squirrel83
Posts: 1219
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Northwest May Lose KLM Link

Mon Jul 18, 2005 6:56 pm

Northwest may lose KLM link

http://www.marketwatch.com/news/story.asp?guid=%7B5959D5F1-6BB8-427C-9C7C-0B6C59ECA3BE%7D&siteid=google

Loss of the waiver could cost Northwest, which is considering filing for bankruptcy protection because of pension funding issues and faces a possible strike by its mechanics, as much as $1 billion a year, The Journal said.

On trans-Atlantic flights KLM and Northwest act as an entity, pooling and splitting revenue and expenses evenly, The Journal said. That allows the two to field many more flights between Northwest's three U.S. hubs and Kim's base in Amsterdam, The Journal reported.

Air France's purchase last year of KLM put the current agreement under a cloud, The Journal said. The airlines have begun working together on pricing, marketing and sales as they integrate.

Air France's main U.S. partner is Delta Air Lines Inc, (DAL: news, chart, profile) a Northwest rival, the Journal said. Air France and Delta received U.S. antitrust immunity in 2002. Northwest and KLM worry that as the Air France-KLM ties grow closer, antitrust concerns will limit the longtime partners' ability to continue setting fares and schedules, according to the report..

http://www.marketwatch.com/news/story.asp?guid=%7B5959D5F1-6BB8-427C-9C7C-0B6C59ECA3BE%7D&siteid=google

[Edited 2005-07-18 11:57:32]
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hjulicher
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RE: Northwest May Lose KLM Link

Mon Jul 18, 2005 11:34 pm

I doubt this because even if KLM and AF begin coordinating flights, AMS will still remain a hub with convenient and efficient connections, much more efficient than the CDG hub. Therefore, it's worthwhile for KLM to continue it's service to American cities, even one's where both KLM and AF fly. Therefore, KLM will continue to fly across the pond, and it will be still codeshared with NW. I don't think KL will pull out on NW because NW feeds too many customers onto KL flights, so it's lucrative for KL. AF and KL may be together, but never will DL and KL be codeshared, nor will NW and AF, unless NW has its way.

[Edited 2005-07-18 17:03:40]
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dtwclipper
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RE: Northwest May Lose KLM Link

Mon Jul 18, 2005 11:37 pm

"Air France's main U.S. partner is Delta Air Lines Inc, (DAL: news, chart, profile) a Northwest rival, the Journal said. Air France and Delta received U.S. antitrust immunity in 2002. Northwest and KLM worry that as the Air France-KLM ties grow closer, antitrust concerns will limit the longtime partners' ability to continue setting fares and schedules, according to the report.."

Does this guy even understand the Skyteam alliance?
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HEGAN
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RE: Northwest May Lose KLM Link

Mon Jul 18, 2005 11:47 pm

It will be really sad to loose probably the best alliance in the world.

They even pool and split revenues, which is something now BA want to make with IB in the flights between UK and Spain.

Quoting Dtwclipper (Reply 2):
Does this guy even understand the Skyteam alliance?

This is something I really don't understand: in an alliance it is possible to have this kind of relation with all the members?
It looks quite difficult (in Star, for example, with so many and different airlines)

Agur,
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EddieDude
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 2:16 am

SkyTeam has a very sui generis set of rules because having 3 U.S. carriers in it raises a lot of antitrust issues. If you add the membership of three large western-European carriers (two of them now owned by the same holding company), KL-NW's close business relationship and AF-DL's antitrust immunity, then you have potentially a situation that European and U.S. competition authorities will look at very carefully.

Even outside of the north Atlantic market, SkyTeam has faced antitrust difficulties. Prior to CO's entry to SkyTeam, AM and CO entered into a codeshare agreement that is currently not in effect. There were big announcements in newspapers and magazines in Mexico of three-way cooperation between DL, CO and AM in the cross-border market, the respective domestic markets and beyond, but, if I am not mistaken, competition concerns (at least in Mexico) have delayed this cooperation. The story of why the CO-AM codeshare agreement has not become effective yet is that AM's current management is very displeased with the terms negotiated by the former CEO and his team, and while I do not doubt this for a second, I would not rule out competition concerns too.
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hjulicher
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 2:19 am

Quoting EddieDude (Reply 4):
three large western-European carriers (two of them now owned by the same holding company)

is the third AZ or CSA? Because last time I checked, these weren't big powerful airlines.
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FI642
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 3:33 am

The NWA/KLM tie up is the Granddaddy of alliances. It would be a shame to see so many years of work go down the drain.
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phollingsworth
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 3:55 am

The three US Skyteam carriers, AF and KL have investigated trying to get a blanket anti-trust immunity for the alliance across the pond. It hasn't gone anywhere.

AF-DL have immunity for their transatlantic ops
KL-NW have it for theirs
CO-DL-NW have immunity for their domestic operations outside of a few markets.

However, as of now it is very hard to fathom much extension beyond this point. This does not, however, preclude code-sharing which can be done on a pure seat purchase basis. One of the problems with extending the immunity is that due to the current fragmentation in the bilaterals/opens skies no none Dutch carriers can serve the US from the Netherlands. The same goes for France. This makes it a huge problem. It also means that KL cannot be fully absorbed by AF until a EU wide Open skies agreement is in place.
 
DCrawley
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 5:48 am

Quoting Squirrel83 (Thread starter):
That allows the two to field many more flights between Northwest's three U.S. hubs and Kim's base in Amsterdam, The Journal reported.

Hmm, didn't know Kim had a base in AMS. I'll have to talk to her about that one. Interesting...

Just my 2 cents,

-D.K. Crawley
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AeroWesty
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 6:05 am

If you want to read the whole WSJ article, I saw this link on another site for non-subscribers:

http://online.wsj.com/article_email/...-IhjgYNplad4opysbHqHaa2Fm5,00.html

Among other things, it adds that AMR has already filed an objection to NW/KL's DOT request to coordinate with AF/DL on trans-Atlantic flights.
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sllevin
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 6:08 am

If KL and NW lose the agreement, I suspect that it will be the beginning of a very short path to the end of AMS as a hub. Skyteam or not, without the codeshare/revenue sharing over the Atlantic, I can't see AMS being attractive enough as a hub.

Steve
 
UAalltheway
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 4:24 pm

I hope they do brake up/apart. PLUS, "Thank you for calling Northwest/KLM-AirFrance Airlines," sounds just stupid.
 
johnboy
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 4:39 pm

I wonder if AMR will be pushing anew for AA/BA in light of this.

Kind of a quid pro quo, if you will.
 
ConcordeBoy
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 5:04 pm

Quoting Phollingsworth (Reply 7):
CO-DL-NW have immunity for their domestic operations outside of a few markets.

No they don't, not by a longshot.

There is NO antitrust-immunity whatsoever between the three of those airlines, in any application nor market.
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IADLHR
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 9:59 pm

Johnboy

Keep in mind that AMS and CDG have openskies with the US. That menas that all US airlines can fly to those airports. That is not the case at LHR. Unless and until LHR is opened to all US carriers, there will not be an AA/BA Anti Triust Immunity. PERIOD!!!!!!!!

My feeling is that perhaps the US will approve the KL/NW/AF for Anit Trust Immunity. The overall aim of the US is to get openskies at LHR. PERIOD!!!!!!!!
To approve the KL/NW/AF for ATI would further tighten the noose around BA and put intense pressure on them and the UK to agree to openskies.

It is also quite possible that the US will only approve KL/NW and DL/AF. However, my gut tells me they will approve the whole thing to ultimately force open LHR.
 
phollingsworth
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RE: Northwest May Lose KLM Link

Tue Jul 19, 2005 10:18 pm

Quoting ConcordeBoy (Reply 13):

There is NO antitrust-immunity whatsoever between the three of those airlines, in any application nor market.

You are correct. They do have USDOT permission to code-share. They are not allowed to coordinate fares, route entry, etc. The USDOT does not have the legal authority to rule on Anti-trust matters withing the US.

Anyhow, I will post the DOT order to prevent further confusion

http://www.dot.gov/affairs/dot00403.htm
 
lijnden
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RE: Northwest May Lose KLM Link

Wed Jul 20, 2005 2:00 am

Let's face it, NWA and CO do not fit in the picture of AF. AF wants to go Delta all the way. What the success is of KLM/NWA, will be copied and put in place with AF/DL for CDG, this time without the nasty competition of AMS.

This is such a back-stabbing blow for NWA, that it might be the end of this great airline. Maybe NWA should not only be American but also become officially the national carrier of The Netherlands, enjoying the rights and privileges of the most liberal open skies deal? With KLM gone up in Air France soon, why not? I would invest in NWA N.V. and nothing forbids to start an airline here in NL and start flying! Also AMS airport Schiphol is very suitable being NWA's home in the EU.

So we will get:
NWAmerica with N-registrations
NWHolland with PH-registrations
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avek00
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RE: Northwest May Lose KLM Link

Wed Jul 20, 2005 3:10 am

Quoting Phollingsworth (Reply 7):
The three US Skyteam carriers, AF and KL have investigated trying to get a blanket anti-trust immunity for the alliance across the pond.

Not true - CO has not sought to join the NWA/KLM, DL/AF, or Skyteam TATL ATI agreements.
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aa757first
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RE: Northwest May Lose KLM Link

Wed Jul 20, 2005 3:40 am

Quoting UAalltheway (Reply 11):
PLUS, "Thank you for calling Northwest/KLM-AirFrance Airlines," sounds just stupid.

That is how most airline alliances are chosen.

Do you mind explaining why you would like them to break up?

AAndrew

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