AF / KLM

The airline said explicitly that the codeshare agreement, which commences on 28-Oct-2012, is the “first phase of a much larger strategic partnership” and includes the “proposed integration of frequent flyer programs”, with “reciprocal ‘earn-and-burn’ privileges for 1.5 million Etihad Guest members and 21 million Air France-KLM Flying Blue frequent flyers across the combined networks”.

Moreover, as Etihad notes, “other potential areas of co-operation include joint procurement, as well as maintenance and repair collaboration, as both carriers identify cost savings and seek to benefit from economies of scale”.

Etihad ties up with Air France-KLM; next Qatar-oneworld and the aviation world turns on its head
CAPA > Aviation Analysis > Etihad ties up with Air France-KLM; next Qatar-oneworld and the aviation world turns on its head
9th October, 2012
inShare



© CAPA

(Updated, following Qatar-oneworld announcement, to include more details of partnership between Air France-KLM, Etihad and airberlin)

Air France-KLM Group, Etihad Airways and airberlin on 08-Oct-2012 confirmed their much speculated tripartite commercial agreement, stealing some spark of the announcement later in the day in New York that Qatar Airways will become a new member of oneworld. It will no doubt be another important shift in the aviation industry’s global axis.

The Etihad deal includes an intra-European codeshare partnership between Air France, KLM and airberlin and a more sweeping alliance/partnership between Etihad and Air France-KLM. The Air France-KLM Group is an anchor of SkyTeam while airberlin is a oneworld member since Apr-2012, but the new oneworld partner is not getting too much love from the group and is forging ties with Air France and KLM under impetus of its 29.21% shareholder Etihad.

Following hard on the heels of the Qantas-Emirates partnership announcement from Sep-2012, this means the three Gulf carriers – previously the bêtes noires of the European airline establishment – will establish themselves at the core of the new global world order. It is difficult to imagine a more dramatic shift in the balance of power as is occurring now.

Until all the necessary approvals are in place and the flow-through implications evolve, there is still much left to speculation, but it is clear that the repercussive effect of Qantas-Emirates is resounding loudly and every major airline will now be re-assessing its role and positioning in the overall system.

See related articles:

Qantas and Emirates to codeshare in first alliance shakeup of the season; next: Qatar into oneworld
With further details, Emirates-Qantas partnership will have global reach; Qantas adjusts partners
A historic Etihad/Air France-KLM codeshare agreement, as a 'first phase'
Etihad was unequivocal in the announcement with the airline’s president and CEO James Hogan describing the deal as a “momentous milestone for both airline groups and offers countless opportunities to develop an unrivalled commercial relationship”.

The airline said explicitly that the codeshare agreement, which commences on 28-Oct-2012, is the “first phase of a much larger strategic partnership” and includes the “proposed integration of frequent flyer programs”, with “reciprocal ‘earn-and-burn’ privileges for 1.5 million Etihad Guest members and 21 million Air France-KLM Flying Blue frequent flyers across the combined networks”.

Moreover, as Etihad notes, “other potential areas of co-operation include joint procurement, as well as maintenance and repair collaboration, as both carriers identify cost savings and seek to benefit from economies of scale”.

Understandably there is some caution in the range of network cooperation envisaged in this “first phase”. Air France and KLM each have extensive networks to nurture and will not be keen to see them cannibalised. At the same time, the carriers are each conscious of the rapid pace of market evolution and are apparently looking on the new agreement as a fundamental part of their long term strategies.

See related article: Air France-KLM to partner Etihad? If you can't beat them join them

Lufthansa now becomes the odd-man out?
The next step in this three-legged race is Qatar's planned membership in oneworld and a combination with BA-Iberia parent IAG. That leaves one major European airline without a partner on this new dance floor: Lufthansa. As head of the Star Alliance, Lufthansa has occupied a prominent position as a network carrier, with a host of partner/satellite airlines. The carrier has actively resisted the expansion of the Gulf airlines into its territory, a fixation that may now see it sidelined as the powerful new entities line up.

Although Lufthansa was courted by Etihad in 2010, senior management resisted the temptation to change course, preferring to rely on its strength in its home market and the power of the Star Alliance grouping which it heads. This may now prove to have been an awkward decision. Etihad’s first move was to partner with airberlin, right on Lufthansa’s doorstep. Now, with a promised Air France-airberlin codeshare, the foreign intrusion becomes ever more poignant.

Double score for Etihad
Etihad, which is the smallest one of the three Arabian Gulf-based network carriers, has now a major codeshare partner in two of Europe’s main markets - Germany and France - that proved difficult to access on its own merits and on the basis of the existing bilateral agreements.

Emirates, which like Etihad flies under the UAE flag and traffic rights, is the dominant operator on routes from the UAE to Germany and to France. Emirates has an approximate 60% share of the capacity (expressed in one way seats) supplied between the UAE and Germany and the UAE and France, according to schedules in Innovata for the week of 08-Oct-2012 to 14-Oct-2012. This compares to a near 18% share for Etihad on the UAE-Germany markets and a 26% share between the UAE and France.

When adding up the Etihad and airberlin flights, their joint seat capacity share between the UAE and Germany rises to about 35%. Etihad and Air France have together a 40% share of the weekly one way seats flown between the UAE and France. Air France flies a daily service from Paris Charles de Gaulle to Dubai and Etihad has a daily flight between is hub at Abu Dhabi and Paris Charles de Gaulle.

United Arab Emirates to Germany by carrier (seats per week, one way): 19-Sep-2011 to 31-Mar-2013

Source: CAPA – Centre for Aviation & Innovata

United Arab Emirates to France by carrier (seats per week, one way): 19-Sep-2011 to 31-Mar-2013

Source: CAPA – Centre for Aviation & Innovata

United Arab Emirates to Germany capacity and capacity share (% of seats) by carrier: 08-Oct-2012 to 14-Oct-2012
Airline
One-way seats
Capacity share (% of seats)
Emirates
23,453
58.7%
Etihad
6,971
17.5%
Lufthansa
5,257
13.2%
airberlin
4,242
16.6%
Source: CAPA – Centre for Aviation & Innovata

United Arab Emirates to France capacity and capacity share (% of seats) by carrier: 08-Oct-2012 to 14-Oct-2012
Airline
One-way seats
Capacity share (% of seats)
Emirates
9,345
59.7%
Etihad
4,088
26.2%
Air France
2,194
14%
Source: CAPA – Centre for Aviation & Innovata

The partnership with Air France will also strengthen Etihad’s position against Qatar to capture a larger share of the Europe to Australasia traffic that connects over a Middle East hub. Qatar deploys about 5,000 one way seats from France to its hub in Doha.

The new agreement with Air France and KLM adds to Etihad’s already extensive list of European codeshare partners such as Aer Lingus (in which it has a near 3% shareholding), Alitalia, Air Astana, Air Malta, airberlin, Brussels Airlines, Flybe, CSA Czech Airlines, Austria’s NIKI (as part of its agreement with the airberlin as NIKI is an airberlin subsidiary), Olympic Air, S7 in Russia and TAP Portugal.

The codeshare arrangement with Air France-KLM Group will see Etihad place its EY code initially on five Air France operated routes from Paris Charles de Gaulle, to Bordeaux, Copenhagen, Madrid, Nice and Toulouse. The EY code will also be placed on KLM flights between Amsterdam and Abu Dhabi and five KLM services from Amsterdam to Billund, Cardiff, Newcastle, Oslo and Stavanger.

The deal with Air France-KLM adds five new destinations to the Etihad network in Europe, of which Nice Côte d'Azur Airport and Madrid Barajas Airport are the main prizes in southern Europe. Etihad is the only one of three Gulf network carriers not present in Spain, while Emirates and Qatar Airways both operate to Madrid and Barcelona El Prat. Qatar offers some 3,900 seats per week from Doha to Spain and Emirates almost double that from Dubai. Etihad would want to draw part of its rivals’ beyond-traffic over Abu Dhabi.

Another major gain for Etihad is Nice Airport. The airport serves the metropolitan region of Nice and the nearby exclusive city-state of Monaco. Nice is France’s busiest airport outside of the Paris area and is currently served daily by Emirates with Airbus 340-500 equipment which soon will be upgraded to a Boeing 777-300ER.

Etihad will also add its code on three of Air France’s 10 largest domestic routes, Bordeaux and Nice to Paris Charles de Gaulle and Charles de Gaulle to Toulouse.

Six of its new codeshare destinations in Europe are now served by Emirates from Dubai and/or by Qatar from Doha.

European destinations included in the Etihad/Air France-KLM codeshare
Destination
Coverage in other Etihad codeshare agreements
Bordeaux
Included in codeshare with French railway operator SNCF
Copenhagen
airberlin codeshare via Dusseldorf and Berlin Tegel
Brussels Airlines codeshare via Brussels
Madrid

Nice

Toulouse
Brussels Airlines codeshare via Brussels
Amsterdam
Aer Lingus codeshare via Dublin
CSA Czech Airlines codeshare via Prague
Billund

Cardiff
airberlin codeshare via Dusseldorf and Berlin Tegel
Aer Lingus codeshare via Dublin
Newcastle

Oslo Gardenmoer
Brussels Airlines codeshare via Brussels
Stavanger

Source: CAPA – Centre for Aviation & Innovata

European destinations included in the Etihad/Air France-KLM codeshare and competition from Emirates and Qatar-operated services
Destination
Services by Emirates and Qatar
Bordeaux

Copenhagen
Emirates
Qatar
Madrid
Emirates
Qatar
Nice
Emirates
Toulouse

Amsterdam
Emirates
Qatar
Billund

Cardiff

Newcastle
Emirates
Oslo Gardenmoer
Qatar
Stavanger

Source: CAPA – Centre for Aviation & Innovata

But what’s in it for Air France and KLM?
The Etihad/Air France-KLM codeshare agreement covers five destinations each for Air France and KLM on the Asian and Australian market. Air France passengers will be able to connect through Abu Dhabi for flights to Colombo in Sri Lanka, Dhaka in Bangladesh, Kathmandu in Nepal, Mahe in the Seychelles and Male on the Maldives. KLM passengers will be able to connect through Abu Dhabi for flights to Colombo, Islamabad and Lahore in Pakistan, and Melbourne and Sydney in Australia.

Air France will add its code on Etihad’s daily flights between Paris Charles de Gaulle and Abu Dhabi.

Islamabad and Lahore are served directly from Paris CDG with a once weekly flight by Pakistan International Airlines (PIA). The Pakistani flag carrier also operates one passenger flight a week between Amsterdam Schiphol Airport and Islamabad. Beither Air France nor KLM have Lahore or Islamabad in their scheduled route network, according to schedules in Innovata.

The partnership for now will not see Air France adding its code on Etihad flights to Melbourne and Sydney but this could be added in 2013, when Air France's present agreement with Qantas on Australia flights (over Singapore) comes to an end. Qantas’ recent novel agreement with Emirates, Etihad’s arch rival, will most likely result in the Air France-Qantas partnership ending and an extension of the Etihad/Air France codeshare accord to include routes to Australia.

Colombo does not feature on Amsterdam’s network of direct routes but new oneworld recruit SriLankan Airlines operates a four times weekly service to Paris Charles de Gaulle. All but one (Kathmandu) of the nine destinations in Asia and Australia that Etihad is adding to the Air France and KLM networks can be reached from Paris or Amsterdam via Emirates’ hub in Dubai.

German-French entente
In parallel with the Etihad codeshare agreement, Air France and KLM will also start codesharing with airberlin as of 28-Oct-2012 on a select number of intra-European routes.

The deal will not really extend Air France or KLM’s reach into Germany but conversely it will considerably grow airberlin’s footprint in France.

Air France will add its code and offer its passengers connections onto airberlin’s flights from Berlin-Tegel Airport to Graz (Austria) and to Krakow and Gdansk in Poland and from Düsseldorf to Dresden. KLM will add its KL code on three destinations beyond Berlin: Krakow, Gdansk and Kaliningrad in Russia.

airberlin will codeshare on Berlin-Amsterdam routes as well as on three UK destinations beyond Amsterdam: Edinburgh, Glasgow and Manchester. The German airline will add its code on Air France operated flights from both Paris Charles de Gaulle and Paris-Orly Airport to Bordeaux, Lyon, Marseilles, Montpellier, Nantes, Nice, and Toulouse.

The airberlin arrangement covers eight of Air France's 10 largest domestic routes in terms of seat capacity, according to schedules in Innovata for the week of 08-Oct-2012 to 14-Oct-2012.

Air France top 10 domestic routes (seats): 08-Oct-2012 to 14-Oct-2012


Source: CAPA – Centre for Aviation & Innovata

See related articles:

airberlin joins oneworld alliance, but its full potential will not be immediately realised
airberlin makes no apologies for Etihad alliance after joining oneworld
The casualty: global alliances under attack
The highly pragmatic role of airberlin in this process is one indicator of just how flexible airlines are now becoming in their attitudes to global alliance membership. The Berlin-based carrier has only recently joined oneworld yet seemingly has few qualms about partnering with one of British Airways' arch rivals, Air France.

For Etihad, clinching a partnership with Air France is a major coup. As Mr Hogan pointed out, “it reflects the core elements of Etihad Airways’ 10-year master plan, driven by organic network growth, combined with the forging of strategic codeshare partnerships and minority equity investments in other airlines.”

For Air France, which for years has resisted the steady inroads of the Gulf hub carriers, the agreement is more avant-garde and a next step in accepting a new world order.

Le Passage, générant la majeure partie du chiffre d'affaires du groupe, sera organisé en trois activités :

le long-courrier ;
le moyen-courrier à Paris-CDG ;
Paris-Orly et les escales de province.
Pour plus d'efficacité économique et opérationnelle, chaque directeur général sera responsable de la totalité du parcours client : depuis le positionnement marketing jusqu'à la mise en œuvre au sol et en vol en intégrant les équipes en charge du produit sol et vol. Un chef pilote ainsi qu'un chef PNC lui seront par ailleurs rattachés fonctionnellement, permettant d'assurer le lien avec les équipages.

Ces trois activités s’appuieront sur les métiers transverses (commercial, Marketing Revenue Network, pilotes et PNC) et sur les fonctions support (Finances, Ressources Humaines, Communication, etc.).

Franco-Dutch carrier Air France-KLM (AIRF.PA) is in "advanced" talks to take control of Italy's flagship airline Alitalia by the summer, Rome's Messaggero newspaper reported on Sunday without citing its sources.

Alitalia is owned by CAI, a consortium of investors that bought the then-bankrupt airline in 2008. CAI is already partly owned by Air France-KLM. Alitalia's shareholders can exercise options to trade their shares when a lock-up period ends on January 12.

In May, Air France said it would probably wait until at least 2014 before using its option to take control of Alitalia, in which it has held 25 percent since January 2009.

Air France-KLM has offered shareholders a 20 percent premium on what they paid for the airline in 2008, the newspaper said, probably in Air France-KLM shares. CAI paid a little more than 1 billion euros to take over Alitalia five years ago.

An Air France-KLM spokesman in Paris declined to comment on the report. Officials at Alitalia did not answer repeated phone calls.

But four-time Prime Minister Silvio Berlusconi, who scuppered Air France-KLM's last attempt to buy Alitalia, said he was still against the airline's sale. Berlusconi is badly behind in the polls ahead of a February 24-25 national election.

"Our country cannot afford not having its own flagship airline," Berlusconi said on his Facebook page. "If Alitalia had fallen into the hands of the French... many tourists would have ended up visiting the castles in the Loire valley instead of our cities of art."

Berlusconi won the parliamentary election in 2008 promising to keep Alitalia out of foreign hands and to clean the trash off the streets of Naples. He is trailing by more than 10 percentage points, polls show.

Alitalia returned to profit in the third quarter after reporting losses in the first half, booking a net profit of 27 million euros ($35.2 million), down from 70 million euros a year before.

Net debt rose to 923 million euros at the end of September, up by 61 million euros from the end of June. ($1 = 0.7666 euros)

Un aller simple à 49 euros TTC, en baisse d'une vingtaine d'euros par
rapport au prix d'appel proposé le plus souvent aujourd'hui (hors
promotion). En contrepartie, des services jusqu'ici inclus dans le prix
du billet qui disparaissent et deviennent pour certains des options
payantes : c'est, selon nos informations, l'offre tarifaire sur une
soixantaine de lignes domestiques et européennes au départ des bases de
Paris-Orly, Marseille, Nice et Toulouse que va annoncer ce lundi Air
France pour attirer les passagers dont le prix est le principal critère
dans le choix d'une compagnie aérienne. Une offre qui va s'ajouter à
celle « tout compris » en vigueur aujourd'hui en classe économique et
qui est maintenue. Les tarifs pourront d'ailleurs être combinés entre
l'aller et le retour. Un passager pourra en effet utiliser un billet «
basique » à 49 euros sur son vol aller et prendre un billet « classique »
au retour.

"We are making good progress in talks with
Rolls-Royce and Airbus and we hope to reach a final agreement by the end
of the first quarter," de Juniac told a news conference.

Trois critères que moins d'une dizaine de compagnies seulement dans le monde parviennent à réunir. Tous des transporteurs asiatiques, ou du Golfe persique. Aucun en Europe ou aux Etats-Unis. Selon des sources concordantes, la compagnie a choisi le siège Cirrus du groupe français Zodiac (voir ici la photo du siège dans le catalogue de Zodiac sur son site), de très belle facture sur ce que l'on peut en juger sur son site Internet. Pour autant, ce siège sera « customisé » pour répondre aux besoins spécifiques de la compagnie. Air France va recevoir une nouvelle maquette. « Il s'agit d'un concept de siège unique installé en épi afin d'offrir aux passagers un accès direct et plus d'intimité », dit Zodiac dans sa présentation. Selon celle-ci, allongé, le siège serait notamment un poil plus long que celui de Singapore Airlines ! (195,6 centimètres contre 193 centimètres, soit un pouce de différence 77 contre 76). Une sacrée référence. La compagnie singapourienne est réputée comme étant l'une des meilleures, voire la meilleure compagnie du monde en termes de qualité de services. C'est notamment l'avis d'Alexandre de Juniac. Zodiac ne va pas en revanche fournir les sièges de la première classe qui va également monter en gamme. Seul bémol, une configuration aussi spacieuse contraint Air France à réduire le nombre de sièges dans ses cabines première et affaires.

 Hausse de 5,2% du chiffre d’affaires à 25,63 milliards d’euros (+2,5% hors change)
 Augmentation de 890 millions d’euros de la facture pétrolière
 Réduction de la perte d’exploitation (-300 millions d’euros contre -353 millions d’euros au 31 décembre 2011)
 Résultat net négatif de 1,19 milliard d’euros après 471 millions de charges de restructuration
 Dette nette ramenée à 6 milliards d’euros (6,5 milliards d’euros un an plus tôt)