International Airlines Group (IAG) CEO Willie Walsh, responding to questions on whether a potential Air France cooperation with Etihad Airways would force a similarly preemptive move by British Airways, said (25-Apr-2012) the two carriers have "totally conflicting positions". "On the one hand, they are the most vigorous opponents of the Gulf carriers and now they are taking a totally different position with them," he said. As previously reported, Air France CEO Jean-Cyril Spinetta, as reported by Die Welt, said the carrier is considering a partnership with Etihad Airways that includes the domestic routes of airberlin, in which Etihad has slightly under a 30% ownership position. Mr Spinetta said Etihad had proposed a partnership on some routes, adding, "A partnership with Etihad would only make sense for us on the Paris-Abu Dhabi route and to other hubs. On the other hand, a wider partnership would be possible if it included airberlin and its network in the German market."
IAG CEO critical of potential Air France cooperation with Etihad Airways
You may also be interested in the following articles...
Chinese long haul secondary city air routes: BA's Chengdu exit does not reflect the broader market
The fastest long haul airline growth is not occurring with Gulf airlines but rather, with services to and from secondary Chinese cities. It is not a secret that local incentives and subsidies, generally common in any market, are especially large in price and duration for secondary Chinese cities. An airline might expect over a third of revenues to be subsidised. This drastically alters the business case in a low-margin industry, hence the proliferation of secondary city services. This extreme dependence on subsidies raises the question of how long governments are willing to issue generous subsidies, and how many routes can be sustainable without them.
British Airways' decision to exit its only secondary Chinese route to Chengdu, in Jan-2017, might suggest the music is ending and the secondary long haul bubble is popping. There is added colour given the recent UK-China air service agreement expansion, and Brexit/British pound depreciation overhangs.
BA's exit does confirm market fundamentals: secondary city yields are low, and some routes are ahead of their time. Yet a number of factors unique to British Airways suggest caution in concluding that BA's Chengdu exit could foreshadow other withdrawals.
Brexit follow-up Part 3: Gulf airlines, Turkish lose UK ally in M/E talks as protectionism spreads
The Brexit referendum produced a vote for the United Kingdom to leave the EU, although this process has not yet been formally invoked. In the scope of aviation, one outcome is the potential loss of the UK in shaping air service agreement negotiations. The UK has been a liberalising voice, one that often counterbalanced more protectionist views from France and Germany. The UK is often able to galvanise the smaller EU states too.
The EU now has mandates to negotiate open skies with states, including the UAE, Qatar, Turkey and the ASEAN bloc. The UAE and Qatar, home to the three Gulf network airlines, are expected to produce the most contentious negotiations. France and Germany will surely takes cues from Air France and Lufthansa to impede Gulf growth. In this light there are questions about whether the talks are genuinely motivated, or merely designed to draw out the discussion and thereby not produce any additional traffic rights while under negotiation.
What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.