Paris Orly Field

For trans-Atlantic airlines, JV benefits are less than obvious as they mature. A US perspective

SkyTeam partners Air France-KLM, Alitalia and Delta are approaching the fifth anniversary of the launch of their immunised trans-Atlantic joint venture. But the major strategic moves by those airlines during the last year were squarely outside that umbrella, as Air France warmed to the Gulf carriers through its new partnership with Etihad, and Delta moved to improve its position in the London Heathrow market through an equity stake and partnership with Virgin Atlantic.

Star joint venture partners Air Canada, Lufthansa and United have been preoccupied throughout most of the last year with getting their own respective houses in order and have done little publicly to play up any advantages they are enjoying through their business partnerships. oneworld joint venture partners American Airlines and sister carriers British Airways and Iberia have been equally distracted with Chapter 11 restructurings, mergers and strikes – and meanwhile, Qatar Airways has been welcomed into the fold, further complicating the evolution of the global alliances.

Lufthansa, Air France-KLM, IAG adopt short haul initiatives to combat LCCs: Airlines in transition

The rise and rise of low-cost carriers in Europe has been rapid and, it seems, irreversible. The result has been to transform Europe's short haul market. There is nothing new about that, but the three big legacy ‘flag carrier’ groups in Europe – Air France-KLM, IAG and Lufthansa – have only recently dedicated serious attention to new initiatives to combat this continued onslaught on their short haul operations.

In 2012, IAG established Iberia Express to operate short haul feed into the Madrid hub and also bid for the 54% of Vueling that is not already owned by Iberia. Also in 2012, Lufthansa announced plans to transfer non-hub European traffic (ie outside Frankfurt and Munich) to LCC subsidiary Germanwings. Only last week, on 28-Jan-2013, Air France-KLM announced a new regional carrier, Hop, bringing together group regional airlines Brit Air, Regional and Airlinair in a further stage of its short and medium haul restructuring that has also brought efficiency measures at its French provincial bases.

HNA, of Hainan Airlines, takes 48% stake of France's Aigle Azur, giving backdoor European access

Hainan Airlines and Hong Kong Airlines parent HNA Group, one of the largest privately-owned Chinese conglomerates, has taken a 48% stake in niche French airline Aigle Azur, adding to HNA's foreign aviation interests in a Turkish cargo carrier and Ghanian LCC.

While HNA's intent does not always have a clear focus, the acquisition of a stake in Aigle Azur, unofficially valued at USD40 million, has one of the clearest rationales. By having a French AOC, HNA can have Aigle open France-China services, which HNA is effectively blocked from doing owing to Chinese restrictions that limits the number of local carriers on intercontinental routes. Aigle Azur will acquire two A330s, likely from HNA, for Paris-Beijing and other services.

Paradoxically, the justification for HNA may be the clearest of its investments, but the profitability of the price-sensitive and competitive Europe-China market remains to be proven.

Delta’s new push to Paris confronts United and shows commitment to SkyTeam amid alliance shifts

Major shifts in the three major global airline alliances during the last few weeks have triggered a bevy questions regarding the future of those tie-ups. But just as Qantas attempts to forge a broad agreement with unaligned Emriates, British Airways has convinced reluctant members to allow Qatar to join oneworld and Air France has reversed its stance to embrace Etihad and airberlin, SkyTeam partners Delta and Air France are bolstering their presence in the US-France market.

It is not clear if Delta could benefit from the new Air France-Etihad tie-up that entails codesharing on flights to Abu Dhabi, but eventually Delta’s connecting customers in Paris could utlilise connections to the Middle East opened up by the new non-SkyTeam partnership.

Beginning in the northern hemisphere summer of 2013, Delta is introducing new flights from Newark Liberty International Airport to Paris Charles de Gaulle, and new seasonal flights from Boston to Paris. Delta also plans to add another daily flight from its Atlanta hub to Paris, which will increase to four the combined number of daily services offered by Delta and Air France on the pairing.

United excludes Houston in new domestic and international push from US hubs

After embarking on promised cuts from its Houston Intercontinental (IAH) hub, United Airlines is introducing new long and short-haul service from all its other US hubs starting in Nov-2012, further enforcing its decision to pull-down its Houston operations after the city endorsed plans by Southwest to launch new international service from the city’s second airport, Houston Hobby.

United will transfer its Paris service from Houston to San Francisco, where United will also resume direct flights to Taipei, where it now has codeshare authorisation with Star Alliance member elect EVA Airways. United is also growing internationally in the Americas, with intentions to launch Chicago-Monterrey and Washington Dulles-San Salvador as well as service to Canadian cities of Thunder Bay and Kelowna, and seasonal services from Chicago to Nassau.

Transavia France is spreading its wings to regional airports in its home market

Air France has earmarked its Paris Orly Airport-based hybrid carrier Transavia.com to take a larger role in its short/medium-haul network, which necessitates a dramatic shake-up in order to safeguard the sustainability of parent company Air France-KLM. Transavia.com France will launch new routes from its home base at Orly and from three regional French airports – Nantes, Lille-Lesquin and Lyon – as it seeks to defend Air France’s dominant position in these airports against the increasing inroads of LCCs.

easyJet has a base at Paris Orly and at Lyon-Saint Exupéry Airport while Europe’s newest LCC, Volotea, opened a base at Nantes Atlantique Airport on 01-Jun-2012 and has announced route expansions from Lille. If Volotea follows up on its stated intentions, its network will inflate to 20 routes from Nantes and bring the capacity share of LCCs at the airport to over 40%.

Transavia France was founded in Nov-2006 as an offshoot of the Dutch charter/low-cost carrier Transavia Airlines, a wholly owned subsidiary of KLM, to re-enter the leisure market from France to countries in the Mediterranean basin.