Air France "acquires" Klm.

[NewHampshire Black Bears]

All of us "airline armchair quarterbacks" know that NW, DL, and CO have been "cozy" with each other lately(codeshareing).

With AF taking over KLM(merger in name only), I'm wondering how/if this might pull NW EVEN closer to DL, given that DL and AF are VERY, VERY close. (like AA and BA)

I'm NOT suggesting a consolidation(merger or takeover) between NW or DL,(Jesus, "nobodys got a pot to PI$$ in, or a window to throw it out of"), but I've got this unexplainable feeling that this deal between AF, and KLM will have some kind of "trickle down" effect on NW and DL, and mabey CO.

????

NH/BB's

 

[Bigsky]

NW and CO been cozy for a least five years and, as you know, the whole UA/US merger threat brought Delta in the mix. There are several goverment imposed limits on the codeshare agreement between DL, NW and CO which basically keep the three from getting too cozy. Examples are limits on the number flights that NW can place on DL flights and visa versa as well as actual cities pairs that may not have code share agreements at all. There's also ALPA which is the pilots' union at all three airlines.

NW and CO should soon join Skyteam creating a fairly large alliance. As to what happens from there remains to be seen but I think that if DL and NW avoid BK, Skyteam will become the strongest and largest of the alliances worldwide.

cheers

bigsky

 

[Bigsky]

Reuters
KLM, Northwest, Continental seen joining Skyteam
Wednesday May 5, 8:57 am ET


PARIS, May 5 (Reuters) - Newly formed Franco-Dutch airline Air France-KLM (Paris:AIRF.PA - News) said on Wednesday it expected KLM, Northwest and Continental to join the Skyteam alliance in mid-September 2004.
Air France, whose takeover bid for KLM was successfully completed on Tuesday, said in a statement that the new members would likely join the world's third largest airline alliance, that already includes Delta (NYSEAL - News), AeroMexico and Korean Air among others, in September.

 

[Just Plane Crazy]

NW and CO been cozy for a least five years and, as you know, the whole UA/US merger threat brought Delta in the mix. There are several goverment imposed limits on the codeshare agreement between DL, NW and CO which basically keep the three from getting too cozy. Examples are limits on the number flights that NW can place on DL flights and visa versa as well as actual cities pairs that may not have code share agreements at all. There's also ALPA which is the pilots' union at all three airlines.

NW and CO should soon join Skyteam creating a fairly large alliance. As to what happens from there remains to be seen but I think that if DL and NW avoid BK, Skyteam will become the strongest and largest of the alliances worldwide.

cheers

bigsky

There is no doubt that NW & CO will join SkyTeam. At that point they will become a bigger threat to OneWorld than to STAR. AA is the only OneWorld representative in the US while UA and US represent STAR in the US. STAR has more airlines and destinations covering their alliance and their influence is even growing. SAA is joining and other carriers are in discussion.

For SkyTeam to become the largest alliance it will take more than just the joining of KL, NW & CO. STAR is still the dominant alliance. (See below)

STAR 16 Airlines +755 airports +132 countries

Lufthansa Group - Europe (W&E), Africa, Asia, America (N&S), Australia -
Austrian Group - Europe (W&E), Africa
South African - Africa, Europe (W), Asia, America (N&S), Australia -
SAS - Europe (W&E), Asia, America (N)
Air Canada - America, Asia, Europe (W)
Varig - America (N&S), Europe (W), Africa
United/Ted - America (N&S), Europe (W), Asia, Australia
USAir - America (N), Europe (W)
Thai Airways - Asia, Europe (W), America (N), Australia
Singapore Airlines - Asia, America (N), Europe (W), Australia
Air New Zealand - Asia, Europe (W), America (N), Australia
LOT - Europe (W&E), America (N)
Asiana - Asia, America (N), Europe (W)
BMI - Europe (W), America (N)
ANA - Asia, America (N), Europe (W)
Spanair - Europe (W), Africa


OneWorld 8 Airlines +550 airports

Aer Lingus - Europe (W), America (N)
American Airlines - America (N&S), Europe (W), Asia
British Airways - Europe (W&E), Africa, America (N&S), Asia, Australia
Cathey Pacific - Asia, America (N), Europe, Australia
Finnair - Europe (W&E), America (N)
Iberia - Europe (W), Africa, Asia, America (N&S)
Lan Group - America (N&S)
Quantas - Asia, America (N), Europe, Australia


SkyTeam 9 Airlines +500 airports +110 countries

Aeromexico - America (N&S)
Air France - Europe (W&E), Africa, Asia, America (N&S), Australia -
Alitalia - Europe (W), Africa, Asia, America (N)
CSA - Europe (W&E)
Delta - America (N&S), Europe
Korean Airlines - Asia, Europe, America (N)
KLM - Europe (W&E), Asia, America (N)
Northwest - America (N&S), Asia, Europe
Continental - America (N&S), Europe, Asia

 

[North by Northwest]

There is no doubt that NW & CO will join SkyTeam. At that point they will become a bigger threat to OneWorld than to STAR. AA is the only OneWorld representative in the US while UA and US represent STAR in the US. STAR has more airlines and destinations covering their alliance and their influence is even growing. SAA is joining and other carriers are in discussion.

For SkyTeam to become the largest alliance it will take more than just the joining of KL, NW & CO. STAR is still the dominant alliance. (See below)

STAR 16 Airlines +755 airports +132 countries

Lufthansa Group - Europe (W&E), Africa, Asia, America (N&S), Australia -
Austrian Group - Europe (W&E), Africa
South African - Africa, Europe (W), Asia, America (N&S), Australia -
SAS - Europe (W&E), Asia, America (N)
Air Canada - America, Asia, Europe (W)
Varig - America (N&S), Europe (W), Africa
United/Ted - America (N&S), Europe (W), Asia, Australia
USAir - America (N), Europe (W)
Thai Airways - Asia, Europe (W), America (N), Australia
Singapore Airlines - Asia, America (N), Europe (W), Australia
Air New Zealand - Asia, Europe (W), America (N), Australia
LOT - Europe (W&E), America (N)
Asiana - Asia, America (N), Europe (W)
BMI - Europe (W), America (N)
ANA - Asia, America (N), Europe (W)
Spanair - Europe (W), Africa


OneWorld 8 Airlines +550 airports

Aer Lingus - Europe (W), America (N)
American Airlines - America (N&S), Europe (W), Asia
British Airways - Europe (W&E), Africa, America (N&S), Asia, Australia
Cathey Pacific - Asia, America (N), Europe, Australia
Finnair - Europe (W&E), America (N)
Iberia - Europe (W), Africa, Asia, America (N&S)
Lan Group - America (N&S)
Quantas - Asia, America (N), Europe, Australia


SkyTeam 9 Airlines +500 airports +110 countries

Aeromexico - America (N&S)
Air France - Europe (W&E), Africa, Asia, America (N&S), Australia -
Alitalia - Europe (W), Africa, Asia, America (N)
CSA - Europe (W&E)
Delta - America (N&S), Europe
Korean Airlines - Asia, Europe, America (N)
KLM - Europe (W&E), Asia, America (N)
Northwest - America (N&S), Asia, Europe
Continental - America (N&S), Europe, Asia

Crazy, the stats you have provided refer to SkyTeam as it stands NOW. It does NOT reflect the new members of NWA/KLM/CO. "SkyTeam takes you to 500 destinations all over the globe" Quote from the SkyTeam webpage. You can expect destinations served by the New SkyTeam to be well over 700. Stay tuned.

 

[Just Plane Crazy]

Crazy, the stats you have provided refer to SkyTeam as it stands NOW. It does NOT reflect the new members of NWA/KLM/CO. "SkyTeam takes you to 500 destinations all over the globe" Quote from the SkyTeam webpage. You can expect destinations served by the New SkyTeam to be well over 700. Stay tuned.

If you would try to look at a route map of NW/KL/CO and the airports they serve and look at the airports that are served currently by SkyTeam and eliminate the duplications, you will discover, that the net gain is not 200 airports but more in the +/-50 airports. DL/CO/NW serve a lot of the same airports in the US and DL/NW serve a lot of the same airports internationally. KL/AF are harmonizing their route pattern in order not to serve the same airports if avoidable.

 

[North by Northwest]

"DL/NW serve a lot of the same airports internationally" You couldn't be farther from the truth. I don't know what route maps you are looking at, but it is clear that it is not of NW/ DL. Our route system is as opposite as you can get. Asia vs. Europe? Throw in CAL as the 2ed largest US carrier to South America/ KL extensive African coverage. Come back in Sept.

 

[Kev3188]

Actually, everywhere NW goes in Europe is served by DL as well.

 

[Bigsky]

Actually, everywhere NW goes in Europe is served by DL as well./QUOTE]

Although DL, CO and DL do serve some of the same destinations their international route structures are very different. DL is one of the largest, if not the largest U.S. carrier from North America to Europe offering non stop service from the US to places like Madrid, Barcelona, Milan, Zurich, Shannon, Dublin, Manchester, Istanbul. These are all destinations that NW does not serve without connecting on KLM through AMS. Northwest, on the other hand, is the largest and preferred US carrier to Asia offering non stop service or connecting service through Narita to cities not served by DL or CO.

DL and NW route structures compliment each other very well if there was to be any overlap it would be with DL and CO as both have a large presence in South America and Europe(from EWR and JFK). Each of the three airlines has a geographical specialty and span the globe quite nicely.

Look for Malaysian Airlines, Alitalia, Jet Airways(India), and others to also join Skyteam. By September it should be the largest of the Global airliine alliances.

cheers

bigsky

 

[WorldTraveler]

At some point, the number of airports served is immaterial as the coverage is vast. I don't think too many travelers or companies really care whether it's 500 or 700 airports served. You have to look at the overall global coverage of an alliance. In that respect, Star is very impressive but I might remind you that a number of Star alliance carriers are in severe financial condition and it is doubtful if some of the those will remain in their present state. Oneworld is in much better shape both from global coverage and financial strength; the biggest hurdle facing them is that leaders AA and BA cannot work fully together until, at its root, LHR is opened to other US carriers.
The success of an alliances is also defined by how closely the carriers work together. The current transoceanic Skyteam carriers (AF, AZ, DL, KE, and OK) all have US antitrust immunity which presents huge opportunities to secure additional business to the alliance.

NHBB,
I expect that it is inevitable that there will be consolidation in the industry and that it very well may be between CO, DL, and/or NW. CO and DL make the most sense to eliminate competing hubs and maximize fleet similarities but CO has said so far (at least Bethune) that they want to remain independent; of the current legacy US carriers, CO probably has a strong likelihood of being able to make it on its own and having a pretty respectable network to boot. Further, CO and DL's parallel JFK and EWR international operations may prove to be an impediment in a merger and maybe even in alliance formation.
NW has made no statements about wanting to remain independent that I am aware of; DL has indicated several times that it wants and needs to acquire to grow big enough to survive since it does not have the mass of UA or AA but is clearly in a different league than CO, NW, or US.
The biggest impediment to a DL/NW merger is clearly fleet but even there DL and NW both operate many different types, about half of which could be eliminated in a merger. NW and DL's older fleets also allow for integration to occur sooner rather than later. However, I'm not sure fleet commonality is as big of an issue w/ a fleet of 800-1000 jets as it is for for smaller airlines particularly. DL and NW each have a substantial number of competitive modern aircraft. There is an opportunity to eliminate some competing hubs as some of DL's mainline and RJ aircraft are redeployed to strengthen NW's hubs.
I also don't believe that the government will provide near as much resistance to further consolidation in the industry as they did in the past -particularly as they did between UA and US. Competition from low cost carriers has grown dramatically in the past 3 years so that network carriers really do not control pricing in many markets at all. Also, DL and NW compete on very few segments and I believe I have read that DL's DCA slots actually are being leased from NW who acquired them to support their DCA hub from years ago. DL and NW each have work to do to keep their own networks competitive - DL in Latin America, NW in Asia - with or without any mergers. Both need more access to London - esp. for DL that pins a much higher part of its identity on Europe.
Bottom line is that I would expect to see DL and NW move even closer together in the next couple years. Alliances serve some purposes but they do very little to reduce costs or reduce duplicate or competing routes. Also, don't underestimate both DL and NW's abililty to generate cash once they get their respective labor issues behind them. DL and NW both demonstrated in the 90's a remarkable ability to shore up their balance sheets - both of which were badly damaged in the early 90's. Mergers work best when both companies are in good shape coming into the merger; DL and NW recognize they need to be financially strong whether they remain and independent or not and are taking the steps to do just that.

 

[Kev3188]

The biggest impediment to a DL/NW merger is clearly fleet but even there DL and NW both operate many different types, about half of which could be eliminated in a merger.

I wouldn't discount the integration of DL's & NW's workforces as a hinderance.

 

[NewHampshire Black Bears]

I wouldn't discount the integration of DL's & NW's workforces as a hinderance.

Kev,
Excellent point !!!!!!!!!

(Hypothetically) My biggest fear, would be that DL and NW would merge, and then ALL the AMT's and ESE's/Fleet Service from both companies would first vote on union representation.
Given the fact that DL has more of "both", It's not out of the realm of possibility that the "newly merged' employees voted NON Union, given DL's long Non Union history.

Scary thought !!

NH/BB's

 

[Just Plane Crazy]

"DL/NW serve a lot of the same airports internationally" You couldn't be farther from the truth. I don't know what route maps you are looking at, but it is clear that it is not of NW/ DL. Our route system is as opposite as you can get. Asia vs. Europe? Throw in CAL as the 2ed largest US carrier to South America/ KL extensive African coverage. Come back in Sept.

You should look at the maps your self. If you don't have them I can give you the online links. So how opposite is the route system.


Frankfurt DL/NW
Amsterdam DL/NW
Paris DL/NW
London DL/NW
Rome DL/NW


DL has a bigger European Network than NW. So looking at the DL vs. NW destinations 0 additional destinations in Europe would be added to the SkyTeam network.

As for the African coverage, AF is serving the same destinations, again 0 added. CO might add some South American destinations but you have to first look at Aeromexico and then subtract again. SkyTeam might add some 50 destinations but not much more.

I don't think that the OneWorld Network is better than the STAR. As a STAR member I have more airlines, routes, frequencies etc to choose from. Just look at how many of those fly to US destinations and the possebilites the passengers have. Much more than any other alliance.

And lets wait till Sep., who knows, if AA, DL & NW will follow in UA's steps. They all are fighting to get the cost down and they all might end up in Chpt11 in order to be able to reorganize. Would not surprise me.

 

[Kev3188]

Kev,
Excellent point !!!!!!!!!

(Hypothetically) My biggest fear, would be that DL and NW would merge, and then ALL the AMT's and ESE's/Fleet Service from both companies would first vote on union representation.
Given the fact that DL has more of "both", It's not out of the realm of possibility that the "newly merged' employees voted NON Union, given DL's long Non Union history.

Scary thought !!

NH/BB's

Scary indeed, NH/BB...As far as actually meshing together, at any station on the NW system, you can still hear echoes of the Republic/Northwest merger...All these years, and still some animosity remains (sound kinda familiar? ).

 

[WorldTraveler]

"(Hypothetically) My biggest fear, would be that DL and NW would merge, and then ALL the AMT's and ESE's/Fleet Service from both companies would first vote on union representation.
Given the fact that DL has more of "both", It's not out of the realm of possibility that the "newly merged' employees voted NON Union, given DL's long Non Union history."

With all due respect, you have to ask why Delta's employees have chosen not to unionize and I think you will come up with the realization that Delta employees have it as good as or better than their counterparts at other carriers. We'll all read enough to know that Delta is no panacea these days but Delta employees still make far more than most other airline employees (total compensation) and also produce more. In return, the company has protected many of their jobs. It is notable that DL is one of the more aggressive "insourcers" for maintenance work and, according to statistics, has the lowest maintenance costs in the network carrier industry - and lower than some LCC's. Not sure how they do it but I don't think I'd worry about losing anything if NW is acquired by DL. We'll see how Mr. Grinstein performs but I think there are alot of people who think he may finally return Delta to its former greatness.