposes the merger as it stands." With (DAL)'s approximately 6,000 pilots (FC) agreeing to new contract terms independently, the (NWA) (MEC) said its roughly 5,000 pilots (FC) "will be disadvantaged in obtaining a joint contract, and potentially in the seniority list integration process" and that without parity, they potentially could be "on a B-Scale for years." (MEC) Chairman Dave Stevens said he met with (DAL) executives and unsuccessfully "suggested" they delay the merger announcement "and spend a short period negotiating a joint contract with a focus on their harmonization issues." Having previously rejected arbitration as a means to settle the seniority dispute, (DAL) pilots (FC) now favor the process, he said, and "may choose not to cooperate on a joint contract for the benefit of the (NWA) pilots (FC), while they seek an agreement on seniority that favors the (DAL) pilots." He warned that "no pilot (FC) group is going to put up with this" and that "no amount of money can sustain a carrier which creates this level of discord. We will be turning our efforts to stopping this merger." (DAL) pilots (FC) approved of the deal, saying that their new contract includes "improvements and financial returns for the value the pilots (FC)'s participation provides to the merger" and is a "far super solution" to the "traditional merger scenario."
The International Association of Machinists (MT) and Aerospace Workers, which represents (NWA)'s 12,500 ground employees, said it opposed the merger on the grounds that failure would result in the liability for each airline's frozen, underfunded pension plans falling on the government's Pension Benefit Guaranty Corp. (NWA) cabin staff (CA) represented by the Assn of Flight Attendants-CWA will "demand an end to concessions and a stake in the merged [airline] equal to equity granted other labor groups." It did not oppose the combination but promised it would look to recover concessions granted during (NWA)'s bankruptcy and "immediately begin to seek to negotiate improvements to our collective bargaining agreement."
Meanwhile, the consolidation spotlight shifted toward United Airlines (UAL) and Continental Airlines (CAL), considered by many to be the candidates most likely to merge in the wake of this merger announcement. Merrill Lynch said that "all fingers are pointing to a (CAL)-(UAL) tie-up." (CAL) Chairman & (CEO) Larry Kellner acknowledged that the (DAL)/(NWA) merger "will change the competitive landscape for (CAL) and the entire airline industry" and that (CAL)'s "preference" to remain independent will be reviewed. (DAL)'s agreement with (NWA) will allow (CAL) to recover the latter's "golden share" and pursue its own combination. (UAL) Chairman, President & (CEO) Glenn Tilton said "the old paradigms no longer apply" and echoed his support for industry consolidation. While press reports and analysts said a (CAL)/(UAL) merger could come soon, the pilots (FC) from both carriers issued a joint statement warning that they will "not allow any merger unless management meets or exceeds our demands to be treated fairly and equitably."
Executives from (DAL) and (NWA) moved quickly to persuade investors, employees, consumers and regulators, that the proposed blockbuster merger of the 2 carriers will be positive for all, while insisting they will avoid many of the pitfalls of past mergers. "Not all mergers are created equal," (DAL) (CEO) Richard Anderson, who would run the combined airline, told analysts. Even though the new (DAL) would be the world's largest, with >800 mainline airplanes and >$35 billion in annual revenue, he asserted that the tie-up will not be unwieldy, because both airlines are doing relatively well, and the 2 companies already code share and are SkyTeam (STM) partners. "Mergers since deregulation and even before involved carriers one or the other of which were in distress," he said. "In this case, you have 2 carriers who just came off strong performances in 2007." In addition, the 2 already cooperate. "We are well ahead of the game by having this merger take place within an existing alliance relationship," (NWA ) President & (CEO) Doug Steenland said. "As alliance partners, we already have pretty integrated Information Technology (IT) systems." Anderson and Steenland insisted there would be little trouble gaining antitrust clearance. While the new (DAL) would have a "compelling package of worldwide destinations that no other USA carrier could match," Steenland noted that it still would hold only a 20% share in the USA domestic market, while Southwest Airlines (SWA) "will remain the largest domestic carrier." Since domestic overlap of routes is "minimal," with only 12 nonstop city-pairs operated by both, and their hubs located in different parts of the country, "the impact of the merger on competition will be little if any," he said.
The USA Department of Justice said that it "will look at the competitive effects of the transaction and how it would affect consumers." The carriers are hoping to finish the regulatory review process before a new President takes office next January.
Anderson and Steenland likely will appear at several Congressional hearings in coming weeks and could face tough questions. Lawmakers from (NWA)'s home state of Minnesota are particularly unhappy with a deal that will see the state lose its status as headquarters of a major international airline. The most vocal critic was Representative James Oberstar (Democrat-Minnesota) Chairman of the House Transportation & Infrastructure Committee. If the merger is approved, it would be "probably the worst development in aviation history" and lead to a "cascade" of other mergers that will leave the USA with just 2 or 3 mega-airlines that could drive the Low Cost Carrier (LCC)s out of business, he said. "We will marshal all the forces we can" to fight the merger, he vowed.
The USA Department of Transportation (DOT) tentatively approved transatlantic antitrust immunity for 6 (STM) members: (AFA), (DAL), (KLM), (NWA), (ALI), and (CSA) nearly 4 years after (DAL) and (NWA) 1st petitioned the (DOT) to allow the alliance. After an initial denial, they reapplied last June with a substantially revised agreement. Currently, (DAL) has antitrust immunity with (AFA), (ALI), and (CSA), while (NWA) enjoys immunity with (KLM). The (DOT) said it "concluded that the proposed alliance is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options, such as lower fares and more nonstop and connecting flights." In response, (DAL) Executive VP Network Planning & Revenue Management Glen Hauenstein said he was "pleased" that the (DOT) "recognizes once again that antitrust immunity offers significant advantages to customers" and that the grant will "significantly strengthen the (STM) alliance." (AFA) and (KLM) said the preliminary decision "seems to be a logical response to both the (AFA)-(KLM) merger and the new European Union (EU)-USA "Open Skies" agreement," and that they would "welcome a quick and final decision from the USA Authorities." The immunity will enable (AFA), (KLM), (DAL), and (NWA) to establish a joint venture agreement among the four and ultimately integrate their transatlantic operations. (AFA) and (DAL) last year initiated their own partnership modeled after the (NWA)/(KLM) tie-up launched a decade ago. The (DOT) proposed that as a condition of obtaining immunity, the carriers must launch their alliance within 18 months.
(AFA)-(KLM) said it was "pleased" by the (DAL)/(NWA) merger announcement and that it looked forward to combining with the new carrier "in the form of a joint venture offering a network with extremely attractive multiple hubs." (AFA)-(KLM) said it had offered short-term financial aid to the airlines as part of the transatlantic alliance granted antitrust immunity last week, but said that "considering the strong liquidity position of the combined airlines," it is "totally satisfied with the new framework which strengthens our North Atlantic partnership without the need for financial aid on our part."
Although not part of the (STM) tie-up, (CAL) "will always be welcome to remain in (STM) and enjoy all of the benefits of the alliance" if it chooses to remain independent, (NWA) (CEO) Doug Steenland said. A merger with United Airlines (UAL) likely would send (CAL) to the Star Alliance (SAL).
British Airways (BAB) issued a statement confirming that it is "exploring opportunities for cooperation with American Airlines (AAL) and (CAL)" and that "further details will be announced when appropriate." (CAL) said 2 weeks ago that it was reconsidering its membership in (STM) and would examine other potential alliances as well as a merger. Over the weekend, (CAL) declined an offer to merge with (UAL).
May 2008: Opposition from some quarters to potential moves by USA airlines in response to the recent Delta Air Lines (DAL)/Northwest Airlines (NWA) merger announcement, is fierce, with Virgin Atlantic Airways (VAA) vowing to fight a British Airways (BAB)/American Airlines (AAL)/Continental Airlines (CAL) transatlantic alliance and United Airlines (UAL)'s pilots (FC) expressing strong disapproval of management's reported merger negotiations with US Airways (AMW)/(USA).
(CAL) said that it has ruled out a merger, but the current SkyTeam (STM) member is on the outside looking in at a (DAL)-(NWA)-Air France (AFA)-(KLM) transatlantic alliance and, according to (BAB), is exploring the possibility of leaving (STM) and joining with (BAB) and (AAL) in those carriers' long-proposed transatlantic partnership.
Virgin (VAA) Group Chairman Richard Branson said that he would "fight tooth and nail" against such an alliance. "When (BAB) and (AAL) 1st tried to get together nearly 10 years ago, the regulators ruled it was against the consumer interest," he said. "A link-up between (BAB) and (AAL) is still anticompetitive, and now they have the cheek of trying to add (CAL) to the mix too. This triple whammy would reduce effective competition across the Atlantic and the regulators should make it absolutely clear that it would have no chance of getting off the starting grid."
Meanwhile, a possible (UAL)-(AMW)/(USA) combination, apparently being explored in the aftermath of the (DAL)-(NWA) announcement, would have to overcome considerable misgivings by pilot (FC) groups. (USA) still is struggling to integrate former America West Airlines (AMW) and former US Airways (USA) pilots (FC) into one group, creating a problematic East-West split among its flight deck (FC) crews. Air Line Pilots Association (ALPA) (UAL) (MEC) Chairman Steve Wallach said in a statement that a merger with (AMW)/(USA) "would be extremely negative," adding: "Continued difficulties [after more than two-and-a-half years] associated with [(AMW)-(USA)] pilot (FC) seniority integration are well chronicled. Even those reports grossly underestimate the complexity of seniority integration, which likely will not be solved without years of litigation. US Airways (AMW)/(USA)'s pilot (FC) integration problems have created a toxic stew, as any carrier that seeks to merge with it will quickly discover." (AMW)/(USA) pilots (FC) recently rejected (ALPA) representation over frustration with the union's lack of progress in negotiations with management.
Korean Air (KAL) is eyeing opportunities to expand its market share in North America, using Incheon as a gateway hub to China, General Manager North America, Song Bo Young said in Seoul. (KAL) currently serves 23 Chinese destinations, and also will promote Incheon as a gateway from the USA to Vietnam, Malaysia, and Singapore. The proposed merger between (NWA) and (DAL), which already are code share partners with (KAL) through (STM), will strengthen its North American market position, Song said. Last year, North American service added some $800 million to (KAL)'s bottom line. "We think we have enough gateways in the USA," he said. "Now we want to make alliances in each area." He said the carrier soon will announce a code share agreement with Alaska Airlines (ASA) that will enable it to expand its presence in the Pacific Northwest and Alaska. "Next year, we expect to increase traffic to Las Vegas and Dallas."
A380s (8 are on order), which are scheduled for delivery beginning in 2010, will be used on flights to New York (JFK) and Los Angeles. (KAL) also is a launch customer for the 787 with 10 firm orders. Last September, it launched a television advertising campaign in the Washington area, that is beginning to pay off in greater name recognition and brand awareness, Song said. This June, it will begin flying to Sao Paulo Guarulhos via (LAX). "We expect a growing economy between Asia and Brazil. We are focusing on that market," he said. (KAL) has a codeshare with (LAN) Airlines and is working on establishing 1 with a Brazilian carrier. Song said that Mexico likely will be the next destination announcement, but timing is uncertain.
Tarom (TRM) and (STM) announced an Alliance Associate Adherence Agreement, paving the way for the Romanian carrier to join the group as an associate. Air Europa (ARE), Copa Airlines (COP), and Kenya Airways (KEN) already are associates and FlyLAL Lithuanian Airlines (LIJ) said in March that it was invited to begin the associate membership process. (TRM) will offer (STM) passengers +130 additional daily flights to Eastern Europe and the Middle East, the alliance said. (TRM), which will be sponsored by (AFA), operates a fleet of 21 airplanes and carries >1.8 million passengers a year to 40 locations.
The USA Department of Transportation (DOT) announced a grant of transatlantic antitrust immunity to (STM) partners (DAL), (NWA), (AFA), (CSA), (ALI), and (KLM), upholding a tentative approval issued last month. The 6 now will be able to "coordinate their transatlantic fares, services and capacity as if they were a single carrier in these markets, subject to certain conditions," the (DOT) said, adding that the approval is unrelated to (DAL)'s and (NWA)'s merger plans. Those are subject to a separate review. The (DOT) said the alliance "is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options," but that the alliance must be implemented within 18 months as a condition of immunity. (NWA) President & (CEO) Doug Steenland said, "This enhanced ability to coordinate among the carriers will provide a more positive, seamless experience for our customers with single-ticketing, seamless baggage handling and greater customer ease and convenience. It is also good news in light of skyrocketing fuel costs."
(STM) hopes to announce the addition of an Indian partner later this year, governing board Chairman, Leo van Wijk said. "Discussions with Kingfisher [Airlines] (KFH) are progressing," he said. "We hope to conclude the negotiations in autumn." (STM) has been looking to add an Indian carrier for several years and was the 1st group formally to invite 1 (Indian Airlines (IND)) into an alliance early last year. The joining did not materialize owing to (IND)'s merger with Air India (AIN) some months later, and the combination opting to join the Star Alliance (SAL). Jet Airways (JPL) is still maintaining publicly that it prefers independence for the time being. Van Wijk also reiterated that Brazil is the other key market where (STM) is seeking a suitable carrier. There has been renewed speculation about Gol/Varig (GOT)/(VAR) joining the group.
June 2008: Continental Airlines (CAL) and United Airlines (UAL) signed a "framework agreement to cooperate extensively, linking their networks and services world wide," and (CAL) revealed that it will leave SkyTeam (STM) to join the Star Alliance (SAL), with (UAL) and (CAL) planning to form joint venture operations with other (STM) carriers for transatlantic services, as well as flights to Latin America and Asia. Both airlines recently said they would not enter into any merger agreements and both will remain independent and retain their brands. But the pact goes "well beyond a traditional codeshare agreement," (UAL) Chairman, President & (CEO) Glenn Tilton said. It will include "significant cooperation" on frequent-flier programs, airport lounges, facility utilization, information technology (IT), and procurement. The deal stems from "efficiency opportunities identified and relationships developed during the parties' earlier merger discussions," the airlines said. Domestically, (CAL) and (UAL) plan "a coordinated process for reservations/ticketing, check-in, flight connections, and baggage transfer."
(CAL) said it will ask the USA Department of Transportation (DOT) to allow it to join (UAL), Lufthansa (DLH), Air Canada (ACN), and 6 other (STM) carriers in an already-established antitrust-immunized alliance. "This will enable Continental (CAL) to establish transatlantic and other international joint ventures" with (STM) members, that will include pooled revenue, it said. Joint ventures also are planned for Latin America and Asia.
(CAL) has been considering leaving (STM), since (DAL) and (NWA) announced a merger agreement. It explored partnering with Oneworld (ONW)'s British Airways (BAB), and American Airlines (AAL). "In a network business, there is significant value gained from linking with larger networks to provide truly national coverage and expanded global reach," (CAL) Chairman & (CEO) Larry Kellner said. He and Tilton met in Chicago to sign a framework accord outlining a "systemwide alliance and cooperation principles," the carriers said. Both antitrust immunity and codesharing agreements are subject to approval by applicable USA and foreign government agencies. "(CAL) intends to terminate its existing agreements with (STM) members, although (CAL) may not be successful," (CAL) cautioned.
(UAL) and (DAL) attempted to form a similar extensive cooperation agreement in 1998, but the deal died in the face of strong opposition by the Air Line Pilots Association (ALPA). They formed a more limited marketing partnership that ended in 2003.
August 2008: While still likely months away from gaining USA Department of Justice (DOJ) antitrust clearance for their planned merger, Delta Air Lines (DAL) and Northwest Airlines (NWA) received approval for the combination from the European Commission (EC). The (EC) said the transaction would be "mainly complementary" as the carriers hub in different USA cities and therefore operate largely separate transatlantic routes from each other. Most of the overlapping activities relate to routes where one offers direct and the other indirect services, it noted, pointing to only 3 routes where both carriers offer a direct service: Amsterdam to Atlanta, Amsterdam to New York, and Paris to Detroit. "The results of the market investigation did not identify any concerns on the overlap routes," it said. (DAL) (CEO) Richard Anderson, who will head the combined airline, described the (EC) approval as "another important step toward completing our pro-competitive" merger with (NWA), adding, "We continue to work closely with the USA (DOJ) and remain confident that we will be able to finalize the merger by the end of the year." (DAL) announced in April that it would acquire (NWA) in an all-stock transaction to create the world's largest airline.
The (EC) said its assessment took into account the fact that (DAL) and (NWA) are both SkyTeam (STM) members, and already cooperate extensively on transatlantic routes with the European member airlines of that alliance. It stressed that its decision on the transaction is "without prejudice to its ongoing investigation of the (STM) alliance." It launched an investigation into possible antitrust abuse by (STM) members in 2006.
September 2008: SkyTeam (STM) is offering discounted multi-trip passes for travel within China.
December 2008: With Northwest Airlines (NWA) merging with Delta Air Lines (DAL) and ceasing to exist as an individual airline, (STM) will consist of 10 member airlines, once the integration of (NWA) into (DAL) has been completed. Once Continental Airlines (CAL) leaves (STM) for the Star Alliance (SAL) on October 24, 2009 (joining the (SAL) on the next day), it would only consist of 9 member airlines, which would become the 3rd-largest airline alliance in the world behind the (SAL) and the Oneworld (ONW) alliance (smallest in terms of the big 3 airline alliances) in terms of number of member airlines (but may not be necessarily the 3rd-largest airline alliance and the smallest of the big 3 in the world in terms of number of passengers served).
February 2009: Aeroflot (ARO) said "preliminary analysis" of its 2008 financial performance indicated a +26.2% year-over-year growth in revenue based on Russian accounting standards. "This gives ground for us to expect a positive financial result for 2008, close to the 2007 level," (ARO) said. It reported a +$313.4 million profit under (IFRS) in 2007. It transported 9.3 million passengers in 2008, up approximately +13.4%, but load factor fell -0.3 point to 70.9% LF.
(ARO) launched 2x-weekly, Moscow Sheremetyevo to Eilat Ovda flights aboard an A320. It also suspended flights to Magadan from Krasnoyarsk and Novosibirsk pending certification of Airbus (EDS) airplanes for operation at the airport. The route currently is served with a Tu-154. (ARO) confirmed its interest in purchasing a stake in (CSA) Czech Airlines following the Czech government's February 5 tender launch. It intends to sell 91.5% of (CSA) in a 2-round tender. (ARO) acknowledged that it cannot own >49% of (CSA) owing to European regulations but said, "We aim to have a partner who would be a Czech resident." (CEO) Valery Okulov said (ARO) is "talking to prospective partners and will be able to declare its choice shortly." (ARO) said it will maintain (CSA)'s status as the country's flag carrier, which would "get an ability to operate on a much wider scale" in partnership with (ARO). "The synergy is certainly there. We started our cooperation long before any global alliances appeared. We have even more in common now that both belong to SkyTeam (STM)," Okulov said.
March 2009: The SkyTeam (STM) alliance serves 905 airport destinations in 169 countries, its 2008 annual passengers totalled 462 million, and its fleet size is 2,971 airplanes.
Pierre-Henri Gourgeon (CEO) of Air France (AFA)/(KLM) confirmed that (AFA)/(KLM) will submit an official expression of interest for (CSA) Czech Airlines' privatization by the March 23 deadline, "Reuters" reported. "We understand the Czech government is interested in finding a buyer for a significant part of (CSA). We don't have a lot of information but we are of course very attentive because (CSA) is a SkyTeam partner (STM)," Gourgeon said. (AFA)/(KLM) earlier had indicated its interest in (CSA) as part of its strategy to participate in the consolidation of the European airline industry.
(STM) partners (AFA)/(KLM) and Aeroflot (ARO) were among the 4 groups filing official yet nonbinding expressions of interest in fellow alliance member (CSA), the Czech Finance Ministry announced. The Czech government is selling its 91.5% stake in the airline. Other interested parties are charter carrier Travel Service (TSF)/Unimex Group and Odien, a private investor. (AFA)/( KLM) said the Czechs do not expect any binding offers before June, giving the bidders time to perform due diligence. It said (CSA)'s "network is highly complementary to that of (AFA)/(KLM)" and that it would "enable the group to strengthen its position in Central and Eastern Europe." (ARO) confirmed its intention to "maintain (CSA)'s status as a national Czech airline" and said that because it is not a citizen of an (EU)-member nation and cannot own >49% of (CSA), it intends to partner with a Czech entity during the tender's 2nd stage. "(CSA) is the largest and most stable airline in Central Europe in economic and market terms. By joining and mutually expanding their route networks, (AAO) and (CSA) will be able to become more profitable," (ARO) (CEO) Valery Okulov said. (ARO)'s bid occurred amid the controversy surrounding Okulov's future with the company. Reports surfaced earlier this month that Russian Transport Minister, Igor Levitin wished to replace Okulov and assign him to a Ministry position. A board member representing 30% shareholder National Reserve Corporation said removing Okulov would be "madness" and "like putting out a fire with kerosene" in comments reported by "Reuters."
April 2009: The SkyTeam (STM) alliance will introduce a centralized managing entity, based in Amsterdam, that will handle marketing, sales, airport synergies and transfer product, cargo, advertising and branding, alliance operations, finance, corporate communications and administration. It will be headed by Managing Director Marie-Joseph Male, an Air France (AFA) executive, and will be in place before year end. "In the (STM), we have always prided ourselves on our collaborative nature. However, given the changing landscape and the increased number of alliance members, we decided to adopt an organizational structure that allows us to navigate market realities more effectively," Chairman Leo van Wijk said.
The (STM) also unveiled a blue-and-silver alliance livery that will feature on at least 1 airplane operated by each member carrier by year end. The (STM) alliance expects to announce at least 1 and perhaps several new members this year and is talking with Malaysia Airlines (MAS) and Vietnam Airlines (VIE), with China Eastern Airlines (CEA) and China Airlines (BEJ) also in the picture, Chairman Leo van Wijk told "Luchtvaartnieuws." The (STM) currently has 11 full members and three associate members, one of which, Copa Airlines (COP), "informally" has indicated its intention to leave. Former partner Continental Airlines (CAL) is trading the SkyTeam (STM) for the Star Alliance (SAL) in October, and (COP) likely will follow suit.
The USA Department of Transportation (DOT) approved Continental Airlines (CAL)'s entry into the Star Alliance (SAL), granting tentative antitrust immunity (ATI) to the carrier and certain (SAL) partners and to (CAL)'s proposed transatlantic joint venture (JV) with Air Canada (ACN), Lufthansa (DLH) and United Airlines (UAL).
The (SAL) alliance and the 4 carriers seeking the (JV), to be called "Atlantic Plus-Plus," petitioned for (ATI) last summer. (ATI) enables airlines to coordinate their operation and act as a single carrier for international air services, sharing capacity, sales and marketing and revenue. The (DOT) said (CAL)'s entrance into (SAL) and the quartet's (JV) "would be in the public interest because it would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times, and reduce fares." (UAL) and (DLH) have held transatlantic (ATI) since 1996.
Atlantic Plus-Plus must be implemented within 18 months as a condition of immunity, the (DOT) said, adding that airlines would remain subject to antitrust regulations with respect to their domestic services.
"(CAL)'s entrance into the (SAL) will provide substantial benefits for consumers world wide while preserving domestic competition and jobs" (CAL) Chairman & (CEO) Larry Kellner said. "In addition, a timely final approval will allow (CAL) to provide a seamless transition for its customers from the SkyTeam (STM) alliance to the (SAL) Alliance this fall."
(ATI) granted to the alliance covers the aforementioned 4 carriers as well as Austrian Airlines (AUL), bmi (BMA), (LOT) Polish Airlines, the (SAS) Group, Swiss International Air Lines (CSR) and (TAP) Portugal.
The (DOT) said objecting parties will have 3 weeks to file their statements regarding the latest ruling. Oneworld (ONW) members: American Airlines (AAL), British Airways (BAB), Finnair (FIN), Iberia (IBE) and Royal Jordanian (RJA) expect the (DOT) to issue its decision on their (ATI) application in the 2nd half of this year.
Vietnam Airlines (VIE) received government permission to move forward with the purchase of 10 A321-200s for delivery in the 2011 to 2014 period and to join the SkyTeam alliance (STM), according to press reports from Vietnam. (STM) signed a preliminary agreement outlining (VIE)'s "intentions to undertake exclusive discussions" to join the group next year, which would bring the (STM) back to 10 members following the departure of Continental Airlines (CALO) on October 24.
(VIE) would be (STM)'s 3rd Asian member after co-founder, Korean Air (KAL) and China Southern Airlines (GUN), which joined in 2007.
"Vietnam Airlines will enhance (STM)'s network in S E Asia, adding a number of new destinations throughout the region," (STM) Steering Committee Chairman & Air France (AFA) VP International Affairs & Alliances, Dominique Patry said. "Given its existing service to 5 alliance hubs and its broad international network, (VIE) is a strategic partner for the alliance." (VIE) serves Beijing, Guangzhou, Paris Charles de Gaulle, Incheon and Tokyo Narita. (VIE) operates routes to 24 international and 20 domestic destinations in total and will offer (STM) access to 17 new destinations (14 in Vietnam). It currently code shares with (GUN) and (KAL).
May 2009: Copa Airlines (COP) confirmed that it will leave the SkyTeam (STM) alliance on October 24 along with Continental Airlines (CAL).
(CEO)s of the Air France (AFA)/(KLM) Group and Delta Air Lines (DAL) signed a profit/loss-sharing joint venture (JV) agreement in Paris covering a wide network around 10 hubs representing >200 flights and approximately 50,000 seats per day. The airlines said their (JV), which will concentrate on service to/from Amsterdam, Atlanta, Detroit, Minneapolis, New York (JFK) and Paris Charles de Gaulle as well as Cincinnati, Lyon, Memphis and Salt Lake City, represents about 25% of the industry's total transatlantic capacity. "This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world's leading long-haul market, "(AFA)/(KLM) President & (CEO) Pierre-Henri Gourgeon said at the Paris news conference, stressing that by "optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering." The (JV) is expected to generate annual revenue of >$12 billion based on 2008 to 2009 data and $150 million in synergies for each of the 2 groups by the 2nd year.
It covers routes between North America and Europe as well as between Europe and South America and between the USA and Africa and the Middle East. On all routes between North America and Europe, between Amsterdam and India, and between North America and Tahiti, (AFA), (KLM) and (DAL) will "consensually" share capacity, revenue, costs and profits/losses. The deal can be cancelled only with a 3-year notice after an initial 10-year term.
The (JV) effectively replaces 2 existing agreements, the 1 between (AFA) and (DAL) signed in 2007, and the 1 between (KLM) and Northwest Airlines (NWA), now part of Delta (DAL), signed in 1997. The (KLM)-(NWA) deal was the 1st transatlantic (JV) between 2 carriers. "We know from experience that the success of a (JV) calls for shared vision and long-term commitment, the simplest of operating rules and fair sharing of revenues and costs," (KLM) President & (CEO) Peter Hartman emphasized. The (JV) will not lead to the creation of a subsidiary, he said.
The (USA) Department of Transportation granted the SkyTeam (STM) partners expanded antitrust immunity last year and "other competition authorities have received the same information" as USA regulators, Gourgeon said, adding that he is not worried the deal will be blocked by the European Commission (EC). Alitalia (ALI) is interested in joining but first must receive anti-trust immunity (ATI), he said. (ALI) was included in the (STM) (ATI) but went bankrupt soon after. (ATI) cannot be transferred from a bankrupt company to a new company.
Gourgeon insisted the agreement is not a virtual merger or a prelude to an equity swap and noted that in the current environment, he prefers to preserve the group's cash position. (DAL) (CEO) and former Northwest (NWA) (CEO) Richard Anderson added, "What we discovered over the years is that there is no need to make an equity investment because we can obtain all the benefits without doing so."
(S7) Airlines (SBR) will join Oneworld (ONW) next year, the 10-member group announced, adding 54 new destinations and 8 new countries: Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan to the alliance's network. (SBR) will be the 2nd Russian carrier in an alliance. Aeroflot (ARO) joined SkyTeam (STM) 3 years ago. (SBR)'s 1st step toward integration will be its June 1 addition to (ONW)'s Global Explorer round-the-world fare. British Airways (BAB) will be its sponsor and adviser during the 18-month alliance implementation program.
(SBR) carried 6 million passengers in 2008 and operates 26 A320 family airplanes, 7 A310s and 2 767s. It earned a +$3 million net profit in 2008 on revenue of $1.7 billion and is 25% state owned. (ONW) members (BAB), American Airlines (AAL), Iberia (IBE), Japan Airlines (JAL) and Royal Jordanian (RJA) serve (SBR)'s Moscow Domodedovo hub. Mexicana (CMA) is set to join the alliance this year. "(SBR) fills 1 of (ONW)'s few remaining membership white spaces with a carrier that matches our alliance's demanding quality requirements. It will expand (ONW)'s presence substantially in Russia and the [CIS]," (ONW) Managing Partner John McCulloch said. (SBR) (CEO) Vladimir Obyedkov said membership "will also strengthen us financially, through revenues from passengers transferring to our network from our (ONW) partners and the cost reduction opportunities the alliance offers."
Meanwhile, in Athens, Star Alliance (SAL) (CEO) Jaan Albrecht said he was not bothered by the fact that his group will be the only 1 of the 3 global alliances to lack a Russian member. He stressed there is no "rush for Russia" and that the (SAL) talked to (SBR), the defunct AiRUnion alliance and Transaero Airlines (TRX) in the past as part of its strategy to recruit members in Russia, Brazil, India, and China. It has secured commitments from major carriers in the latter three nations. "The Russian airline industry is still very unsettled," he said at the Aegean Airlines (CRM) joining event in Athens. "There are still too many airlines in Russia and it's still a very uncertain environment. Look at what happened to AiRUnion. 2 years ago they were the upcoming airline group in the (CIS), but they folded. We have time. e will not rush into announcing a member because others do so."
June 2009: SkyTeam (STM) said the 1st level of its 1st co-branded alliance lounge, located in London Heathrow's Terminal 4, will open this month. The facility eventually will consist of 2 floors covering >1,600 sq m. The 2nd level is scheduled to open in November. Eligible passengers on Delta Air Lines (DAL), (KLM), Continental Airlines (CAL), and Kenya Airways (KEN) will have access immediately, with more coming as additional (STM) carriers shift operations to T4.
Continental Airlines (CAL) Chairman & (CEO) Larry Kellner said (CAL) will enter the Star Alliance (SAL) "hours or days" after it exits the SkyTeam (STM) Alliance on October 24. "The difference for us between the (STM) and the (SAL) is that we and Delta (DAL) have a lot of overlap, whereas within the (SAL) there's a lot of open area," he said. "So it's a good fit for us."
July 2009: Shanghai Airlines (SHA) hopes to maintain its membership in the Star Alliance (SAL) even after its merger with China Eastern Airlines (CEA), which most likely will join the SkyTeam (STM) alliance, Chairman, Zhou Chi said. He noted that (SHA) needs to discuss the matter with (SAL) airlines. "Also, whether we can maintain it or not will be up to which global airline alliance (CEA) joins," he said. (CEA) Chairman Liu Shaoyong has said internally that the carrier prefers the (STM), which already includes China Southern Airlines (GUN). (CEA) was scheduled to sign an agreement with the (STM) last month, but it was postponed because it is "busy with merger issues with (SHA)."
After the merger, (SHA) is expected to become a wholly owned subsidiary of (CEA) but maintain its brand. "It is important for us to operate independently. Our relationship with (CEA) will be just like Cathay Pacific (CAT) and Dragonair (DRG)," Zhou revealed. "We never expected to expand our business by relying on the merger with (CEA), but the merger will produce synergies and will help build Shanghai as an international aviation hub." The carriers remain in negotiations and the specific merger plan is expected to come out this month. Zhou emphasized that the merger is being pushed by Beijing and led by (CEA). "The whole merger process will have to take about 4 to 5 months to complete," he said.
Current members of the Star Alliance (SAL) and aspiring member Continental Airlines (CAL), pushed back strongly against the USA Department of Justice (DOJ)'s opposition to the extension of antitrust immunity (ATI) to (CAL) when it joins in October, arguing in a filing with the (DOT) that the (DOJ) favors a "myopic policy" that would "abandon almost two decades of highly successful international aviation policy."
The (DOT) in early April approved (CAL)'s entry into the (SAL) and granted tentative (ATI) to the carrier and certain (SAL) partners and to (CAL)'s proposed transatlantic joint venture with Air Canada (ACN), Lufthansa (DLH), and United Airlines (UAL). It has final say on whether (ATI) will be granted, but the seemingly clear path to final approval hit a roadblock last month when the (DOJ) weighed in to argue that (ATI) would bring "substantial" harm to consumers. A 52-page response filed by the (SAL) carriers and (CAL) urged the (DOT) to ignore the (DOJ) and "promptly" issue a final order that would grant (ATI) "without modification" from its tentative order. The (DOJ) is proposing "a narrowly focused and ill-conceived policy that ignores unique considerations affecting international aviation," the carriers wrote. "Aside from being inconsistent with [DOT's] statutory mandate, such a myopic policy would jeopardize current and future "open skies" agreements [and] hobble the (SAL) and (CAL) so they cannot compete effectively with the SkyTeam (SKT) Alliance."
The carriers added that consumers would lose out on benefits that immunized alliances bring if the (DOJ) had its way and argued that adding (CAL) to the (SAL) and allowing it to participate in the transatlantic joint venture (JV) does not raise any issue that "justifies such an abrupt reversal of international aviation policy," particularly considering that (CAL) "offers fewer than 3% of worldwide scheduled seats." The (SAL) carriers and (CAL) said the (DOJ) is advocating a "radical shift predicated on faulty analysis [that] ignores critical aviation policy considerations." They wrote that the department does not understand that current and future open skies accords "directly" depend on immunized alliances, adding that it also "ignores the substantial benefits that would flow from immunity" and "fails to recognize substantial and actual competition" in markets in which (CAL) would operate in conjunction with (SAL) members.
The (DOJ) in its filing with the (DOT) estimated that fares "are likely to increase by roughly +15% on routes where the number of nonstop competitors decreases from two to one, and by roughly +6% on routes where the number of nonstop competitors decreases from three to two." The (SAL) carriers said this analysis is "flawed, contradicted by previous analyses and the (DOT)'s findings, and should be disregarded."
November 2009: SkyTeam (STM) alliance officials said Vietnam Airlines (VIE) and Tarom (TRM) will join the alliance as full members in June, according to a statement from the (STM) alliance's Incheon board meeting cited by "Bloomberg News." (TRM) signed an associate agreement with the (STM) alliance in May 2008, while (VIE) was invited formally last April. The (STM) alliance also is interested in Japan Airlines (JAL)/(JAS), currently a member of Oneworld (ONW). "We would be keenly interested to see whether (JAL)/(JAS) would be interested to join the (STM) alliance as a potential partner," alliance Chairman Leo van Wijk said at a news conference, according to "Business Week."
(DAL) revealed that it has made a comprehensive offer to (JAL)/(JAS) to switch from the Oneworld (ONW) alliance to the (STM) alliance that includes financial assistance and guarantees totaling $1 billion, saying it wants (JAL)/(JAS) to be "the face of Asia" for (DAL). Struggling (JAL)/(JAS) is attempting to enter into a government-backed restructuring that would allow it to avoid bankruptcy, but no plan has been agreed to and Japanese Transport Minister Seiji Maehara said that a court-administered bankruptcy is a possibility. He said his past assurances regarding (JAL)/(JAS) were not meant to rule out bankruptcy but to communicate that the government would make sure that (JAL)/(JAS) would not "collapse or disappear."
(DAL) President Edward Bastian told reporters in Tokyo that (DAL) and other SkyTeam (STM) alliance partners are willing to provide a $500 million equity injection as well as an additional +$200 million in asset-backed financing. It also would guarantee the $300 million in annual revenue that (JAL)/(JAS) claims it now generates owing to its membership in the (OMW) alliance. (DAL) reiterated that it would cover the Information Technology (IT) costs of making an alliance switch, estimated to be about $15 to $20 million.
Bastian asserted that "The (STM) alliance is by far the strongest partner for (JAL)/(JAS) and the best ally to ensure (JAL)/(JAS)'s growth and stability." The (STM) alliance currently does not have a Japanese affiliate but has an Asia/Pacific presence with Korean Air (KAL) and China Southern Airlines (GUN). Bastian said (JAL)/(JAS) "for (DAL) would represent in many ways the face of Asia." He claimed (JAL)/(JAS)'s annual revenue would be boosted by around +$400 million through access to (STM) passengers. In a USA regulatory filing, (DAL) said it has "discussed a possible marketing alliance and joint venture with (JAL)/(JAS) covering routes between North America and Asia, including a related capital investment in (JAL)/(JAS) by us and one or more other [STM] members." Bastian told reporters that a (JAL)/(JAS) alliance switch could be achieved in less than a year. He added that the (DAL)/(STM) offer is "unconditional" and does not depend on how much financial assistance (JAL)/(JAS) receives from the Japanese government.
American Airlines (AAL) has indicated that it will put up a strong fight to keep (JAL)/(JAS) in the (ONW) alliance, including challenging a move to the (STM) on antitrust grounds owing to (DAL) subsidiary, (NWA)'s strong presence in Japan. (AAL) reportedly has teamed with (TPG) Capital to propose investing $300 million in (JAL)/(JAS).
December 2009: American Airlines (AAL) is partnering with Texas Pacific Group (TPG) Capital to offer to invest $1.1 billion in Japan Airlines (JAL)/(JAS) to assist with (JAL)/(JAS)'s restructuring and ensure it remains in the Oneworld (ONW) alliance fold.
(AAL) CFO & Executive VP Finance & Planning Tom Horton insisted that the (AAL)/(TPG) proposal is "far superior" to the $1 billion package Delta Air Lines (DAL) offered (JAL)/(JAS) to induce it to switch to the SkyTeam (STM) alliance. He added that the value of the (AAL)/(TPG) deal could increase by as much as $700 million over 10 years "if (JAL)/(JAS) builds its links" with (AAL). He stated, "The total incremental financial support from the (AAL), (ONW) and (TPG) proposal is in excess of >$1.8 billion and far exceeds any other available proposition."
He further claimed that (ONW) "provides (JAL)/(JAS) with roughly $500 million in annual revenue" and claimed that (JAL)/(JAS) would lose $500 million in the first two years following a switch to the (STM).
However, Horton declined to detail the financial structure of the proposed offer or the share each of the partners would contribute, though he did say (AAL)'s contribution would be substantial. He also reiterated (AAL)'s claim that a (DAL)/(JAL)/(JAS) tie-up would pose antitrust concerns owing to (DAL) subsidiary, Northwest Airlines (NWA)'s strong position at Tokyo Narita. Horton said that currently, the three major alliances each have about a third of the USA - Japan market. However, with (JAL)/(JAS) in (STM) "that balance is shattered. (STM)'s share will jump to 62% and (SKT) and the Star (SAL) alliance will have a duopoly with 93% of the market, an anti-competitive result that the USA government simply will not allow."
Former USA Transportation Secretary, Norman Mineta is acting as a consultant to (AAL) on its (JAL)/(JAS) bid and joined Horton for the briefing in Tokyo. "There is no precedent for the Department of Transportation (DOT) to immunize 2 airlines that operate connecting hubs in the same market, which is the case with Delta (DAL) - (NWA) and (JAL)/(JAS)," Mineta said. (DAL) President Ed Bastian told reporters he is confident that a (DAL)/(STM) investment in (JAL)/(JAS) would be cleared by antitrust regulators.
Horton stated that (AAL) would apply to form an antitrust-immunized transpacific joint venture with (JAL)/(JAS), which he said will be permissible under the USA - Japan "open skies" accord expected to be finalized imminently. Additionally, (ONW) members, British Airways (BAB) and Finnair (FIN) said they would code share "far more widely" with (JAL)/(JAS), while (LAN) Airlines and Mexicana (CMA) also pledged greater cooperation to increase (JAL)/(JAS)'s access to Latin America.
(JAL)/(JAS) President, Haruka Nishimatsu has said he would like to choose between the (AAL) and (DAL) offers by year end. (JAL)/(JAS) is attempting to enter into a government-backed restructuring and last week secured an emergency loan from the Development Bank of Japan.
February 2010: Months of high-stakes jockeying between the Oneworld (ONW) alliance's American Airlines (AAL) and the SkyTeam (STM) alliance's Delta Air Lines (DAL) over partnering with troubled Japan Airlines (JAL)/(JAS) came to an end when (JAL)/(JAS) announced it will stay in the (ONW) alliance and jointly apply for antitrust immunity (ATI) on transpacific routes with (AAL).
(JAL)/(JAS) President & (COO) Masaru Onishi said (JAL)/(JAS), which last month entered into a court-monitored bankruptcy restructuring, had "analyzed this issue in great detail" and reached the conclusion that "the advantages of this development with (AAL) can strongly support (JAL)/(JAS) at a time when we are striving towards the revival of our business."
(JAL)/(JAS) Senior VP Corporate Planning Daiji Nagai told reporters that the near-term stability gained from sticking with the (ONW) alliance outweighed the potential long-term benefits of jumping to the (STM) alliance, a move that would have given that alliance a dominant hold on the USA to Japan market. "We had a fierce debate over whether we should choose (DALO) and the (STM) alliance for future profitability or stay in the (ONW) alliance and avoid incurring a loss from making a switch this year," he explained. "If we don't survive the first two years, there will be no future for (JAL) after the third year of restructuring. We decided that we can minimize risk by staying with American (AAL)."
(JAL)/(JAS) said that upon receiving approval from the the USA Department of Transportation and the Japanese Ministry of Land Infrastructure, Transport and Tourism, it intends to enter into "a joint business venture (JV) [with (AAL)] which will enhance [the 2 carriers'] scope of cooperation on the routes between the USA and Japan through adjustments to their respective networks, flight schedules and other business activities."
(ATI) approvals for (AAL)/(JAL)/(JAS) and for a similar (JV) between United Airlines (UAL)/Continental Airlines (CAL) and (ANA) are prerequisites for enactment of the Japan/USA "open skies" accord tentatively agreed to in December. It appears that (AAL) will not take a stake in (JAL)/(JAS) through a capital investment as previously had been considered. "We respect that this was an important decision for (JAL)/(JAS) and we believe they have made the right choice for (JAL)/(JAS)'s many stakeholders, for Japan's national interests and for consumers travelling between Japan and the USA," said (AAL) Chairman & CEO Gerard Arpey, who had vowed to "move aggressively to block" a (JAL)/(JAS) attempt to partner with (DAL). He added that (AAL) "remains confident" (ATI) will be cleared.
"The members of the (STM) alliance respect the decision made by (JAL)/(JAS)," the (STM) alliance said in a statement. "We believe that cooperation with (JAL)/(JAS) would have brought good opportunities to all parties involved."
March 2010: China Southern Airlines (GUN) plans to join SkyTeam (STM) Cargo this year, Senior VP Cargo, Luo Laijun announced during the IATA World Cargo Symposium in Vancouver. (GUN) would be the 1st Chinese airline to join a global cargo alliance and is expected to gain full membership by November. "Since its passenger membership into the SkyTeam (STM) alliance on November 15, 2007, China Southern Cargo has been working to narrow the gap in all areas between itself and the (STM) alliance," Luo said, citing efforts in safety auditing, fleet renewal and expansion, hub development, service improvement, Information Technology (IT) and branding. (GUN) Cargo operates 2 747-400Fs and 2 777-200Fs from Shanghai Pudong (PVG) to Amsterdam, Frankfurt, and Chicago O'Hare. It plans to add 4 more 777-200Fs by the end of 2011 and launch new service to Vienna, New York (JFK), Dallas/Fort Worth, and other major destinations in Europe and North America from both (PVG) and Guangzhou Baiyun. SkyTeam (STM) Cargo currently comprises the cargo arms of AeroMexico (AMX), Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM) and Korean Air (KAL).
April 2010: China Eastern Airlines (CEA) signed a letter of intent (LOI) in Shanghai to join the SkyTeam (STM) alliance, a move industry analysts said would allow it to establish a closer relationship with China Southern Airlines (GUN) and better position it to compete against Air China (BEJ).
(CEA) is expected to sign a formal alliance agreement with (STM) in June, setting its official entry into the airline grouping for mid-2011. Its decision to join the (STM) alliance is a disappointment to the Star Alliance (SAL) and the Oneworld (ONW) alliance, both of which had been wooing (CEA), seen as a valuable partner owing to its 50% market share at its Shanghai base.
(CEA) Chairman Liu Shaoyong described the (LOI) signing as an "engagement ceremony," explaining, "It is time for the 22-year-old (CEA) to get married to the (STM) alliance." He said joining the alliance would expand (CEA)'s global reach and raise its service standards.
Liu guided China Southern (GUN) to formal SkyTeam (STM) alliance membership in 2007 when he served as (GUN)'s Chairman. (GUN) is (CEA)'s sponsor to join the alliance. The 2 carriers already cooperate on ground handling services and code share on some domestic routes.
SkyTeam (STM) alliance Chairman Leo van Wijk said in Shanghai that (CEA)'s "1,253 daily flights can increase (STM) alliance daily flights by +10% and add +25 more destinations" to the alliance's network. (CEA)'s joining will "enable (STM) to play a leading role in the Chinese market," he added.
"China Southern (GUN) already covers China through its hubs in Guangzhou and Beijing," (STM) added in a statement. "Together with China Eastern (CEA) and its hub in Shanghai, (STM) will be able to offer service out of 3 major Chinese markets." (CEA) subsidiary, Shanghai Airlines (SHA) is expected to withdraw from the Star Alliance (SAL) in the coming days.
May 2010: China Eastern Airlines (CEA) will sign a binding agreement with the SkyTeam Alliance (STM) next month, according to (STM) alliance Managing Director Marie-Joseph Male.
(CEA) signed a letter of intent (LOI) to join the (STM) alliance last month. "We have formed a special team to help (CEA) meet (STM)'s various requirements regarding Information Technology (IT) systems, frequent-flyer program and marketing so that it will be in line with the standards of the other (STM) member carriers," Male said.
He predicted (CEA) will gain formal membership in 12 to 16 months. Air China (BEJ) and Shanghai Airlines (SHA) are Star Alliance (SAL) members and China Southern (GUN) is a member of the SkyTeam (STM) alliance. (GUN) is (CEA)'s sponsor to join the (STM) alliance. With (CEA) in the process of merging with (SHA), it is widely expected that (SHA) will withdraw from the (SAL) alliance and join the SkyTeam (STM) alliance. Male said he hoped (SHA) will join the (STM) alliance.
Vietnam Airlines (VIE) will formally join the SkyTeam (STM) alliance on June 10, a move that will increase the (STM) alliance’s members to 10 carriers. Earlier this month, (VIE) and Air France (AFA) agreed that (AFA)’s flights between Bangkok and Paris will carry the (VIE) code. Delta Air Lines (DAL) already has USA Department of Transport approval to carry the (VIE) code. (VIE)’s entry into the (STM) alliance, which has been expected, means the (STM) alliance now has 2 members in the area. The Guangzhou base of (STM) partner, China Southern (GUN) is just 800 km/500 mi from Hanoi.
June 2010: China Southern Airlines (GUN) said it remains on track to join the SkyTeam (STM) Cargo alliance formally in November, and sources indicate that it is contemplating a possible merger of its cargo business with that of China Eastern Airlines (CEA).
(GUN), which joined the SkyTeam (STM) passenger alliance in 2007, signed a letter of intent (LOI) to become the 1st Chinese airline to join a global cargo alliance. Currently, it operates 2 747-400Fs and 2 777-200Fs from Shanghai Pudong (PVG) to Amsterdam, Frankfurt, and Chicago O'Hare. Cargo Director Luo Laijun noted that (GUN) is scheduled to take delivery of 3 new 777Fs in July and August and plans to operate them from (PVG) to Vienna, New York, and Dallas.
Meanwhile, (GUN) has not ruled out merging its cargo business with (CEA)'s. It long has been speculated that Beijing intends to merge the cargo operations of China's big 3 carriers into 1 cargo company that would be better positioned to compete against foreign airfreight players. But it may be impossible for Air China (BEJ) to merge its cargo business with (CEA) and (GUN) because (BEJ) has signed a framework agreement with Cathay Pacific Airways (CAT) to launch a cargo joint venture (JV) based in Shanghai. It is still waiting for government approval for the (JV).
Foreign airlines currently have a dominant position in the Chinese air cargo market, in which domestic carriers hold <20% share of traffic. (CEA) Chairman Liu Shaoyong said that (CEA) plans to introduce a strategic investor in its cargo business by year end and it is widely speculated the partner will be (GUN). (CEA) has agreed to join the SkyTeam (STM) passenger alliance under the sponsorship of (GUN).
August 2010: Delta Airlines (DAL) on June 1, 2011, plans to inaugurate a nonstop service between John F Kennedy International Airport in New York and Keflavik International Airport in Reykjavik. (DAL) intends to operate a 2-class 757-200 to Iceland, with 15 seats its BusinessElite cabin and 155Y seats in economy. (DAL) will also operate the service with the same flight number to its hub in Minneapolis-St Paul. “(DAL) ’s newest international destination from New York is part of its ongoing investment in the New York market, adding to >40 new destinations introduced from LaGuardia and (JFK) combined in the last 4 years,” (DAL) says in a release. “Our new flight to Iceland is another milestone in our efforts to be the leading domestic and international carrier in New York,” adds Gail Grimmett, Senior VP for New York. “We have always prided ourselves in offering a large number of unique destinations from our (JFK) hub to provide customers convenient access to growing but under-served global markets. The addition of Reykjavik also marks the 1st service in Iceland for the SkyTeam (STM) Alliance, that includes (DAL), Air France (AFA)-(KLM), Alitalia (ALI) and nine other airlines,” she adds. The new Reykjavik flight will be operated as part of (DAL)’s transatlantic joint venture with Air France (AFA)-(KLM) and Alitalia (ALI).
September 2010: China Airlines (CHI) signed an "adherence agreement" with the SkyTeam (STM) alliance in Taipei, signaling the start of a joining process that will likely lead to it gaining full membership in the alliance by mid-2011. “The China Airlines (CHI) network will complement those of China Southern [Airlines] (GUN) and Shanghai-based China Eastern [Airlines] (CEA),” (STM) Managing Director Marie-Joseph Male noted at the signing ceremony. “As the largest passenger and cargo airline providing services between both sides of the Taiwan Strait, the addition of China Airlines (CHI) to the SkyTeam (STM) alliance will mark a major milestone in Taiwan’s efforts to become 1 of Asia’s leading air transport and business hubs.” He added, “China Airlines (CHI) will bring 4 new destinations [Okinawa, Miyazaki, Surabaya, and Palau] to the (STM) alliance’s network.”
(CHI) Chairman Philip Wei said, “As the 1st Taiwanese airline to join the world-class alliance, our strategic target is to continuously strengthen profitability and boost international market competitiveness.” (CHI) President Sun Huang-Hsiang added that by joining the (STM), (CHI) can add around TWD1.6 billion/$50.4 million annually in passenger revenue.
Launched in 1959, China Airlines (CHI) is Taiwan's largest carrier and operates a fleet of 66 airplanes, including 46 passenger jets and 20 freighters, to 93 destinations in 28 countries. It will become the (STM)'s 14th member. (CHI) will bring 4 new destinations to the (STM) alliance network: Miyazaki; Okinawa; Palau; & Surabaya.
October 2010: Aerolineas Argentinas (ARG) will sign an agreement by the end of this month "to officially start the process of joining the SkyTeam (STM) alliance as the 1st South American member of the (STM) alliance."
The (STM) alliance added that it "is actively working to strengthen its presence in Latin America, a region with strong growth figures and a positive outlook for the future." It said (ARG) is expected to become a full member in 2012. Aeromexico (AMX) is the geographically closest current member.
Re-nationalized in late 2008, (ARG) has been loss-making for some time. It is trying to shake off what President Mariano Recalde has described as a reputation for poor service that took hold when Grupo Marsans owned (ARG). When the Spanish company controlled it, service was "irregular and constantly delayed," he told the "Buenos Aires Herald" earlier this year. "Buying a ticket and hoping for a flight on time was like buying a lottery ticket." He has projected that (ARG) will return to profitability in 2012.
The SkyTeam (STM) alliance said that "through a 5-year restructuring plan introduced last year, (ARG) is implementing a number of measures to strengthen its business model and establish itself as a major player in Latin America. Key elements of this plan include fleet renewal and rationalization, adding key international destinations, increasing the density of the domestic and regional network and improving product quality and consistency."
SkyTeam (STM) alliance Chairman, Leo van Wijk said at the alliance's 10th anniversary gathering in New York earlier this year that Latin America is "the most difficult" area in which to find potential partners with suitable network scope because "the market is rather fragmented. It is not a continent where 1 solution will do, so we are targeting more carriers in the different regions of the continent."
SkyTeam (STM) Managing Director, Marie-Joseph Male said that the (STM) alliance will maintain its standards as it expands because "Whoever wants to join has to commit to go through a process and comply with >100 membership requirements. That in and of itself ensures that we have a level of service offering that's acceptable."
The (STM) alliance currently has 13 members. China Eastern Airlines (CEA) and China Airlines (CHI) also are in the process of becoming members. (ARG)'s network comprises 18 international destinations. In conjunction with regional affiliate, Austral Lineas Aereas (ALA), it operates flights to 34 destinations in Argentina.
SkyTeam (STM) alliance’s Korean Air (KAL) will soon (in May, to be exact) become airline number 6 to fly the A380. The 1st of 10 units on order will be followed by 3 more from June to August, putting it in the same league with Singapore Airlines (SIA), Qantas (QAN), Emirates (EAD), Air France (AFA)/ (KLM) and Lufthansa (DLH), all respected as quality longhaul premium carriers. (KAL) plans to configure its A380s with just 400 to 450 seats (less than most others) and will use them on routes to the USA (Seoul to Los Angeles will likely be the 1st) and to Europe.
Aeromexico (AMX) will become the sole USA sales representative next month for SkyTeam (STM) alliance partner Air Europa (ARE). With this strategic alliance, (AMX) will be (ARE)’s sole contact for travel agencies, wholesalers and on-line tour operators. (AMX) will also promote (ARE) in North America under the new arrangement.
Air Europa (ARE) operates nonstop service between its base at Madrid Barajas Airport and New York Kennedy International Airport, a route launched about a year ago, and since March has operated a nonstop to Miami International Airport. This accord coincides with an expansion of (AMX)'s North American schedule, about 3 months after the collapse of the country’s largest international operator, Mexicana (CMA), significantly reduced capacity to the USA and Canada.
As part of the expansion, Aeromexico (AMX) on November 20 plans to resume operations between Ontario International Airport in California and Guadalajara International Airport with a seasonal daily service, and from December 15 it expects to resume seasonal flights to Denver International Airport from its Mexico City hub. Both of these routes are possible despite the USA (FAA) safety downgrade imposed in July because authority had previously been granted to the airline, confirms the (FAA). The downgrade does not allow Mexican airlines to add new service to the USA until the country’s rating returns to Category 1.
The upgraded schedule also includes increased frequencies for existing USA markets that boost Chicago, Los Angeles, Miami, and New York to 2x-daily, and Las Vegas to 2x-daily from Thursday to Sunday. The new frequencies should begin December 6.
November 2010: China Eastern Airlines (CEA) said that its wholly owned subsidiary, Shanghai Airlines (SHA) has withdrawn from the Star Alliance (SAL) to join the SkyTeam (STM) alliance along with (CEA) next year.
(CEA) signed a formal agreement with the (STM) alliance in June and is scheduled to gain membership in 2011. Shanghai (SHA)'s departure had been expected after it agreed to merge with (CEA). (SHA)'s network will add +32 destinations to the grouping's network.
SkyTeam (STM) Alliance Managing Director Marie-Joseph Male said, "The addition of the combined networks of China Eastern (CEA) and Shanghai Airlines (SHA) gives new opportunities for the SkyTeam (STM) alliance customers to access cities in all regions of China using Shanghai's Pudong and Hongqiao airports." (CEA) acquired (SHA) last year.
The SkyTeam (STM) alliance also counts China Southern Airlines (GUN) as a member. China Airlines (CHI), based in Taipei, is additionally expected to join the alliance in 2011.
Without (SHA), the Star (SAL) alliance's only Chinese member is Air China (BEJ). The Oneworld (ONW) alliance has no mainland Chinese participants but Hong Kong-based Cathay Pacific (CAT) is a member.
Aerolineas Argentinas (ARG) signed an agreement to join the SkyTeam (STM) alliance in 2012. (ARG) will be the (STM) alliance’s 1st South American member, adding 38 new destinations to the (STM) network.
January 2011: Delta Air Lines (DAL) announced it will reinstate code share flights with SkyTeam (STM) alliance partner, Aeromexico (AMX) following the USA (FAA)'s decision to upgrade Mexico's federal civil aviation authority to Category 1. The reinstated code sharing will connect (DAL) customers between 20 Mexican and 9 USA airports on >125 (AMX) and Aeromexico Connect flights.
The SkyTeam (STM) alliance said that Lebanon's Middle East Airlines (MEA) will sign an agreement on February 28 "to officially start the process" in 2012 to become a member of the (STM) alliance. (MEA) is the 2nd Middle East carrier to agree to join the (STM) alliance this month, following Saudi Arabian Airlines (SVA). "The (STM) alliance is actively working to strengthen its presence in the Middle East, one of the world's most important economic regions," the (STM) alliance said in a statement. "(MEA) will be a valuable addition to the alliance by offering customers increased access to the Middle East and Western Africa." It added, "(MEA) has continued to improve its products and services to customers ever since it successfully concluded a thorough restructuring plan. Key elements of this plan included fleet renewal and rationalization, increasing the density of its European, Middle East and West African network and improving product quality and consistency."
March 2011: Middle East Airlines (MEA) formalized its previously-announced decision to join the SkyTeam (STM) alliance in 2012. (MEA) joins Saudi Arabian Airlines (SVA) as future Middle East members of the (STM) alliance. "The addition of (MEA) to the (STM) alliance network will enable the SkyTeam (STM) alliance to compete more efficiently, not only within the Middle East, but also to and from Western Africa," (STM) said.
The (STM) alliance noted that (MEA) "has continued to improve its products and services [via a] thorough restructuring plan," including "fleet renewal and rationalization, increasing the density of the carrier's European, Middle East, and West African network, and improving product quality and consistency." (MEA) Chairman & Director General, Mohamad El-Hout stated, "By joining the (STM) alliance, (MEA) being relatively a small airline, will now be able to provide its customers an extensive global network covering Europe, Asia, Africa, and the Americas."
Aeroflot (ARO) placed an order for 6 (GE90)-powered 777-300ERs and 2 777-200ERs. "These 777 airplanes will strengthen our network strategy, particularly the international growth opportunities we expect from our joint businesses with SkyTeam (STM) alliance partners when servicing the 2014 Sochi Olympic Games and the 2018 FIFA World Cup," (ARO) General Director Vitaly Saveliev said.
The official signing of the order corresponded with USA VP Joe Biden's visit to Moscow to meet with Russian President Dmitry Medvedev.
Boeing (TBC) noted that Russia's (VSMPO), a subsidiary of Rostechnologii State Corporation, manufactures large titanium forgings for the 777’s landing gears, wings and pylon. It said 7 of SkyTeam (STM) alliance's 12 members have ordered a combined 141 777s.
March 2011: Jet Airways (JPL) may be planning to join the SkyTeam (STM) alliance through a transatlantic joint venture (JV) with Air France (AFA)/(KLM), Alitalia (ALI) and Delta Air Lines (DAL), according to media reports.
"Dow Jones," citing an inside source, said (AFA), (ALI) and (DAL) are in talks with (JPL) to include (JPL) in the (JV). The report follows a similar report in "La Tribune," saying that the (AFA)/(KLM) Group is in negotiations with (JPL) on a wide-ranging cooperation, including code sharing and the transfer of (JPL)’s Brussels hub to Amsterdam. This would lead to (JPL)’s entry into the SkyTeam (STM) alliance, the "French daily" said. It added that a Memo of Understanding (MOU) may be signed as early as this month or in April but could be postponed owing to political developments in India, where government approval is mandatory for such a partnership.
(JPL) operates a hub in Brussels, connecting Mumbai, Chennai and Delhi (DEL) with New York (JFK), Newark, and Toronto Pearson. (JPL) last year opened a (DEL) to Milan Malpensa (MXP) route, in code share with (ALI), fueling off-and-on rumors that (JPL) would close its Brussels operations and move them possibly to (MXP), but those have never been confirmed.
The SkyTeam (STM) alliance is the only alliance with no future partner in India. Air India (AIN)/(IND) will join the Star (SAL) Alliance this year and the Oneworld (ONW) alliance has invited Kingfisher Airlines (KFH)to join.
April 2011: The SkyTeam (STM) alliance named (KLM) Executive VP Cargo Michael Wisbrun as Managing Director, replacing Marie-Joseph Male. He will assume the Amsterdam-based post on June 1.
Male, the 1st to hold the Managing Director title at the SkyTeam (STM) alliance, set up a central office in Amsterdam in 2009 to manage the day-to-day affairs of the global alliance. He has "decided not to extend his contract with the SkyTeam (STM) alliance for personal reasons," according to a statement issued by the (STM) alliance.
Wisbrun will leave his post as head of (KLM)'s Cargo Division and Chairman of the Air France (AFA)-(KLM) Cargo Joint Management Committee. He first joined (KLM) in 1978 and has held various management positions with the company.
SkyTeam (STM) alliance Chairman, Leo van Wijk said, "Michael Wisbrun is a very experienced executive in the airline industry who has shown strong leadership and vision with a solid track record of delivering solutions to complex projects. He was instrumental in developing the (KLM) - Northwest (NWA) joint venture (JV), the blueprint of which is still considered to be the most developed alliance in the world."
Additionally, the SkyTeam (STM) alliance said it has created the new position of deputy Managing Director and appointed China Southern Airlines (GUN) Chief Economist, Su Liang to the post. He will also assume the job on June 1. Van Wijk said Su's "broad perspective on the emerging Asia/Pacific markets will further reaffirm the SkyTeam (STM) alliance's growing presence in the region."
The (STM) alliance rapidly expanded its reach during Male's tenure as Managing Director; it currently has 13 members but 6 more carriers have signed agreements to join in the future, including its 1st 2 Middle Eastern members.
Last year, Male downplayed the risk of lowering overall customer service standards as more airlines are added, saying, "In any case, whomever wants to join has to commit to go through a process and comply with >100 membership requirements. That in and of itself ensures that we have a level of service offering that's acceptable."
May 2011: SkyTeam (STM) Alliance members: Delta Air Lines (DAL), Air France (AFA)/(KLM) and Alitalia (ALI) announced they will reduce transatlantic capacity between Europe and the USA plus Canada offered through their joint venture by -7% to -9% this fall in response to significantly higher fuel prices "and fluctuating seasonal demand."
June 2011: China Eastern Airways (CEA) and its subsidiary, Shanghai Airlines (SHA) officially joined the SkyTeam Alliance (STM) on June 21st.
SEE ATTACHED "AIRLINER WORLD" ARTICLE: "STM-2011-06-SKYTEAM ALLIANCE."
September 2011: China Airlines (CHI) officially joined the SkyTeam (STM) alliance, becoming the 1st Taiwanese airline to join the alliance. (CHI) becomes the SkyTeam (STM) alliance’s 15th member. China Southern (GUN) and China Eastern (CEA) joined the alliance in November 2007 and June 2011, respectively.
(CHI) operates 224 daily departures to 80 destinations and brings 3 new destinations to the SkyTeam (STM) Alliance’s network: Okinawa and Miyazaki, Japan, and Surabaya, Indonesia.
The SkyTeam (STM) alliance Managing Director Michael Wisbrun said, “Thanks to excellent links to a number of existing SkyTeam (STM) hubs, China Airlines (CHI)’s membership adds value to the alliance for both passengers and cargo customers.”
(CHI) has also refreshed its brand image. At the joining ceremony in Taipei, the Taiwan flag carrier unveiled a new trademark, integrating its “Plum Blossom” trademark and a “Chinese Seal.”
November 2011: China Southern Airlines (GUN) subsidiary, Xiamen Airlines (XIA) has been accepted into the SkyTeam (STM) alliance, with full entry slated by the end of 2012. (XIA) signed the agreement last week in Rome. The predominately domestic carrier feeds 90% of traffic out of its 3 hubs in Xiamen, Fuzhou and Hangzhou.
SkyTeam Alliance (STM) membership will enable (XIA) to offer passengers access to the (STM) alliance’s strong network of 173 countries served by 15 member carriers. “Membership in the SkyTeam Alliance (STM) will enable us to expand our intercontinental network offering, in cooperation with our partners in the alliance,” (XIA) President Che Shanglun said.
As of April 30, (XIA) operated 71 airplanes. Che said (XIA) will expand its fleet to 136 airplanes by 2015, when passenger boardings are targeted to reach 30 million. As China’s 5th largest airline, (XIA) ordered 6 787s in May, which are scheduled for delivery between 2014 and 2015, when (XIA) is expected to launch routes to Europe and the USA.
Other Chinese SkyTeam Alliance (STM) member carriers include China Southern (GUN), China Eastern (CEA) and Taipei-based China Airlines (CHI). "The SkyTeam Alliance (STM) has long recognized the region’s huge economic potential, resulting in our No 1 position in Greater China. Xiamen Airlines (XIA)’s membership in the SkyTeam Alliance (STM) will strengthen our offer in the SE part of China and the cross-strait markets,” (STM) Managing Director Michael Wisbrun said.
January 2012: Aeroflot (ARO) and Skyteam (STM) Alliance partner, Delta Air Lines (DL/Atlanta) have finally started code sharing last month after receiving approval some years ago.
China Eastern Airlines (CEA) parent, China Eastern Air Holding (CEAH) reported 2011 net income of >+CNY5 billion/+$793 million, a slight increase over a net profit just under +CNY5 billion in 2010.
Though earnings didn't grow significantly in 2011, (CEA) was able to maintain the large profit jump achieved in 2010. Speaking at the company's annual conference, (CEAH) General Manager & (CEA) Chairman, Liu Shaoyong credited the continued profitability to a “hub effect.” (CEA) is building Shanghai as its multi-point international hub while Kunming serves as its regional hub, a strategy Liu believes is serving (CEA) well. Also, he said, its SkyTeam (STM) Alliance membership enabled (CEA) to enjoy “a remarkable route network effect through cooperation with other member airlines.” (CEAH) said other subsidiaries also contributed to the result.
(CEAH) did not disclose 2011 operating revenue and expenses. Annual (CEA) passenger boardings rose +5.7% year-over-year to 68.8 million with an average load factor of 78.8% LF, up +0.8 point compared to 2010, while cargo traffic volume stayed flat at 1.5 million tonnes. Average daily airplane utilization increased +0.1 hours to 9.84 hours.
Looking ahead, Liu warned that the worsening global economic outlook would increase uncertainties in the airline industry. “In China, it won’t be easy for Chinese carriers to maintain consecutive growth in [the] domestic air transport market in 2012, which would lead to reduction of net profit reported by domestic carriers [this year],” Liu said. He expects (CEA)’s international routes and cargo business to be negatively impacted by global economic sluggishness in 2012.
SkyTeam (STM) Alliance airlines have co-located their check-in counters at Beijing airport’s old terminal.
The European Commission (EC) has opened an investigation to assess whether the transatlantic joint venture (JV) between (AFA) - (KLM)), Alitalia (ALI) and Delta Air Lines (DAL) breaches (EU) antitrust rules. “The (EC) will investigate whether the partnership may harm passengers on certain (EU) to USA routes where, in the absence of the joint venture (JV), the parties would be providing competing services.” Under terms of the (JV), concluded in 2009 and 2010, the SkyTeam (STM) Alliance carriers fully coordinate their transatlantic operations with respect to capacity, schedules, pricing and revenue management. They also share profits and losses on their transatlantic flights.
The (EC) noted the investigation is “coherent with the (EC)'s recent enforcement action in relation to the transatlantic (JV)s of the 2 other airline alliances,” Oneworld (ONW) and Star (SAL) Alliances.
The (EC) formally opened antitrust proceedings into the planned transatlantic (JV) between British Airways (BAB), American Airlines (AAL) and Iberia (IBE) in April 2009. It cleared the (JV) of the 3 Oneworld (ONW) Alliance airlines in July 2010 after they accepted a series of legally binding commitments to address the (EC)’s competition concerns. The antitrust probe into the transatlantic cooperation between Star (SAL) Alliance members Air Canada (ACN), Lufthansa (DLH), Continental Airlines (CAL) and United Airlines (UAL) was opened in April 2009 and is still ongoing, the (EC) confirmed.
Meanwhile, the (EC) has closed its investigation into cooperation agreements between 8 SkyTeam (STM) Alliance members that began in 2006 when the member airlines were Aeromexico (AMX), (AFA), (KLM), (ALI), (CAL), (CSA) Czech Airlines, (DAL), and Korean Air Lines (KAL). (CAL) has since merged with (UAL) and left SkyTeam(STM) Alliance for the Star (SAL) Alliance. “This decision was taken as part of the priority-setting process in light of significant changes in the circumstances on the relevant markets. The closure of proceedings does not, however, relieve the SkyTeam (STM) Alliance members from assessing their behavior and ensuring that they comply with (EU) competition law,” the (EC) said.
Saudia (SVA), formerly Saudi Arabian Airlines, joined the SkyTeam (STM) Alliance, becoming the alliance’s 1st member airline from the Middle East. “Joining the SkyTeam (STM) Alliance is an integral part of Saudia (SVA)’s long-term transformation strategy, which includes re-branding our airline, restructuring core operations and enhancing on board products and airport services,” (SVA) Director General Khalid Al-Molhem said.
SkyTeam (STM) Alliance Managing Director Michael Wisbrun said (SVA)’s membership “adds value to the (STM) alliance by opening up the considerable Saudi Arabian market to our customers.”
From its hubs in Jeddah, Riyadh and Dammam, (SVA) operates a network throughout the Arabian Peninsula, the Indian Subcontinent and Northern Africa. (SVA) adds +51 new destinations to the SkyTeam (STM) Alliance’s global network, including 23 within Saudi Arabia.
(SVA) said it has embarked on a 4-year turnaround program, which will be completed by 2013. “As a key part of this program, (SVA) has refreshed its corporate identity and changed its name. Upon joining the SkyTeam (STM) Alliance, the airline's name "Saudia" was reintroduced, [which was] the airline’s name from 1972 to 1996.”
Other elements of Saudia (SVA)’s transformation plan include modernizing its Information Technology (IT), commercial, operational and financial platforms and renewing the fleet by acquiring 90 new airplanes.
During the joining ceremony, (SVA) unveiled 2 airplanes painted in the SkyTeam (STM) Alliance livery.
SEE ATTACHED PHOTOS - - "STM-2012-05 - SAUDIA SKYTEAM A320 AND 777."
The airplanes include a 777-200 deployed on routes to Dubai, London, New York and Guangzhou; and an A320 used primarily on routes to Europe and the United Arab Emirates (UAE).
SEE VIDEO OF SKYTEAM (STM) ALLIANCE CABIN ATTENDANTS - -
June 2012: China Eastern Airlines (CEA)'s subsidiary, China Cargo Airlines (CKK) is expected to become the 2nd Chinese carrier to join the SkyTeam (SKT) Cargo alliance as it aims to improve its global competitiveness. (CKK) General Manager Zhu Yimin said (CKK) would formally join the (SKT) alliance by June 2013.
(CEA) and subsidiary, Shanghai Airlines (SHA) joined the SkyTeam (STM) alliance last year; China Southern Airlines (GUN) became a member in 2007.
(CKK), China’s largest cargo carrier, operates a fleet of 19 airplanes on 16 domestic and international routes. (CKK) is moving forward with its strategic transition plan to become a logistics enterprise “instead of being just a cargo carrier. It is conducive for us to build an international route network and improve our global competitiveness to join the (STM) Alliance,” Zhu said.
SkyTeam (STM) Alliance Cargo has nine member carriers that include Aeroflot (ARO), Air France (AFA)-(KLM) Cargo, Alitalia (ALI) Cargo, Delta (DAL) Cargo and Korean Air (KAL) Cargo.
The SkyTeam (STM) alliance has just welcomed Middle East Airlines (Air Liban (MEA) as its 17th member). The flag carrier of Lebanon, (MEA) becomes the (STM) alliance’s 2nd Middle Eastern member, offering customers from the region access to an extensive global network.
From its home base in Beirut, Middle East Airlines (MEA) flies to 30 international destinations throughout Africa, the Middle East and Europe. (MEA)’s membership of the SkyTeam (STM) alliance makes it easier for customers to travel to and from Lebanon, whether it’s for business or leisure. This especially benefits the large Lebanese communities living in the USA, Canada and Brazil, who will be able to connect via the major hubs Paris (CDG) and Rome. Beirut is served by (STM) alliance members Alitalia (ALI), AirFrance (AFA), Aeroflot (ARO), Saudia (SVA) and TAROM (TRM), providing additional connections via their hubs in Europe and the Middle East.
China has become an increasingly important trade partner for the Middle East. With members China Airlines (CHI), China Eastern (CEA) and China Southern (GUN), the (STM) alliance network opens up increased opportunities for commerce in the Greater China Region.
“By welcoming (MEA) into the (STM) alliace, we are offering our customers increased travel options to and from Lebanon, particularly given its strong trade links with the Gulf Region, Asia, Africa, and the Americas (all regions with a considerable (STM) alliance footprint),” said Michael Wisbrun (STM) alliance’s Managing Director.
“Joining the (STM) alliance allows us to expand our global reach and offer our customers hundreds more worldwide destinations,” said (MEA) Chairman & Director General Mohamad El-Hout. “Becoming a (STM) alliance member is integral to our strategy for growth and increased profitability, as we look forward to a future of cooperation with our alliance partners.”
Effective immediately, (MEA) customers will be able to earn and redeem miles on services operated by all (STM) alliance member airlines. Members of other (STM) alliance airlines’ frequent flyer programs can also earn and redeem miles when flying on (MEA) operated flights.
(MEA)’s membership and integration into the (STM) alliance is sponsored by founding (STM) alliance member AirFrance (AFA).
August 2012: Aerolíneas Argentinas (ARG) has become the SkyTeam Alliance (STM)’s 18th member and the (STM) alliance’s 1st South American member. (ARG) adds 40 new destinations to the SkyTeam (STM) alliance network.
(STM) Alliance Managing Director, Michael Wisbrun said (ARG) will help the (STM) alliance strengthen its South American network.
Joining the (STM) Alliance is part of (ARG)’s long-term restructuring plan, which includes fleet renewal and network rationalization, upgrading the entire Information Technology (IT) platform, improving product quality and enhancing its frequent flyer program.
(ARG) operates from Buenos Aires airport (BUE) to 52 destinations in 14 countries, including 35 domestic destinations. (BUE) is served by 6 (STM) Alliance members (Aeroméxico (AMX), Air Europa (ARE), AirFrance (AFA), Alitalia (ALI), Delta Air Lines (DAL) and (KLM)) and between them, the (STM) Alliance carriers now offer 123 daily departures from the Argentinean capital to 53 destinations world wide.
In addition, because (ARG) operates direct flights from (BUE) to Sydney, the (STM) Alliance can now offer a nonstop link between South America and Australia.
(ARG) unveiled a 737-700 painted in the silver SkyTeam (STM) Alliance livery at the end of the ceremony.
The SkyTeam (STM) Alliance's presence in South America is weak compared with the Oneworld (ONW) and Star (SAL) alliances, even with the membership of (ARG). (ARG) is one of the continent's smaller major airlines as a result of its bankruptcy and reorganization, and does not have services to destinations where many of its competitors operate.
The Oneworld (ONW) alliance includes Chile's (LAN), which has local operations in Argentina, Colombia, Ecuador and Peru. Brazil's (TAM) (TPR), which merged with (LAN) in June, may join the (ONW) alliance within the next 2 years. A decision is expected by the end of this year.
The Star (SAL) alliance includes Colombia's Avianca (AVI), which has operations in Brazil and Ecuador, and for the time being, (TAM) (TPR). The alliance also includes Panama's Copa Airlines (COP), which has operations in Colombia (REU), and El Salvador's Taca (TAC), which has operations in Costa Rica, Guatemala and Peru.
Wisbrun says he "encourages" (ARG) to grow in Argentina and South America, in order to help close that gap between SkyTeam (STM) alliance's network and the other alliances.
(ARG) 1st signed an agreement to become a member of the (STM) alliance in November 2010.
September 2012: In the past year, the global marketing alliances (Oneworld (ONW), SkyTeam (STM) and Star (SAL)) have found themselves facing 2 large dilemmas. 1st, almost all of the world's major airlines have become aligned to a global alliance, making it difficult to increase value. The standouts are largely low-cost carriers (LCC)s and Middle East network carriers. 2nd, internal segmentation has occurred as member carriers, under pressure to be smarter and more strategic, form tight relationships outside of alliance lines. That inverts the loyalty proposition: where carriers once associated themselves with a marketing alliance, now the primary association is often to key members, with the alliance alignment secondary.
The SkyTeam (STM) Alliance's solution is consideration of a hybrid partnership platform. Details are being worked through but the framework would target the low-cost (LCC) and hybrid carriers that largely comprise the unaligned standout carriers.
September 2012: Chinese authorities intend to allocate Beijing’s much-delayed 2nd airport to SkyTeam (STM) alliance airlines, which include China Southern Airlines (GUN) and China Eastern Airlines (CEA), the largest and 3rd-largest carriers in China.
Under this plan, Beijing’s current airport, Beijing Capital International, and the planned facility at Daxing in the city’s south, will both be hubs. An alternative plan, adopted in many Asian cities, would have dedicated long-haul services to one airport and domestic operations to another, say 2 airline industry sources familiar with the plans.
With such a split, the Star Alliance (SAL)’s Air China (BEJ) will remain at Beijing Capital; Oneworld (ONW) Alliance has no mainline Chinese members.
Under the latest plan, Daxing in its 1st stage will have a 700,000 square meter/7.5 million square ft terminal designed for 45 million passengers a year. Plausible assumptions on traffic growth suggest expansion work might have to get underway even as the 1st passengers arrive at the check-in desks.
Initial plans for Daxing projected 9 runways, including 1 for military use, but these have since been scaled back to 4 runways. Some 40 sq km (15.4 sq mi) has been allocated to the development. There will be places for 220 airplanes and runway capacity for 650,000 movements a year.
Total cost is forecast to reach 80.3 billion yuan/$12.7 billion.
Daxing airport has been planned for at least 8 years, and while construction was scheduled to start in 2010, ground breaking has yet to occur. The latest target opening is 2017, and most airport projects take 5 years to complete.
Beijing Capital is designed to accommodate 85 million passengers a year, and in 2011 it recorded 79 million passenger movements.
October 2012: China Airlines (CHI)’s cargo division became the 10th member of SkyTeam (STM) Alliance Cargo. (CHI) joined the (STM) Alliance in September 2011.
(CHI) Senior VP James Yu said, “Completing all the prerequisites and joining as an official member of (STM) Alliance Cargo is by no means a closure, but the beginning of a journey.”
SkyTeam (STM) Alliance Cargo Executive Tony Charaf said the new membership will “significantly strengthen our global reach. With its extensive route network throughout Asia, Europe, North America and Oceania, plus strong exposure in the cross-strait market, China Airlines (CHI) will certainly enhance the network and opportunities of the (STM) alliance.”
(CHI) operates 51 passenger jets and 21 747-400F freighters.
November 2012: Xiamen Airlines (XIA) has become the 19th member of the SkyTeam (SKT) global alliance. China's 6th largest carrier, (XIA) flies >15 million passengers annually to >50 cities including Macau, Hong Kong and Taipei. (XIA) is headquartered in the coastal city of Xiamen and is a subsidiary of China Southern Airlines (GUN).
Other SkyTeam (SKT) alliance member airlines in the China region include (GUN), China Airlines (CHI) and China Eastern (CEA).
"By joining the SkyTeam (STM) Alliance, (XIA) opens up the world to its passengers. And today we also strengthen the (STM) Alliance's footprint in China," (STM) Managing Director Michael Wisbrun said. "Greater China remains a priority region for our (STM) alliance.”
(XIA) operates a fleet of 87 Boeing (TBC) airplanes and plans to expand its fleet to >136 airplanes in 2015. It operates 5 international routes to Singapore, Thailand and destinations in neighboring N E Asian countries.
(XIA) has also ordered six 787s for 2014 to 2015 delivery. It plans to use the 787 Dreamliners to launch flights to Europe and the USA from its Xiamen base and Fuzhou.
According to the UK's "Sunday Times", Delta Air Lines (DAL) wants to partner with AirFrance (AFA)/(KLM) to buy Virgin Atlantic (VAA) by purchasing the 49% stake in (VAA) held by Singapore Airlines (SIA), (whom has long indicated it has wished to be rid of it). Another factor is that 49% is the limit under foreign ownership rules, and (AFA)/(KLM) could buy Sir Richard Branson's 51%, so that the 3 SkyTeam (STM) Alliance partners could together assume full control.
December 2012: The balance of power in the London Heathrow (LHR) long-haul market may once again shift, as the Virgin Group and Singapore Airlines (SIA) appear to be moving closer to selling a stake in Virgin Atlantic (VAA), possibly to Delta Air Lines (DAL) and AirFrance (AFA)-(KLM).
(SIA) in a short statement to the Singapore stock exchange says it is “in discussions with interested parties concerning the possible divestment of its 49% shareholding in Virgin Atlantic (VAA).” But it adds, “These discussions may or may not result in a transaction.”
The disclosure came after UK newspaper "The Sunday Times," without citing sources, reported that (DAL) is in talks with (SIA) to buy its 49% stake in (VAA). The report also says (DAL)’s SkyTeam (STM) Alliance partners AirFrance (AFA)-(KLM) is planning to buy part of the Virgin Group’s 51% stake in (VAA).
(DAL), meanwhile, is not commenting on the story, calling it rumor and speculation. If (DAL) proceeds with the acquisition, the move would provide a major boost to the (STM) Alliance’s access at (LHR), and at the same time curtail Star (SAL) Alliance’s reach at the airport, which has been limited by Lufthansa (DLH)’s sale of its (BMI) (BMA) division to the International Airlines Group (IAG) unit British Airways (BAB). (BAB) currently is the dominant player on transatlantic services from (LHR), a position that is strengthened by its joint venture with Oneworld (ONW) Alliance partner American Airlines (AAL).
In contrast, (VAA)’s strategic position has become weaker as its competitors grow. This prompted (VAA) in 2010 to appoint an adviser to investigate potential growth options, including alliance membership and buying a stake in another airline. Sir Richard Branson, (VAA)’s controlling shareholder through his Virgin Group, has said that he wants to remain involved in (VAA) even if part of (VAA) is sold.
(VAA)’s biggest asset is its transatlantic network from (LHR), the main gateway into the UK and 1 of the world’s most important business destinations. But (VAA) has been losing money. In the 12 months ending February 29, (VAA) posted a loss of -£80 million/-$128.3 million, compared to a profit of +£18.5 million in the previous year. (VAA)’s (CEO) Steve Ridgway, at the time said the loss was due to “sky-high fuel prices,” global economic uncertainty and a +25% increase in passenger duty fees. Ridgway is due to retire from his position in early 2013.
(VAA) is particularly vulnerable to high fuel prices. Its fleet of 42 airplanes includes 4 A340-300s, 17 A340-600s and 13 747-400s. These 4-engine airplane types burn more fuel and are more expensive to maintain than newer models. (VAA) has taken steps to update its fleet by ordering 16 787-9s and 6 A380s. 1st delivery of the 787-9s and A380s is in 2014 and 2015, respectively, says (VAA).
Despite the cost exposure, (VAA) has valuable airport slots and may be of strategic importance to a USA carrier. It will still be difficult for (SIA) to secure a price comparable to what it paid for its stake in early 2000. (SIA) paid £600.25 million for the 49% share, which included a capital injection of £49 million. The deal valued (VAA) at £1.2 billion, but (SIA) has since written down the value of the shareholding.
February 2013: AirFrance (AFA)-(KLM) Group Chairman & (CEO) Jean-Cyril Spinetta said he believes Delta Air Line (DAL)’s recent 49% stake in Virgin Atlantic (VAA) will help strengthen the SkyTeam (STM) Alliance’s transatlantic joint venture (JV). Spinetta said: “(DAL) acquired 49% of (VAA) by buying the stake held by Singapore Airlines (SIA). That will translate into a strengthening and consolidation of our competitive position there.”
He highlighted the strong performance of the (JV), which also includes Alitalia (ALI). The partnership delivered €9.6 billion/$12.66 billion in revenues during 2012. Transatlantic unit revenues (excluding currency effects) rose +10.4%, off the back of a 5.3% capacity reduction during the year.
The (AFA)-(KLM) (CEO) dismissed suggestions that the (DAL)-(VAA) deal could dilute traffic from its Paris and Amsterdam hubs, as (VAA)’s primary focus is on point-to-point activities. He believes the tie-up will “significantly improve the performance of (VAA)” with improved American feed.
He also sees a potential future for (VAA) in the (STM) Alliance, describing such a move as “logical.”
June 2013: China Eastern Airlines (CEA)’s subsidiary, China Cargo Airlines (CKK) officially joined the SkyTeam (STM) Cargo alliance as it aims to expand its international route network. (CKK) signed a letter of intent (LOI) in June 2012.
“With liberalization of global aviation industry and growing trend of alliance development, it conforms to long-term strategic interest of China Cargo Airlines (CKK) to join SkyTeam (STM) Cargo, which can help (CKK) not only to benefit from scale economy but also be able to improve global competitiveness,” China Eastern (CEA) Senior VP Shan Chuanbo said. (CKK) is moving forward with its strategic transition plan to become a logistics enterprise in addition to a cargo carrier.
(CKK) operates a fleet of 10 airplanes, comprising 6 MD-11Fs, 2 747-400Fs and 2 A330-600Fs. It plans to gradually introduce 777F freighters to replace the MD-11F freighters. By 2015, (CKK) expects to use mainly 777Fs, 747-400Fs and A300-600Fs.
SkyTeam (STM) Cargo has 9 member carriers, comprising Aeroflot (ARO), AirFrance (AFA) - (KLM) Cargo, Alitalia (ALI) Cargo, Delta (DAL) Cargo, Aeromexico (AMX) Cargo, China Airlines (CHI) Cargo, Czech Airlines (CSA) Cargo, China Southern (GUN) Cargo and Korean Air (KAL) Cargo.
November 2013: Aerolineas Argentinas (ARG) cargo division, Aerolineas Cargo, joined the SkyTeam (STM) Cargo Alliance during the Air Cargo Americas Show in Miami, Florida. Aerolineas Cargo became the 12th member carrier of the SkyTeam (STM) Cargo Alliance and adds >30 Latin American destinations to SkyTeam (STM) Cargo’s global network. “Aerolíneas Cargo strengthens our presence in the growing Latin American market, particularly in the southern cone of South America,” SkyTeam Cargo executive board member and Aeromexico (AMX) Cargo (CEO) Mauricio Nieto said.
The Skyteam Cargo Alliance is currently home to the cargo divisions of Aeroflot (ARO), AeroMéxico (AMX), AirFrance (AFA), Alitalia (ALI), China Airlines (CHI), China Southern Airlines (GUN), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM) Royal Dutch Airlines, Korean Air (KAL), and China Eastern Airlines (CEA).
December 2013: Garuda Indonesia (GIA) will join the SkyTeam (STM) Alliance as its 20th member on March 5, 2014, the (STM) alliance announced. The national airline of Indonesia, (GIA) will become (STM) Alliance’s 2nd member from S E Asia.
(STM) Alliance said (GIA)’s membership will facilitate travel to Indonesia for customers around the world. (GIA) operates nonstop flights from Jakarta, the nation’s capital and financial center, to 6 (STM) Alliance hubs: Seoul, Guangzhou, Beijing, Shanghai, Taipei, and Amsterdam.
(STM) Alliance Managing Director Michael Wisbrun said (GIA) is "on target to meet all the membership criteria required by the SkyTeam (STM) Alliance, including implementing a new Information Technology (IT) platform and customer-focused initiatives.”
(GIA) President & (CEO) Emirsyah Satar said, “Joining the SkyTeam (STM) Alliance is a long-term development strategy for Garuda Indonesia (GIA), as planned in the airline’s strategic expansion program ‘Quantum Leap 2011 - 2015,’ and (GIA) has been upgrading its service and actively forging cooperation with (STM) member airlines with this objective in mind.”
January 2014: The Star (SAL) Alliance maintained its position as the largest airline alliance in 2013 with 26.6% of total scheduled traffic in revenue passenger km (RPK), followed by the SkyTeam (STM) Alliance (20.1%), and the Oneworld (ONW) Alliance (15.4%).
AirFrance (AFA) has agreed to help Air Mauritius (MAU) in its bid to join the SkyTeam (STM) Alliance under a renewed and extended partnership between the 2 carriers.
“As part of this new partnership, (AFA) is reaffirming its commitment to provide its full support to (MAU) in its aim to join the global airline (STM) Alliance,” (AFA) said in a statement.
(AFA) was 1 of (MAU)’s founding partners and code shares with the carrier on links between Paris and Mauritius. Under the renewed agreement, (AFA) will also provide Air Mauritius (MAU) with a wide range of management expertise, including Commercial Operations, Cost & Revenue Management, Procurement, & Maintenance.
AirFrance (AFA) has been an (MAU) shareholder since it was founded in 1967 and today it holds an 8.5% stake (2.78% directly and 5.72% indirectly) in (MAU).
The partners have signed 2 cooperation agreements, 1 in 1998 and another in 2008, which has just been renewed and extended.
March 2014: Garuda Indonesia (GIA) has joined the SkyTeam (STM) Alliance as its 20th member. (GIA) becomes the 2nd airline from S E Asia.
The (STM) Alliance said (GIA)’s membership adds Jakarta as an alternative gateway to and from S E Asia, as well as 40 new destinations to the (STM) Alliance’s global network served by the alliance. "(GIA)’s entry into the (STM) alliance will give its customers access to (STM)’s 1,064 destinations that cover >90% of the most relevant traffic flows in the world,” (STM) Managing Director Michael Wisbrun said. “(GIA) strengthens our presence throughout the Asia-Pacific region for our 588 million global passengers.”
(GIA) President & (CEO) Emirsyah Satar said, “For the past 3 years, a (GIA) has been actively forging cooperation with the other 19 member airlines with this objective in mind and it has been an incredible journey.” (GIA) connects (STM)’s extensive network to “1 of the largest economies in S E Asia via its hubs in Jakarta, Denpasar, Makassar, Medan, Surabaya, and Balikpapan,” Satar added.
October 2014: News Item A-1: Garuda Indonesia (GIA) Cargo, a strategic business unit of Garuda Indonesia (GIA), has announced its intent to join the SkyTeam (STM) Cargo Alliance by the end of June 2015. The announcement was made at the (TIACA) Air Cargo Forum in Seoul.
According to a (STM) Alliance statement, membership requirements include Information Technology (IT) system integration; product alignment and enhancement; service procedure improvement in accordance with service standards; and improving brand image.
“By joining (STM) Alliance Cargo, (GIA) Cargo will offer >900 world wide locations, giving our customers a far greater choice of destinations from and to Indonesia,” (GIA) Cargo VP Rajendra Kartawiria said. “These additional destinations and greater collaboration with other (STM) Alliance members will also support (GIA)’s planned +30% capacity increase in 2015.”
(STM) Alliance Cargo Chairman Chong Choy said, “(GIA) Cargo will strengthen (STM) Alliance’s Cargo network in Asia-Pacific by adding 63 new destinations, increasing global trade between the dynamic Indonesian market and the rest of the world.”
News Item A-2: The European Commission (EC) is seeking input into whether (STM) Alliance members Delta Air Lines (DAL), Air France (AFA) - (KLM) and Alitalia (ALI) have unfair dominance on their transatlantic New York services.
This marks the latest step in a probe that was formally opened by the (EC) in January 2012. The investigation originally looked at whether all (STM) Alliance carriers had transatlantic market dominance, but later dismissed 8 other alliance members to focus on just (AFA) - (KLM), (ALI), and (DAL). “The 3 airlines have offered to make landing and takeoff slots available at both ends of the Amsterdam to New York and Rome to New York routes to facilitate the market entry of competitors,” the (EC) said, inviting comments from 3rd parties within a month of publication in the "Official Journal."
(AFA) - (KLM), (ALI) and (DAL) are also willing to allow rivals to sell tickets on their flights, facilitate connections and give access to their frequent flyer program on all three routes. “If the market test confirms that the proposed commitments remedy the competition concerns, the (EC) may make them legally binding on the companies,” the (EC) said.
The (EU) body is concerned that the “extensive cooperation” between (AFA) - (KLM), (ALI), and (DAL), which includes profit-sharing, as well as schedules, pricing and capacity coordination, could be pushing up premium fares between Paris and New York, in addition to premium and non-premium fares on the other two routes.
April 2015: News Item A-1: SkyTeam (SKT) Alliance partners, Delta Air Lines (DAL) and Aeromexico (AMX) aim to launch a transborder joint venture (JV) for flights between the USA and Mexico similar to the transatlantic (JV)s (DAL) operates with Virgin Atlantic Airways (VAA) and Air France (AFA) - (KLM)/Alitalia (ALI).
(DAL) and (AMX) have applied to the USA Department of Transportation (DOT) and Mexican Federal Economic Competition Commission for antitrust approval. The airlines said an antitrust-immunized (JV) would “allow (DAL) and (AMX) to operate more effectively on routes between the USA and Mexico. Also, (DAL) and (AMX) will seek to expand opportunities to collocate and invest in airport facilities by improving gates and lounges. Additionally, the airlines will increase joint sales and marketing initiatives.”
(DAL) owns a 4.17% stake in (AMX).
May 2015: News Item A-1: Alitalia (ALI) is to end its Air France (AFA) - (KLM) partnership in 2017.
Etihad Airways (EHD) equity partner, Alitalia (ALI) will not renew its long-standing agreements with (AFA) - (KLM), when they come up for renewal in January 2017, saying the relationship is imbalanced.
The (AFA) - (KLM)/(ALI) tie-up covers passenger services between France, Italy, the Netherlands and beyond (as well as the marketing, sales and distribution of (ALI)’s belly capacity, currently performed by (AFA) - (KLM).
(ALI) said the (AFA) - (KLM) partnership and ancillary joint venture (JV) agreements were signed “under very different economic circumstances” in 2009 and 2010, before being transferred to the new (ALI) in January 2015. As part of this transition, Etihad Airways (EHD) took a 49% stake in Alitalia (ALI). (AFA) used to be a key (ALI) shareholder, but now holds <1% of (ALI).
“These agreements are no longer beneficial, either commercially or strategically, to the new (ALI) and its ambitious turnaround plan. They were negotiated when (ALI) was in a very different position, with the result that the agreements in their current forms favor the other party,” (ALI) (CEO), Silvano Cassano said.
He added the agreements are “undermining” (ALI)’s efforts to restructure its network, aimed at winning back traffic and supporting the Italian manufacturing industry’s cargo needs.
As part of its reinvention, (ALI) has joined (EHD)’s network of equity partners that includes airberlin (BER), Air Serbia (JAT), Air Seychelles (ASY), Etihad Airways (EHD), Etihad Regional operated by Darwin Airline, Jet Airways (JPL), and NIKI (NKI).
“We have indicated to (AFA) - (KLM) that we are willing to discuss more equitable arrangements that benefit all the parties involved, but thus far, we have been unable to achieve this result. We remain open to further discussions to achieve a mutually acceptable solution. However, in the interest of transparency, and certainty for all parties, we felt it necessary to announce our intention not to renew these agreements under the present conditions,” he said.
It is unclear what, if any, implications this announcement has for (ALI)’s SkyTeam (STM) Alliance membership and its transatlantic joint venture (JV) with Air France (AFA) - (KLM) and Delta Air Lines (DAL).
An (AFA) - (KLM) spokesperson said in an emailed statement: “(AFA) - (KLM) is currently holding discussions with (ALI) to see how they can cooperate in the future in Europe. The agreements under the European (JV) between (AFA) - (KLM) and (ALI) still applies until January 2017.”
News Item A-2: Delta Air Lines (DAL) and Alitalia (ALI) remain committed to their transatlantic joint venture (JV) and do not expect to see changes in the relationship, despite the apparent split between (ALI) and its SkyTeam (STM) Alliance partnership with Air France (AFA)/(KLM).
Etihad Airways (EHD) equity partner, (ALI) has said it will not renew its long-standing agreements with (AFA) - (KLM), when they come up for renewal in January 2017, saying the relationship is imbalanced. (DAL) President, Ed Bastian said he did not expect that to affect (DAL)’s relationship with (ALI). (DAL), (ALI) and (AFA)-(KLM) are all founding members of the SkyTeam (STM) global alliance. “(ALI) is still in our partnership and we expect no change,” he said. “There are some intra-European discussions going on with (AFA) now, but both (ALI) and our expectations are that we will stay in the transatlantic partnership.”
Air France (AFA) used to be a key (ALI) shareholder, but now holds <1% of (ALI), while Abu Dhabi-based (EHD) now holds a 49% stake in (ALI).
In a recent statement, (ALI) (CEO) Silvano Cassano said (ALI)’s agreements with (AFA)-(KLM) were no longer beneficial, either commercially or strategically, to the new (ALI) and its ambitious turnaround plan. But he also said (ALI) remained open to further discussions “to achieve a mutually acceptable solution.”
Asked if (DAL) (which also has a transatlantic (JV) with Virgin Atlantic (VAA) and equity stakes in Aeromexico (AMX) and (GOL) (GOT)), whether it was seeking more airline partnerships, Bastian said (DAL) was “constantly pursuing opportunities.” Asia was a particular focus, he said. “That’s a little far out, but I think there may be some good opportunities there. Korean Air (KAL) is a partner, and we are trying to drive that to a better level.”
Bastian and a (DAL) contingency of some 100 employees were in Toulouse to take delivery of its first 242-tonne maximum take-off weight A330-300 variant. Atlanta-based (DAL) is the first to receive the airplane type among 11 airlines.
June 2015: Indonesian flag carrier, Garuda Indonesia (GIA) has signed an agreement with local cargo carrier, Cardig Air (PTC) to coordinate on cargo shipping throughout the region.
(PTC) currently operates 3 737-300F cargo airplanes, principally on domestic routes between major hubs in Indonesia, but also to international destinations such as Singapore, Brunei, Vietnam, and Malaysia.
“This will expand domestic business for (GIA). It is a strategic move to increase (GIA) Cargo services,” (GIA) (CEO) Arif Wibowo said.
(GIA) has already begun to move strongly into cargo with its imminent signing to the SkyTeam (STM) Cargo Alliance, to bring its products in line with international standards.
Wibowo also noted the agreement with (PTC) would open the way for (GIA) to further expand its international cargo operations, although in the short term, it would concentrate on high volume routes such as Surabaya to Bali to Dili (East Timor).
Cardig Air (PTC) will also extend its carrying capacity by tapping into existing cargo and belly space on (GIA)’s 76 domestic and international schedules. “In the future, we will continue to cooperate with (PTC) on developing cargo shipments to other international routes, that are currently not served by Garuda Indonesia Cargo (GIA),” Wibowo said, adding the deal has the capacity to generate up to +$10 million extra income per year through increased efficiencies.
July 2015: News Item A-1: "Delta (DAL) is to Buy 3.55% Stake in China Eastern (CEA) for $450 million" by (ATW) Aaron Karp, July 27, 2015.
(DAL) has agreed to invest $450 million to acquire a 3.55% stake in Shanghai-based (CEA), and the SkyTeam (STM) Alliance members said they will launch a “commercial cooperation plan.”
In comments posted on (DAL)’s website, (DAL) Senior VP Asia Pacific Vinay Dube said, “(DAL) has nearly tripled the size of its China network in the past 5 years. Pairing up with (CEA) increases our reach and further cements our commitment to the market and to our customers, who travel between China and the USA. (CEA) is the hub carrier in the leading Chinese business market, Shanghai, so this is a great opportunity to build a profitable, enduring business model.”
(CEA) (CEO) Shaoyong Liu said, “The cooperation of the parties is based on a global vision and joint strategic blueprint. The parties will take advantage of their respective route networks, flight services, relevant businesses and advantageous resources, to fully connect the world’s 2 top economies as well as 2 top air transportation markets.”
Dube added, “Our $450 million investment in (CEA) is only a part of our partnership. While the investment results in a 3.55% stake in (CEA) and an observer seat on the (CEA) board of directors, the true value in this agreement comes from our shared vision to build a long-term, profitable partnership by creating a world-class, customer-focused offering, and be the most successful franchise in the growing USA to China market.”
(CEA) and its subsidiary, Shanghai Airlines (SHA) code share with (DAL) on 30 domestic USA routes, 43 domestic Chinese routes and 7 China to USA transpacific routes. (CEA) operates 35x-weekly Boeing 777-300ER flights from Shanghai to Los Angeles, New York, San Francisco, and Honolulu. (DAL) operates 28x-weekly flights to Shanghai, Beijing, and Hong Kong from Seattle and Detroit. (DAL) recently moved to Terminal 1 at Shanghai Pudong Airport, co-locating with (CEA) and Shanghai Airlines (SHA).
Delta (DAL) said its goal to be “the most Chinese-friendly USA airline.”
November 2015: The SkyTeam (STM) alliance has appointed Perry Cantarutti as (CEO), succeeding the retiring Leo van Wijk.
Cantarutti is formerly Delta Air Lines (DAL) Senior VP Europe, Middle East & Africa. During his 5 years in this role, the (STM) alliance said Cantarutti was “instrumental in maximizing the profitability of (DAL)’s transatlantic operations and identifying growth opportunities for its joint venture (JV) with Air France (AFA), (KLM), and Alitalia (ALI) (the industry’s largest transatlantic alliance).”
The SkyTeam (STM) alliance also announced Michael Wisbrun would take over as the Chairman of the governing board, which is composed of (CEO)s and Chairmen of the 20 member airlines. Van Wijk served >8 years as Chairman of the (STM) alliance.
“Perry brings with him a wealth of experience gained throughout 23 years in the aviation industry which, combined with his track record of forging successful airline partnerships and driving customer-focused results, will make him a dynamic leader of the SkyTeam (STM) alliance,” Wisbrun said.
Perry said that during van Wijk’s tenure, the SkyTeam (STM) alliance “secured the leading position in Greater China, grew its global presence, and set itself apart as the customer focused alliance.”
December 2015: SkyTeam (STM) alliance partners Delta Air Lines (DAL) and (KLM) Royal Dutch Airlines are launching a new code share program with Jet Airways (JPL), the Indian airline that is 24% owned by Gulf carrier Etihad Airways (EHD).
January 2016: News Item A-1: China Eastern Airlines (CEA) has further grown its network to Thailand with the introduction on January 28 of a new 3x-weekly service on the 2,612 km route between Wenzhou (WNZ) and Bangkok Suvarnabhumi (BKK). No other carrier serves this route, which will be flown by (CEA)’s 737-800s. For (CEA), the SkyTeam (STM) Alliance carrier, this is its 34th route to Thailand, second from Wenzhou (it already serves Surat Thani) and 11th to Bangkok’s biggest airport. It also operates 6 routes each to Chiang Mai and Krabi, 5 to Phuket, 4 to Surat Thani and 1 each to Chiang Rai and Utapao.
News Item A-2: China Southern Airlines (GUN) on January 27 launched its 5th route between China and Australia, its 2nd to Sydney (SYD) and its 1st from Shenzhen (SZX). The new 3x-weekly service on the 7,424 km route will be operated by (GUN), the SkyTeam (STM) member’s 284-seat A330-300s. Flights depart China on Wednesday, Friday and Sunday evenings arriving in Australia early the following morning. The return flights depart Sydney on Mondays, Thursdays and Saturdays. (GUN) already serves 4 Australian airports (including Sydney) from its Guangzhou hub.
February 2016: China Airlines (CHI) has become the 2nd carrier in as many weeks to launch flights between Taipei Taoyuan (TPE) and Yangzhou (YTY). (CHI), The SkyTeam (STM) Alliance member began 2x-weekly (Mondays and Fridays) service on the 843 km route on February 1 using its 737-800s. (CHI) began 3x-weekly flights on January 25. This brings to 19 the number of Chinese destinations served by China Airlines (CHI) from its Taipei base. However, of the 19 routes, just 2, Beijing and Shanghai, are served with at least daily flights.
March 2016: Jet Airways (JPL), which recently announced a strategic code share with SkyTeam (STM) Alliance partners Delta Air Lines (DAL) and (KLM) Royal Dutch Airlines, confirmed it will close its Brussels hub and move to Amsterdam Schiphol.
April 2016: The SkyTeam (STM) Alliance opened its latest lounge at Dubai International Airport. Situated in the newly built Concourse D, Terminal 1, the lounge has been designed to offer high-end hospitality and amenities for Elite Plus, First (F)- and Business (C)-Class passengers of the 10 SkyTeam (STM) Alliance member airlines serving the airport.
October 2016: "SkyTeam Introduces Online Frequent Flyer Rretro-crediting" by (ATW) Linda Blachly firstname.lastname@example.org, October 5, 2016.
The SkyTeam (STM) Alliance has introduced an online, retroactive credit tool to make it easier for frequent flyers to keep their account balances up-to-date. Already available across most of SkyTeam (STM) Alliance’s 20 members, the tool works in real-time to validate retroactive requests for eligible flights.
According to (STM), the new tool eliminates the need for manual processing of post-travel claims such as when a Frequent Flyer Program (FFP) number has not been entered into a reservation. Customers log into their (FFP) account, enter flight details and the system validates the request in seconds. Eligible flights are credited to their account automatically and retroactive requests can be made as little as 1 week after the date of travel.
“We are offering a fast, simple and seamless way to claim missing miles across the alliance for our >200 million frequent flyers,” (STM) Director Customer Loyalty Michael Schutzbank said.
March 2017: Delta Air Lines (DAL) has acquired an additional +32% of Grupo Aeromexico (AMX)’s outstanding shares for approximately $620 million, and now owns 36.2% of Aeromexico (AMX). (DAL), which already owned a 4.2% stake in Mexico City-based (AMX), acquired 228 million additional shares at MXN53 ($2.71) per share in the tender offer. (DAL) holds options to acquire another 12.8% stake in (AMX), so eventually it could own 49% of (AMX).
(DAL) and (AMX) late last year gained regulatory approval to establish an antitrust-immunized joint venture (JV) for transborder flying. Both carriers are members of the SkyTeam (STM) alliance.
(DAL) (CEO) Ed Bastian said the completion of the tender offer “is yet another milestone that strengthens the (DAL) - (AMX) relationship as we move toward implementing our joint cooperation agreement in the 2nd quarter.”
August 2017: News Item A-1: "Air France (AFA) - (KLM) & Virgin Atlantic (VAA): Culture Clash?" by (ATW) Victoria Moores email@example.com, July 28, 2017.
Air France (AFA) - (KLM) pulled a surprise move, announcing plans to acquire 31% of UK long-haul carrier Virgin Atlantic (VAA), but how will the partnership play out in terms of culture and strategy?
From a strategic standpoint, the acquisition joins up a few SkyTeam (STM) alliance dots. (AFA) - (KLM) has a strong relationship with USA major Delta Air Lines (DAL), which in turn has a maximum 49% stake in Virgin Atlantic (VAA). Meanwhile, SkyTeam (STM) alliance members (DAL) and China Eastern (CEA) are each buying 10% of Air France (AFA) - (KLM).
There are definite gains to be had on both sides of the Channel. (VAA) will finally get the short-haul feed it has been craving for years, since its failed attempts to buy UK short-haul carrier bmi. Meanwhile, Air France (AFA) gets a solid London foothold to add to its Paris and Amsterdam hubs.
But do equity partnerships truly work? The "Qualiflyer Group" tried this strategy. It failed. Air Afrique (AFR) also tried it and failed.
Another equity investment story is playing out at the Etihad (EHD) Group, which has just offloaded its stake in Swiss regional Darwin Airline (flying as Etihad Regional). Meanwhile, 2 other investments: Alitalia (ALI) and airberlin (BER) continue to bleed cash, contributing to Etihad (EHD)’s -$1.87 billion net loss for 2016.
The Lufthansa (DLH) Group and the International Airlines Group (IAG)’s portfolio of airline brands seem to be better examples of industry consolidation, but these are typically full-control ventures.
How much strategic benefit do smaller (but significant) equity stakes truly bring, compared with non-equity joint ventures?
Also, how will this fit with the UK’s plans to exit the European Union (EU) (Brexit), if UK carrier Virgin Atlantic (VAA) has 79% foreign ownership (49% Delta (DAL) and 30% (AFA) - (KLM))?
Then there’s the problem of cultural fit. (AFA) - (KLM) and (VAA)’s cultures are very different. (AFA) trades on its lengthy history, exuding a certain elegance and grace. (KLM) is more in line with (VAA), with an edgy, modern and slightly rebellious personality.
But here’s the rub. Air France (AFA) and (KLM) joined forces in 2004 and (despite 13 years together) the 2 companies are still batting a serious cultural divide. How well will (AFA) mesh with (VAA)?
October 2017: "China Eastern (CEA) and Delta (DAL) Complete Air France - KLM Buy-in" by (ATW) Victoria Moores firstname.lastname@example.org, October 5, 2017.
SkyTeam (STM) Alliance members Air France (AFA) - (KLM), Delta Air Lines (DAL) and China Eastern Airlines (CEA) have completed a series of share transactions aimed at strengthening their strategic partnership.
Under the agreement, which was originally announced July 27, (CEA) and (DAL) are each taking a 10% stake in (AFA) - (KLM), which will in turn acquire 31% of UK-based long-haul carrier Virgin Atlantic (VAA). “Each of (CEA) and (DAL) now holds 10% of (AFA) - (KLM)’s share capital and has consequently 1 director representing it at (AFA) - (KLM)’s board of directors,” (AFA) said.
>75 million new (AFA) - (KLM) shares have been admitted to the Euronext Paris and Amsterdam stock exchanges, injecting €751 million/($893 million) into (AFA) - (KLM). “This operation is an integral part of the "Trust Together" project, allowing (AFA) - (KLM) to regain the offensive, to reinforce its commercial integration with its principal partners and to continue improving its financial structure,” (AFA) - (KLM) said.
October 2017: Lufthansa Group low cost carrier (LCC) subsidiary Eurowings (EWG) (CEO) Thorsten Dirks has said Star (STM) Alliance member Brussels Airlines (DAT)/(EBA) could operate long-haul flights for (EWG) from Düsseldorf, Germany.
“This could include flights to the USA. However, we will not change (DAT)/(EBA)’s business portfolio. For example, they are an expert on routes to Africa, but we want to use their competence and air operator’s certificate (AOC),” Dirks said in Vienna.
In December 2016, the Lufthansa Group took over 100% of SN Airholding, the parent company of Brussels Airlines (DAT)/(EBA), in a deal to fully integrate the Belgian carrier into Lufthansa (DLH)’s Eurowings (EWG) Group in 2018.
Dirks said the (EWG) long-haul fleet comprises 6 Airbus A330-200s. A 7th A330 will arrive in December, which was actually planned as a spare aircraft, but will now be used for scheduled services immediately. All these aircraft are part of a wet-lease contract with SunExpress (SNS), a joint venture of (DLH) and Turkish Airlines (THY).
(EWG) expects to take over 2 former (DLH) A340-300s to speed up its long-haul network expansion.
(EWG) is also leasing a Boeing 767-300ER from Swiss company PrivatAir (PTS) to cover the increased demand after airberlin (BER) canceled all its long-haul routes following insolvency in August.
June 2018: News Item A-1: Delta Air Lines (DAL) expanded its transpacific partnership with Korean Air (KAL) on June 14 as (DAL) announced a new nonstop route between Seattle-Tacoma International (SEA) and Osaka, Japan’s Kansai International (KIX) starting in 2019.
(DAL) will code share the flight with (KAL) as part of the joint venture (JV) partnership launched between the airlines in May. (DAL) plans to fly the route with a Boeing 767-300ER equipped with 25 lie-flat seats in Delta One, 29 “comfort plus” seats and 171 main cabin seats.
Concurrent with the Osaka route announcement, (DAL) said it had “made the difficult business decision” to end its nonstop Seattle to Hong Kong flights, with the last flight out of Hong Kong set for October 4. (DAL) service between the 2 cities will continue, but will be offered via Seoul-Incheon (ICN) on Korean Air (KAL).
The new Osaka route follows on (DAL)’s plan to launch nonstop flights in 2019 between Minneapolis/St Paul International (MSP) and (ICN); as with Osaka, specific schedules will be released later. The (MSP) to (ICN) flights will take advantage of the (DAL) - (KAL) (JV), as the 2 SkyTeam (STM) alliance founding member airlines are co-located in the newly opened Terminal 2 at (ICN). The new Minneapolis route complements 3 existing USA to Seoul nonstop routes (Seattle, Detroit and Atlanta). (DAL) said it will utilize a “newly refreshed” Boeing 777-200ER on the (MSP) to (ICN) route, with 28 Delta One suites including a full height door, 48 premium select cabin seats and 220 main cabin seats.
(DAL) - (KAL) code sharing ramped up following the (JV) partnership announcement. According to (DAL), 132 (DAL)-operated flights from Seattle, Atlanta, Las Vegas, New York, San Francisco, Honolulu, Chicago and Dallas were coded with (KAL) flight numbers in May, adding to 164 existing (KAL) code share markets on (DAL) in North America from (DAL) hubs in Atlanta, Los Angeles and New York (JFK).
In June so far, 66 additional markets from Detroit, Portland, Seattle and Atlanta have become North American code shares, and (KAL)’s code was added to 5 (DAL)-operated flights from Japan to the same USA airports. The new additions expand on 36 existing code share routes with Asia.
News Item A-2: State-run national flag carrier Kenya Airways (KEN) plans to merge with Nairobi Jomo Kenyatta International Airport (JKIA) to compete with other state-owned carriers in Africa and the Middle East, such as Ethiopian Airlines (ETH) and Emirates Airline.
“The deal should be completed by the end of the year, which is gaining an instrument against competition,” said (KEN) (CEO) Sebastian Mikosz.
The 2 state-controlled companies are being brought together under 1 holding. “This move will help us grow our Nairobi hub,” Mikosz said.
(JKIA), which is managed by state-owned Kenya Airports Authority (KAA), will be owned and managed by a holding company that will be 100% owned by Kenya Airways (KEN). (JKIA) employees will be taken over by the holding company.
Mikosz said the holding is expected to bring efficient operations between the (JKIA) and (KEN), including controlling aviation-related businesses such as ground handling, fuel distribution, catering and slot coordination.
Ethiopian Airlines (ETH) uses a similar model at its hub at Addis Ababa Bole International Airport.
SkyTeam (STM) Alliance member Kenya Airways (KEN) operates in a very competitive environment. However, Mikosz said its financial restructuring plan has paid off significantly. “But it has not ended the process of healing (KEN),” he said. “We must continue to fix revenue and cost issues, among many other necessary measures.”
(KEN)’s ownership now comprises 48.9% by the government, 38.1% by local banks, 7.8% by (KLM) and 5.2% by other shareholders. According to the (KAA), (JKIA) handles >40 passenger and 25 cargo airlines.
* News Item A-3: Kenya Airways (KEN) is evaluating an order of up to 20 Bombardier CSeries or Embraer E2 regional jets. A decision will be made by the end of this year, (CEO) Sebastian Mikosz said on the sidelines of this month’s (IATA) (AGM) in Sydney.
“We are talking about 20 aircraft on top of what we have,” he said.
Mikosz said one advantage is that Egyptian flag carrier EgyptAir (EGP) has ordered 12 CS300s and he expects Ethiopian Airlines (ETH), as well as a Tanzania-based carrier, will order the CSeries as well. “This would make sense in terms of our maintenance capacity,” Mikosz said.
(KEN) as a SkyTeam (STM) member is also evaluating a Boeing 737 MAX order.
(KEN) operates a fleet of 8 Boeing 737-800s, 2 737-700s, 2 737-300Fs, 7 787-8s and 15 Embraer E190s.
Separately, (KEN) is expanding its network to Europe and Asia when (KEN) adds 5 wide body airplanes in the next 18 months. Mikosz did not reveal the new destinations, but said they would be announced “sometime after the summer.”
(KEN) is adding the additional capacity as it prepares 20 take back 2 Boeing 787-8s and 3 777-300ERs when the leases expire.
The 787-8s, which were on a 3-year wet lease arrangement with Oman Air (OMR), will return in 2019 to support New York flights. (KEN) plans to launch daily Nairobi Jomo Kenyatta to New York (JFK) services on October 28.
3 777s that were leased to Turkish Airlines (THY) will return in 2019 to 1920. “These we will put in our network [to] manage capacity growth,” he said.
Mikosz said (KEN) will establish 30 to 60 new pilot (FC) positions for long-haul fleet expansion. The pilots (FC) will use common type ratings for both the 777 and 787. However, 2 types of long-haul airplanes should be reduced to one type in the future. “This could be a single 787 fleet, which is a natural choice. But we are also eyeing the Airbus A350, which is a good product,” Mikosz said.