Joint Venture Final

[chucky]

Air France-KLM finalises Delta jv deal; sees rapid Alitalia talks - COO UPDATE
October 01, 2007: 03:50 AM EST


(Adds details on jv, comments on Alitalia, Iberia)
PARIS, Oct. 1, 2007 (Thomson Financial delivered by Newstex) -- Air France-KLM has finalised a joint venture agreement with Delta (NYSEAL) Air Lines over the operation of transatlantic flights from April 1, chief operating officer Pierre-Henri Gourgeon told Les Echos.

'It will allow us to go from the barter system of the current code-sharing agreements to a more integrated operation, with decisions taken jointly and a sharing of costs and receipts,' Gourgeon said.

The joint venture between the two companies, already partners in the Skyteam alliance, is to be signed later this month, Les Echos said.

The agreement is in response to the open-skies agreement on air traffic liberalisation, which will introduce greater competition on transatlantic routes from next April.

As a first stage, the partners are to share flight slots between Delta's US hubs (Atlanta, New York-JFK, Cincinnati and Salt Lake City) and Paris-CDG and Lyon in France, as well as all routes out of London.

Story

 

[Alice Cramden]

Looks like AF and KLM will be buying a minority stake in DAL.

Then DAL will be THE worlds rudest air line for sure! Open Skies, here we come, oui, oui, oui all the way home!

 

[CynicalResAgent]

Will someone explain this one to me. I thought I read something about UA and BMI trying to do a similar arrangement, what will this look like to the public? just another codeshare arrangement? Will they come up with a seperate marketing name for the transatlantic ops? Will the plane just say Skyteam? I am just wondring what this will look like 5-10 years down the road?

 

[Alice Cramden]

Will someone explain this one to me. I thought I read something about UA and BMI trying to do a similar arrangement, what will this look like to the public? just another codeshare arrangement? Will they come up with a seperate marketing name for the transatlantic ops? Will the plane just say Skyteam? I am just wondring what this will look like 5-10 years down the road?

JMHO...DAL and AF along with KLM will be flying transatlantic routes sharing the costs and profits. Which one is the biggest market? Europe or USA? Tell me your thoughts.

 

[metopower]

Will someone explain this one to me. I thought I read something about UA and BMI trying to do a similar arrangement, what will this look like to the public? just another codeshare arrangement? Will they come up with a seperate marketing name for the transatlantic ops? Will the plane just say Skyteam? I am just wondring what this will look like 5-10 years down the road?

This is very differrent. what this will look like is nothing differrent then what you see today. What this deal will do is give Delta access to Heathrow. Air France and or KLM will lend (rent, give , share ) their landing slots in Heathrow to Delta. They have excess and they are more valuable to Delta then they are to them. By "lending them to their partner the alliance still keeps the slots and basicaly gains 5 th freedom out of Heathrow.(on an alliance basis not airline) The slots gained by Delta from the UAL sale (ny-london) that many thaught were worthless now are valuable because the authority is for london not airport specific. This agreement will allow the partners to share asset between the partners and slots are just part of it. All this happens after open skys starts next year.

 

[flyingcat]

There seems to be some confusion.

Antitrust immunity allow carriers to coordinate schedule and pricing among themselves. AF/DL already have this but DL/KL do not. DL/AF has applied to get KLM into the fold.

UA/BD have also applied for antitrust immunity which UA has with LH.

The joint venture is a step beyond antitrust immunity. Beside coordinating prcing and schedules it essentially makes both DL and AF transatlantic ops a partnership. If KLM gains antitrust KLM flights might be included but I am not positive on this. more sharing of costs and profits are possible than antitrust allows. In many ways it creates a pseudo type merger of both transatlantic divisions.

I am not certain what will happen to the product. Dissimilar cabins could be a problem along with differing service levels. AF still has an F cabin. DL's new business class cabin is very different than AF. AF has a premium Y cabin, DL does not.

F seems to be going the way of the dodo as new J products are similar to what F once was. The joint venture should go with three classes J/Y+/Y.

 

[metopower]

This agreement has nothing to do with code share. Air France owns KLM. KLM is in Skyteam. I think that you will see similar agreements in the future amoung alliance patners. NWA, CAL will likwise make deals with other Skyteam partners to do the same thing. I think that is the way that Delta will get access to the 787 early by shareing asset from other Skyteam partners for example.

 

[brokenwrench]

meto,
You are spot on. The value of this agreement is in the acces to Heathrow DL gains via its partnership with AF. AF gains by gaining access via code share on DL to more of the US market.

 

[BABABOOY]

BA facing a fierce fight at HeathrowDominic O’Connell

http://business.timesonline.co.uk/tol/busi...icle2651509.ece


THE fight for the world’s most lucrative air route will heat up this week when America’s Delta Air Lines teams up with Air France to take on British Airways at Heathrow.

The pair are expected to announce their first-ever transatlantic flights from the London airport. Delta is likely to serve New York, Atlanta and one other American city, with Air France studying a Los Angeles service.

The two airlines, already part of the Skyteam alliance, have asked the American government for approval to share revenue and coordinate fares and schedules on all transatlantic routes. This arrangement could include America’s Northwest Airlines and Holland’s KLM, which are also part of Skyteam.

Competition has been restricted at Heathrow for 30 years. A treaty between Britain and the US stipulated that only four airlines – BA, Virgin, United and American – could fly to the US from Britain’s largest hub.

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The restrictions will be scrapped from the end of March.

The liberalisation has triggered furious jockeying for Heathrow runway slots and terminal space.

Delta is understood to have secured slots from its partner, Air France, which will sacrifice some of its short-haul flights. Other US airlines are also trying to muscle in. Northwest is likely to start services to Detroit, and Continental is trying to secure slots for New York and Houston. In response, BA, headed by Wil-lie Walsh, has moved US flights from Gatwick to Heathrow.

Experts are divided as to whether the extra capacity will bring a reduction in fares. “The UK-US market is worth around £4 billion a year, and it is growing fast,†one analyst said.

“It has a high proportion of business-class travellers, and they subsidise economy fares. I doubt you will see a big reduction in economy prices. What BA fears most is business-class tickets going down.â€

BA told analysts last week it was not unduly concerned about the extra competition. BA is to announce details of “Project Lauren†– its new flights from continental capitals to America – in late November or early December.

Industry sources said the new operation might not be branded as BA, with speculation mounting that it would be called “Speedbird†– the airline’s radio call sign. BA said yesterday it had not yet decided how the new operation would be branded.

The “airline within an airline†will start with two Boeing 757 aircraft from two European cities.

An organisation called Project Lauren has begun advertising online for suitable pilots. A source at BA confirmed this was for the proposed service.


Interesting that they bring up "Project Lauren".
Haven't Airlines learned that an Airline within an Airline just doesn't work?

 

[chucky]

Air France, Delta Target Heathrow-U.S. Routes