European Commission (EC) invited (21-Dec-2012) interested parties to comment on commitments proposed by Lufthansa, United and Air Canada to address competition concerns about their transatlantic cooperation. The EC stated "concerns that this cooperation may harm premium passengers on the Frankfurt-New York route because it could result in higher prices, in breach of EU antitrust rules". The parties have offered to make landing and take-off slots available at Frankfurt and/or New York to facilitate the entry of competitors on this route. The parties are also prepared to enter into fare combinability and special prorate agreements with competitors to enable them to offer tickets on their flights and facilitate access to connecting traffic. The EC outlined that the extensive cooperation between Lufthansa, United and Air Canada involves revenue-sharing and the joint management of schedules, pricing and capacity. At this stage, the EC has "concerns that this may result in higher prices on the Frankfurt – New York route for time-sensitive and flexibility-focussed passengers (so-called "premium passengers")". The companies jointly offered a set of commitments to alleviate the Commission's concerns. EC noted, "The commitments offered by the airlines are primarily aimed at enabling competing airlines to start operating or extend existing operations on the Frankfurt-New York route by lowering barriers to entry and to expansion. More concretely, they offer to make available landing and take-off slots at Frankfurt am Main and/or New York John F Kennedy/Newark Liberty airports on the route from Frankfurt to New York. In addition, the parties commit to enter into fare combinability and special prorate agreements with competitors on the Frankfurt-New York route. These agreements would enable competitors to offer tickets on the parties' flights and facilitate access to connecting traffic. The parties are also prepared to allow passengers of new entrants without an equivalent frequent flyer programme to accrue and redeem miles on the parties' frequent flyer programmes". [more - original PR]
European Commission tests commitments from Star alliance members Lufthansa, United and Air Canada
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Greater cooperation between Lufthansa and Etihad reflects their local and global challenges growing in quantity and complexity. Contact between the two has led to speculation that the partnership could radically expand to include an equity tie up, with rumoured merger talks.
Their initial Dec-2016 codeshare announcement was, in practical terms, small but showed the possibility, as they stated, to expand cooperation. However, it would be a leap to go from their handful of codeshares to a 17-Jan-2017 article from Italian daily newspaper Il Messaggero that Etihad could invest in Lufthansa on the way to a possible merger between the two. A subsequent denial in a Reuters story that "A financial stake is out of the question at the moment", does little to dispel the rumour. Were it not for the last three words of that statement the rumour would lack credibility.
There is certainly logic for a deeper partnership - and the two have danced this waltz before. Equity involvement from airlines can cement partnerships, add to board influence and partially allow one side to gain financially from any matter it feels it is compromising away. Nevertheless, there are obstacles to a full blown merger, and even to Etihad's taking a 30% to 40% stake. A marriage between the new bedfellows does not seem an immediate prospect. Nonetheless the logic is there for a move; and the mere fact of a potential move is sufficient to rock the equilibrium.
Ryanair's 117million pax in 2016 tops European airline groups. The first time an LCC topped rankings
For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
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