American Forms Marketing Alliance With Swissair and Sabena, Will Codeshare on Transatlantic Routes

http://biz.yahoo.com/prnews/990622/tx_amer_sw_1.html

Very interesting news. I wonder whether Swissair & Sabena are preparing for AF & DL alliance? Additionally, AA is teaming up with a lot of airlines lately...

Dan.

SR (also on behalf of their 49.5% daughter Sabena) informed today / my interpretation

second transatlantic partnership with AA / gruezi oneworld (ante portas), ciao Delta

SR has always been properly informed about the ongoing talks between Delta and Air France / we have been stronly opposed, but Delta would not listen

SR and Sabena will merge many administration & technical service departements / the only two reasons that we don't take over legally 100% of Sabena are; inner-belgium-political-resaons and the advantage to have a legally EU based company operating from/in the EU. Switzerland is not member of the EU

AUA Austrian Airlines intends to follow SR/Sabena / we (SR) would like to takeover AUA, but this is politically and mentally not possible - at least as long as those .... Austrians always beat us in all ski-world-cup-events! (SR is the main sponsor of the Swiss ski-alpine-team)

[This message has been edited by Rudi (edited 06-22-1999).]

Well it very much sounds like goodbye Delta, hello Oneworld. Predictable.

See also the thread "AF chooses Delta over Continetal" in this Forum for discussion and Delta's latest news release on the Air France alliance.

James



[This message has been edited by james (edited 06-22-1999).]

The full press rls can be found here:
http://talk.flyertalk.com/forum/Forum1/HTML/001421.html

Even though it was "In the News", I though it fitted better in the Buzz.

more Swissair news (late Tuesday afternoon, after the swiss stock exchange closed):

Swissair and Sabena, per july-1st-99, found a new company, based in Bruxelles, Belgium, to manage all flight activities of both companies (about 50 Zurich based SR managers will have to move to Bruxelles ... at least they won't have to miss good chocolates there ...).

"The two European carriers plan to form Airline Management Co., a joint venture to manage these functions [the code share's]."

Interested in any details on Elite qualification and whether such mileage will count toward it for AA Advantage members!

doc -- just a guess here, but if you're flying on an AA flt number, it should be counted for elite status.

the swiss newspaper are full today of speculations and commentaries about "our" national airline "leaving" Switzerland as a manager base ...

and most of the comments say, that Swissair feels "deceived" from DL and will leave that partnership as soon as economically and legally feasable (DL and SR hold a 5% stake of shares in each other). My "Neue Zuercher Zeitung" says:

"Swissair changes from being a strong partner in that weak Global Excellence partnership with Delta to become a small partner in that strong OneWorld-Alliance".

I'm wondering if this is really a done deal by the way. Wasn't there a lot of concern over the AA/BA partnership, and they had to make concessions (no code sharing across the Atlantic and the rules about FF earning across the Atlantic) to get regulatory approval.

It seems to me that if AA tries to add even more carriers that fly trans-Atlantic, there will at the minimum the same restrictions, and possibly even more restrictions!

Something is going to move with the US/UK air talks, hopefully, then AA & BA can continue their partnership. Just today, Virgin filed for 2 daily ORD-LHR roundtrips starting Nov 1, and British Midland already has UK approval to start London- New York, MIA, and maybe both or either ORD & BOS service. Have to see after the July 6 bilateral talks take place...

The problems between BA and AA seemed to be that they dominated the very profitable London-NY and London-Chicago routes having about 70% of the market. There were also issues about total landing slots at LHR which in combination seemed highly anti-competitive.

I may be wrong but there could also have been issues with the US-EU open skies agreements.

I don't see any of these factors affecting a deal between a Swiss and US company so I would be surprised if they could not get aporoval. If SR formally break up with Delta it should be even easier.

Just to add a bit more to Rudi's previous post:

"I can confirm that we intend to sell the stake in Delta in the time ahead," SAirGroup spokesman Jean-Claude Donzel told Reuters, corroborating a report in Switzerland's Tages-Anzeiger newspaper. He added the sale could take months or years.

Donzel said it was now an open question whether the Delta holding was still a strategic investment given Delta's decision to form an alliance with Air France.

Thanks burkey! It seems that DL was the most liberal with their agreements with their many former partner carriers in the past (including SQ). It woulb be nice to get credit for all Swissair and Sabena flights too!

Though it doesn't apply here directly, I think KL and NW are unique in getting waivers from both governments to share all kinds of "sensitive" business information!

Hmm... I wonder if a Qualiflyer/oneworld tie-up would run into trouble at the European Commission? That grouping would have the flag carriers of five of the six westernmost nations in the EU (British, Aer Lingus, Iberia, TAP, and Sabena).

... and (from the Qualiflyer-Group) Austrian Airlines, and Crossair Europe (based in Alsace, France), and Turkish Airlines ....

But still I don't think so, as mighty Lufthansa, Air France, and SAS not being part of OneWorld - guarantees even heavier competition!

Any opinions on this:

US Airways is linked to AA. US Airways severed ties with Air France about a year ago. They have been linked to Sabena and Swissair for some time now, and just linked up with Austrian earlier this year. Word on the street here in Arlington, Virginia (US Airways corporate headquarters) is that they are seeking to settle their "dispute" with BA. Stephen Wolf (US Airways CEO) said recently that it would make sense for BA and US Airways to do some things together. US Airways pilots union has just been asked to allow ATR's on "codeshare" flights. American Eagle is FLUSH with ATR's. US Airways has zero ATR's. Word on Wall Street says US Airways and American are planning a financial link up as well. Their FF programs are already significantly linked and US Airways just changed its reservation and FF computer system to AA's Sabre system. US Airways is a dominant player in the US east coast market where 80% of the trans-Atlantic originating and departing traffic comes from. The trans-Atlantic routes are THE most profitable business routes in the world. I wonder if something is going on here.... any thoughts???

Cheers

geo1004 - BA and US did have a lot of codeshares and a marketing agreement which ended as soon as the AA/BA merger was announced. In particular, BA used to market their LGW-Charlotte flight to connect to a wide range of US flights.

Silverpie, you make an interesting point about competition. However, I think they would just about be OK with the scenario you suggest. As Rudi points out LH and AF would be out; VS and BD provide transatlantic and European competition for BA (just). EI and TAP are relatively small airlnes mostly serving their domestic markets although the market to Ireland could easily become stifled by these arrangements. Possibly the largest problem is Iberia?

Belgium is a small country, effectively in central Europe allowing a large amount of competiiton on incoming routes. Also, except when talking about flights between UK, Ireland, Spain and Portugal you almost always have to go across France or Germany to get from on EU country to another. This means that with effective service and marketing, AF and LH should always have a chance to compete.

It is my feeling that such marketing arrangements would reach their natural limit in your situation. In any case, I am not sure why Oneworld would want TAP and Sabena - BA and SR are high quality airlines with extensive worldwide route networks add in IB and Europe is extrememly well covered in the alliance. Add in EI and you have three EU airlines. I think TAP and Sabena would just be overkill and would not add anything to the alliance yet would attract unwanted regulatory attention.

How strong an alliance is Qualiflyer? I.e. is there any reason why it shouldn't break up, other than SR owning a chunk of Sabena?

James


[This message has been edited by james (edited 06-24-1999).]

don't underestimate Sabenas Europe-Africa-network - and the unique strength of Austrian Airlines into Eastern Europe.

Which must be balanced against overall standards of quality and EU pressure over anticompetitveness. The later is enhanced by the fact that there isn't much room for expansion in central European traffic due to crowded air lanes and air traffic control problems. Do you really thing the EU would allow a marketing pact that inlcudes BA, EI, IB, Sabena, TAP, Austrian and Swissair (outside their direct jurisdiction but...)?

It's mostly speculation at this point, after all. I don't see anyone getting SR without getting Sabena as well so the options seem to be: SR dump TAP and Austrian or they may have to look elsewhere if they are dedicated to Qualiflyer.

James

[This message has been edited by james (edited 06-24-1999).]