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hOMSaR
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US Megacarriers Vs European "groups"

Sat Apr 04, 2015 11:49 pm

I'm curious what the reasons are, whether legal or cultural, that have led to US airline consolidation taking the form of megacarriers, if you will (UA, DL, now AA), while in Europe it seems that airline acquisitions have generally kept the airlines separate (BA and IB; the LH group of carriers, AF + KL, etc.).

Are there specific legal reasons why the European airlines haven't merged under a common brand, or is it more of a cultural thing (i.e. folks from one country wouldn't want their main hub carrier being branded with another country's name)? I would imagine that from an operational efficiency point of view, it would be a lot better if the airlines had the ability to rotate planes through the network, or make short-notice swaps between planes of the same or similar type, so there must be some particularly strong prevailing reason to keep the operations separate, even if they're all owned by the same parent.
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airbazar
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 12:18 am

Yes, lots of legal reasons. The U.S. is a country. The E.U. is not a country, but a group of sovereign nations, each with their own laws and regulations. Also, each country controls its air services agreements. For example, Spain cannot negotiate an air service agreement for BA.
 
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Polot
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 1:03 am

Cultural reasons as you stated is a big reason. Unifying under name is also difficult for marketing reasons unless the name is neutral. There are many people out there, especially outside of Europe, who have no clue that those European mega groups exist. Good luck convincing someone in South America who is unfamiliar with aviation to check out British airways for nonstop flights to Spain for example. Or to check out Air France for flights to the Netherlands.

With the American carriers the brands, if known, were already known to be American outside the U.S.

[Edited 2015-04-04 18:05:44]
 
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lesfalls
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 3:14 am

It also allows flights to be cheaper in the EU because of their being more choices.
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MrHMSH
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 4:32 am

SImply put, there would be much uproar among the UK, France, Germany, Spain etc if they didn't have a flag carrier at least in terms of role, and while the groups may be structured and operated differently, there is still a brand and a responsibility associated with the carrier. In the USA, it's sad to see brands go, but otherwise what uproar is there to cause?
 
Max Q
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 5:57 am

Well, its not as 'separated' as you imply.


We basically have three major carriers left in the US but that's really what is left in Europe with the three alliances.
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CiC
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 7:08 am

Also think it's also about traffic rights.

Within the E.U. you can fly from anywhere to everywhere, but if you go outside the E.U. you still need many bilateral agreements between the countries.

So Ryanair, Easyjet, Norwegian &co. can fly e.g. FRA-PMI, HEL-TFS, LHR-ATH, BUD-ORY and so without any limitations, but not ORY-JFK, FRA-LAX etc.
These legs are still regulated and the local carriers need traffic rights from both countries they are flying from/to.

As far as I know Ryanair can't fly FRA-JFK- but as an Irish Airline they can apply for DUB/SNN to JFK...
 
lancelot07
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 7:11 am

Quoting Max Q (Reply 5):

In EU, its not just alliances. In the end, we also have only 3 major companies, but each has more brands.
e.g.: IAG with BA and IB, or AF and KLM, or Lufthansa Group with LH, OS, LX, etc.
 
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LAX772LR
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 7:17 am

Quoting HomSaR (Thread starter):
I'm curious what the reasons are, whether legal or cultural, that have led to US airline consolidation taking the form of megacarriers, if you will (UA, DL, now AA), while in Europe it seems that airline acquisitions have generally kept the airlines separate (BA and IB; the LH group of carriers, AF + KL, etc.).

"culture" is a convenient scapegoat.... but it's really about the traffic rights.

People seem to forget that most of the world does not see the EU as a single cohesive aviation/business market, and their bilateral agreements reflect that.

If KL or IB were to cede their certificates and fully merge into their larger siblings, conventional wisdom is that they would also forfeit their respective Dutch/Spanish traffic rights, slots, authorities, etc with other countries.

No such problem in the USA.
I myself, suspect a more prosaic motive... ~Thranduil
 
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 7:22 am

The EU has open skies with the US and Canada so any airline based in any EU country can fly from any other EU country to the US and Canada. Only two countries mind.
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
Max Q
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 7:43 am

Quoting lancelot07 (Reply 7):
In EU, its not just alliances. In the end, we also have only 3 major companies, but each has more brands.
e.g.: IAG with BA and IB, or AF and KLM, or Lufthansa Group with LH, OS, LX, etc.

Yes, that's what I meant.
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n251ay
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:15 am

Main problem: "American Airlines" works perfectly fine for AA+US. But you can't really merge AF+KL and call them "Air France".
 
lancelot07
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:21 am

Quoting Max Q (Reply 10):

well, but they are not allied independent companies. They each have a common owner. Air France-KLM is one company, OS and LX are 100% owned by LH, and IAG owns both BA and IB 100%.
They may have different liveries and different flags on the tailfin, but they are one company just like DL or AA.
 
OO-VEG
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:33 am

Quoting LAX772LR (Reply 8):
"culture" is a convenient scapegoat.... but it's really about the traffic rights.

Not entirely true. Take Wizzair, it consists of multiple entities under the same name. Just like LAN and Avianca do on the other side of the pond.

It's all about marketing.. in Holland, like people stated before.. there is a sense of nationality and a for foreigners it would seem strange to Fly British Airways to Spain (though not unlikely).

Interesting is that these groups are playing with a single brand under an entirely different name. LH Group is rebranding Germanwings into Eurowings to have a europe-wide LH short-haul network. Only FRA and MUC have classic LH flights.
KL/AF is doing the same with Transavia. The airline has a French and Dutch part, but one name.
 
rta
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:39 am

I think the main issue lies in the EU being composed of different countries, while the USA is, well, just one country. And with that, EU carriers are fairly distinct in terms of culture and branding.
 
aviationaware
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 10:05 am

The EU has become a soviet-centrist superstate, after eradicating national sovereignty I am sure the unelected EU officials will also manage to eradicate national sentiment and cultural specialties.

Then we can have mega carriers as well.
 
seat38a
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 11:58 am

Quoting OO-VEG (Reply 13):
Just like LAN and Avianca do on the other side of the pond.

Countries in the South America are not under a umbrella like the EU or a single mega country like the USA, Canada, China etc. so it probably has to do more with legal issues than marketing reasons. While LAN might operate as a single brand, the legal company behind it are still different entities most likely due to 5th freedom etc.. For example, when you try to book a flight from LAX to somewhere in South America, it tells you in fine print which "Legal Airline" (LAN Peru etc) is operating the flight.

Same kind of situation last year when flying Air Asia on our trip. While most of the airline might have a unified brand, the legal operating company of each segment has a different operating company (Thai Air Asia) and flight code.

Air Canada, Delta, American, Air China don't have to worry about a flight operating from say YVR -> LHR and another flight YYZ -> LHR having to have two different entities operate each one. British Columbia and Ontario are part of a single country. Same situation for LAX -> LHR and ATL -> LHR or PEK -> LHR vs PVG -> LHR.
 
airbazar
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 12:19 pm

Quoting LAX772LR (Reply 8):

"culture" is a convenient scapegoat.... but it's really about the traffic rights.

  
That and dealing with laws and regulations in different countries.

Quoting OO-VEG (Reply 13):

It's all about marketing..

That too but it's a lot more than that.
Each country has different laws and regulations. Imagine combining unions across multiple countries with entirely different labor laws. There are also significant cost differences from country to country. Keeping the airlines separate provides a level of diversification that is more beneficial than it it detrimental.

Quoting [email protected] (Reply 9):
The EU has open skies with the US and Canada so any airline based in any EU country can fly from any other EU country to the US and Canada. Only two countries mind.

The U.S. is a bad example. Most countries don't have Open Skies with the EU and are not willing to go there.
 
LHRFlyer
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 12:34 pm

Quoting HomSaR (Thread starter):
would be a lot better if the airlines had the ability to rotate planes through the network, or make short-notice swaps between planes of the same or similar type, so there must be some particularly strong prevailing reason to keep the operations separate, even if they're all owned by the same parent.

Merging operations between US carriers has often been problematic so, as has been said, a cross border merger of operations would be too difficult to contemplate.

But, if you look at IAG's procurement of new A320 aircraft, there is a programme to harmonise technical standards to take advantage of bulk buying and so that aircraft can be moved between IAG group airlines within a matter of days. I imagine there will be a similar programme for the A350.

I think it will be interesting to see how the multi-brand airline group evolves over the coming years.

Relatively speaking, it's a concept that is in its infacy compared to the hotel industry which has had multi-brand portfolios for decades (see Hilton, Starwood and Intercontinental Hotels Group).

In the coming years we may see aviation brands within IAG distinguished less by geography and more by, to use marketing speak, "brand values" just in the same way that hotels are.
 
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 12:43 pm

Quoting airbazar (Reply 17):

The U.S. is a bad example. Most countries don't have Open Skies with the EU and are not willing to go there.

Sorry, but it is an excellent example given a previous respondent said:

Quoting CiC (Reply 6):
Ryanair, Easyjet, Norwegian &co. can fly e.g. FRA-PMI, HEL-TFS, LHR-ATH, BUD-ORY and so without any limitations, but not ORY-JFK, FRA-LAX etc.

As I clarified, but which you ignored, the US and Canada are but two countries. Clearly ASAs are required for virtually all others beyond Morocco, Israel, Lebanon, etc., which have agreements with the EU in its entirety.

[Edited 2015-04-05 05:46:28]
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
777way
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 1:09 pm

Quoting AviationAware (Reply 15):

Agree, definitely some hidden agenda that will show its face in due course.
 
kl911
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 1:16 pm

Quoting AviationAware (Reply 15):
The EU has become a soviet-centrist superstate, after eradicating national sovereignty I am sure the unelected EU officials will also manage to eradicate national sentiment and cultural specialties.

Then we can have mega carriers as well.

So what? I'm a European, born in The EU, and have been working and living in at least 6 EU countries the last 15 years. Please give me 1 parliament and 1 President. That will save millions of hours bureaucracy and wasted time with decision making.


I do agree though that Megacarriers are only possible when the EU will finally negotiate open skies agreements on behalf of all member states and even then that megacarrier will have to have a 'neutral' name.
 
vv701
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 1:38 pm

Quoting lancelot07 (Reply 12):
IAG owns both BA and IB 100%.

Well, yes. But . . .

As others have said, the prime reason why the likes of BA and IB have retained their operational identities is that BA flies to many countries where their traffic rights are those negotiated by the British and other national governments. BA probably operates to scores of countries where their authority to do so is vested in a bilateral air services agreement signed by the British government. So, for example, BA operates its LHR-DME under a bilateral air services agreement made between the UK and the Russian Federation. That agreement specifies that only two British and two Russaian airlines can fly between LON and MOS. The British CAA nominated BA and U2. The Russian authotities nominated UN ans SU. No other airline may operate scheduled flights on this route.

It is perceived that IAG owns 100 per cent of BA and IAG is a Spanish registered company. So, as I have already said, 'Yes. But . . .'

It is true that economically IAG controls 100 per cent of both BA and IB. But the majority owner (50.1 per cent) of the British Airways operating company - what IAG calls BA OpCo - is a private British company. Similarly there is a private Spanish company that owns 50.1 per cent of the Spanish equivalent, IB OpCo. This enables the two airlines to fly routes subject to bilateral agreements signed by respectively the British and Spanish governments.

This was all detailed in May 2010 at the final British Airways Investor Day Meeting before the formation of IAG. The slides from that meeting can still be viewed on the web. Check out Slide 62 and especially Slide 63 here that shows the structure I have tried to describe above:

http://media.corporate-ir.net/media_.../01_ID_2010_Full_presentations.pdf

I believe that Air France / KLM and Lufthansa Group have addressed the same issue in their own way so that their airlines can continue to fly internationally under the authority of those bilateral agreements relevant to their member airlines' operations.

It is possible that eventually every single bilateral air services agreement signed by every member of the EU will be replaced by one signed by the EU (like the EU / USA Open Skies Agreement). Bur until then . . .
 
BA0197
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 2:15 pm

Quoting kl911 (Reply 21):
So what? I'm a European, born in The EU, and have been working and living in at least 6 EU countries the last 15 years. Please give me 1 parliament and 1 President. That will save millions of hours bureaucracy and wasted time with decision making.

Deary me. Just like that- you have given up the sovereignty of several countries that have been around for centuries. I for one, will always be British before European. I agree in the European idea- that the EU should make life living in EU countries easier. It is by no means meant to make EU member countries less sovereign. I realise that this is a sentiment of some citizens on the continent (And indeed by some subjects here) but this is a minority view across the EU.

Back to the point- in addition to the bilateral issues by sovereign states- let me put this in more of a sentimental perspective.

Take BA- the flag carrier (in every sense of the word) of the UK. That cannot be overlooked in any sense. Imagine Her Majesty stepping off an IB aircraft! I for one, would not like London to be the hub of a foreign named airline.

To my fellow American's across the pond- this would be like AC joining together with UA and the new carrier being called Air Canada. The public, government and industry will not like it. That is the difference- in the US, these mergers are all with USA based carriers. This is not the same when compared to the mega 3 in Europe.

[Edited 2015-04-05 07:25:19]
 
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JetBuddy
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 2:23 pm

Sense of nationality and culture yes. Traffic rights, not so much.

Quoting LAX772LR (Reply 8):
"culture" is a convenient scapegoat.... but it's really about the traffic rights.

People seem to forget that most of the world does not see the EU as a single cohesive aviation/business market, and their bilateral agreements reflect that.

If KL or IB were to cede their certificates and fully merge into their larger siblings, conventional wisdom is that they would also forfeit their respective Dutch/Spanish traffic rights, slots, authorities, etc with other countries.

No such problem in the USA.

You're wrong. The EU operates as a single market with regards to traffic rights in almost all areas.

Quoting airbazar (Reply 17):
That and dealing with laws and regulations in different countries.

Nope.

Quoting airbazar (Reply 17):
That too but it's a lot more than that.
Each country has different laws and regulations. Imagine combining unions across multiple countries with entirely different labor laws. There are also significant cost differences from country to country. Keeping the airlines separate provides a level of diversification that is more beneficial than it it detrimental.

The things you speak of are barely any more different between each EU state as it is between each US state. Cost differences, laws and regulations, labor laws.. it's different from state to state in the US as well.

The point is that BA and IB could be one carrier, AF and KL could be one carrier.. what's stopping them is not traffic rights, it's culture and sense of nationality.
 
BA0197
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 2:27 pm

Quoting JetBuddy (Reply 24):
The point is that BA and IB could be one carrier, AF and KL could be one carrier.. what's stopping them is not traffic rights, it's culture and sense of nationality.

I agree very much with this- however there are a not insignificant number of cases where traffic rights have valid arguments.

Take the UK-Russia Bilateral- two UK based airlines and two Russian based airlines. UK does not equal EU and vice versa. If BA/IB were a unified brand (not based in the UK) then BA would lose its route authority.
 
SCQ83
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 3:17 pm

Quoting BA0197 (Reply 25):
I agree very much with this- however there are a not insignificant number of cases where traffic rights have valid arguments.

But you could have Iberia UK Ltd. or British Airways Spain with different AOCs. The same way there is easyJet Switzerland, or Transavia or Wizzair have multiple AOCs in countries they operate from. There was already Lufthansa Italia.

So it is purely for marketing/branding reasons that those are kept under different names.

Quoting LHRFlyer (Reply 18):
But, if you look at IAG's procurement of new A320 aircraft, there is a programme to harmonise technical standards to take advantage of bulk buying and so that aircraft can be moved between IAG group airlines within a matter of days. I imagine there will be a similar programme for the A350.

I think it will be interesting to see how the multi-brand airline group evolves over the coming years.

Relatively speaking, it's a concept that is in its infacy compared to the hotel industry which has had multi-brand portfolios for decades (see Hilton, Starwood and Intercontinental Hotels Group).

In the coming years we may see aviation brands within IAG distinguished less by geography and more by, to use marketing speak, "brand values" just in the same way that hotels are.

Great analogy.

IMO IAG is in the right direction. Instead of expanding their "living space" to nearby countries to suck passengers to their very own network like other European groups do and have tried to do (see LH Italia), segmenting their airlines almost like lifestyle choices (like the hotel industry does) is probably a more sensitive and profitable way to go in the long term.

The next interesting move will be when Aer Lingus (hopefully soon) joins IAG. Contrary to the nay-sayers, I believe Aer Lingus and BA will be the perfect complements (no matter the potential overlap between Europe-US routes) since they both have very different "personalities" and they could appeal to different market segments (EI targeting the more budget-conscious segment, and BA the more premium). BA could be InterContinental and Aer Lingus, Holiday Inn, so to speak  
 
blueflyer
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 4:17 pm

Quoting HomSaR (Thread starter):
there must be some particularly strong prevailing reason to keep the operations separate, even if they're all owned by the same parent.

Operations are separate only to the extent that they need to be for branding and/or regulatory reason. Anything and everything that can be consolidated legally and away from the public eye is, or is in the process to be.
 
Alfons
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 6:10 pm

Quoting HomSaR (Thread starter):

I'm curious what the reasons are, whether legal or cultural, that have led to US airline consolidation taking the form of megacarriers, if you will (UA, DL, now AA), while in Europe it seems that airline acquisitions have generally kept the airlines separate (BA and IB; the LH group of carriers, AF + KL, etc.).

Are there specific legal reasons why the European airlines haven't merged under a common brand, or is it more of a cultural thing (i.e. folks from one country wouldn't want their main hub carrier being branded with another country's name)? I would imagine that from an operational efficiency point of view, it would be a lot better if the airlines had the ability to rotate planes through the network, or make short-notice swaps between planes of the same or similar type, so there must be some particularly strong prevailing reason to keep the operations separate, even if they're all owned by the same parent.

You should compare with the same legal metrics. USA is one country. Germany is one country. Switzerland is one country.

Europe is NOT one country. Asia is not one country as well.
 
strfyr51
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 6:31 pm

Quoting kl911 (Reply 21):
I do agree though that Megacarriers are only possible when the EU will finally negotiate open skies agreements on behalf of all member states and even then that megacarrier will have to have a 'neutral' name.

HELL!! There's the RUB right there !! Can't yoy see BA as European Air? Or Air France as Gallic/Viking Air?
There's be heck to pay !!
 
jfk777
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:34 pm

Quoting airbazar (Reply 1):
. For example, Spain cannot negotiate an air service agreement for BA.

All EU are treaties are done by at the EU level not the individual member states. IT is the new EU-USA treaty which opened Heathrow to Delta, Continental, USair and Northwest.

Quoting CiC (Reply 6):
As far as I know Ryanair can't fly FRA-JFK- but as an Irish Airline they can apply for DUB/SNN to JFK...

YES it could, Open Skies flies for BA from Paris to New York. Air France had a flight in 2009 fro LHR to LAX, it lasted only one summer.
 
aviationaware
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 8:43 pm

Quoting kl911 (Reply 21):
So what? I'm a European, born in The EU,

You are dutch. Get to grips with that fact.

Quoting kl911 (Reply 21):
Please give me 1 parliament and 1 President.

All of which would be required to be elected in a democratic way, which is impossible to achieve. The elections to the European Parliament are not compliant with the principles of democratic elections, especially equality (a Maltese vote is much more potent than a German vote).
The President is appointed in a green room. No election takes place. Not good.

Europe will never become a homogenous mass, and people are starting to revolt against this EUSSR madness. Later this year, the Euro will come crashing down when Greece defaults and TARGET2 collapses in its wake, in 2017 Nazine LePen will become President of France. All of that should be enough to make people wake up and have the EU cut back to what it was in 1990, hopefully. Its cancerous growth is a menace to freedom.

To draw a line to aviation, the structure of the EU aviation groups follows a logic of national identity. National identity is not an artificial construct like the EU, but a historically grown fact and can't be abolished by edict. The dutch would never allow KLM to be renamed to Air France, and the Austrians would fume if AUA would be renamed Lufthansa. And what a joke would it be if Iberia would fly as British Airways, from Madrid? The names and brands of many European airlines alone are heavily nationalized, to build a mega carrier would mean to drop those in many cases highly successful brands and add a new, artificial brand. Very, very bad idea.
 
mjoelnir
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 9:21 pm

There seems to be a steady misunderstanding about the EU/EAA.

- Any EU/EEA airline can operate from any EU/EEA airport to any EU/EEA airport, according to EU/EEA rules.
- Any EU/EEA airline can operate from any EU/EEA airport to any airport in the USA according to the open sky agreement with the USA. So every EU/EEA airline should be able to operate ORY - JFK apart from slot restrictions.

Regarding bilateral treaties. You have to look at bilateral treaties between single EU/EEA countries and third countries as legacies.
Any new treaty is done by the EU not the single member countries.
Regarding the old treaties the member state should not distinguish between the single EU/EEA carriers. So yes BA should be able to fly from Spain to somewhere on an Spanish bilateral with some third country. There is a European court decision that single EU countries are not allowed to discriminate between EU/EEA airlines regarding their bilateral treaties.

The integration inside the EU/EEA is a process not all rules, regulation, permissions and so on have been streamlined, but it is moving and getting harmonized.

One has to exclude Switzerland as it is neither EU nor EEA, so a few European airlines have a subsidiary in Switzerland.
 
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Aesma
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 9:49 pm

Quoting LAX772LR (Reply 8):
"culture" is a convenient scapegoat....

Not really. For starters we don't speak the same language. I don't speak Dutch and most Dutch don't speak French. So shuffling crew around would be limited by that fact.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
vv701
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RE: US Megacarriers Vs European "groups"

Sun Apr 05, 2015 10:46 pm

Quoting mjoelnir (Reply 32):
So yes BA should be able to fly from Spain to somewhere on an Spanish bilateral with some third country. There is a European court decision that single EU countries are not allowed to discriminate between EU/EEA airlines regarding their bilateral treaties.

However specifically the Russian Federation refused to sign any bilateral agreement that covers all EU airlines on any route between any EU airport and any Russian airport. And no European Court has the ability to force Russia to agree to this condition. Nevertheless on 14 March 2011 the EC announced what it called 'infringement procedures' against several member states for signing agreements that did not meet this EU requirement. It also said that the Russian requiremet for payment for overflyinfg Siberia by aircraft routing between the EU and Asia was illegal. Russia had appeared to acknowledge this as in negotiations between the EC and the Russian Transport Minister, Igor Levitin in 2006, it agreed to address the this issue and phase out these duties. However Russia did not phase them out. Here is an extract from an EC document addressing this issue dated 14 March 2011, five years after the agreement, It says:



'EU designation

'The absence of an "EU designation" creates serious practical problems. For example, after the takeover of Austrian Airlines by Lufthansa, Russia started to argue that flights operated by Austrian Airlines to Russia would no longer be covered by the ASA between Austria and Russia because the airline was no longer owned by Austrian interests. To the extent that "traffic rights" for flying over Russian territory are so far only granted for short time periods, this creates uncertainty as to whether Austrian Airlines – not being recognised as an "EU carrier" – might continue to have the right to fly over Russian territory. And there are other similar cases (see below).


'Effects on Member States

'Some examples relating to the countries against which infringement proceedings have been launched are listed below. The issues at stake are particularly important for Spain, Belgium, The Netherlands and the UK which are immediately affected by problems caused by both the lack of an "EU designation clause" and the Siberian overflight charges.

'Spain: Spain is particularly affected as regards "EU designation", following the merger of Iberia with British Airways (in a similar way as Austrian Airlines, see above).

'Portugal and Ireland: The bilateral air services agreements are in breach of EU law as regards EU designation and Siberian overflight charges.

'Cyprus, Slovakia, Poland: The bilateral air services agreements are in breach of EU law as regards "EU designation".

'Belgium: On the "EU designation" issue, Brussels Airlines is affected following its takeover by Lufthansa (in a similar way as Austrian Airlines). In relation to Siberian overflight charges, all Belgian carriers flying to Asia (such as Brussels Airlines) are affected and have to pay the charge.

'Netherlands: Both issues also affect the Netherlands. On the "EU designation" issue, KLM is affected after the merger with Air France. On Siberian overflight charges, all Dutch carriers flying to Asia (such as KLM) are affected and have to pay.

'UK: Both issues affect the UK. In the case of the "EU designation" clauses for example, British Midlands is affected after the take-over by Lufthansa (in the same way as Austrian Airlines). All UK carriers flying to Asia are also affected by Siberian overflight charges and have to pay (including for example British Airways and Virgin).

'Italy: The main issue for Italy, currently, is the Siberian overflight charges. Italian carriers (such as Alitalia) flying to Asia are affected and have to pay.

'Luxembourg: Luxembourg is also affected by Siberian overflight charges, all carriers flying to Asia (such as Cargolux) are affected and have to pay.

'Sweden/Denmark: The main issue for Sweden and Denmark at the moment is the Siberian overflight charges. All Scandinavian carriers flying to Asia (such as SAS) are affected and have to pay.

'Estonia, Greece, Lithuania: The main issue is "EU designation" and the problem with freedom of establishment. Air carriers from these countries for the moment do not operate flights to destinations in the Far East. Nevertheless, the respective air service agreements contain provisions that risk having a negative impact on competition.

'Hungary: The main issues are "EU designation" and Siberian overflight charges. Hungarian Malev has had to pay such charges to fly to Beijing.

'Malta, Slovenia: The main issue is "EU designation" and the problem with freedom of establishment.'


The above commentary directly refers to a multiplicity of nineteen National Air Service Agreements between Russia and individual EU Member States, Clearly although the EC has been responsible for EU Civil Aviation Policy since 1992 there is not just one EU - Russian Federation Air Services Agreement covering all EU countries as is the case of the EU/USA Open Skies Agreement. This appears to be because while the USA recognises the EC as a competent organisation to handle commercial aviation treaties while the Russian Federation refuses to do so.

Nevertheless the Siberian overflight charges issue was later resolved effective on 1 January 2014, The Russian Federation agreed that from that date '. . . any charges EU airlines have to pay for flying over Russian territory will be cost-related and transparent, and they will not discriminate between airlines.' This followed Russia's admittance to the WTO, The 'transparent charges likely refer to charges for services provided including ATC services. The issue of EU designation persists. Hence the complex IAG structure described in the link provided in my earlier reply that allowed the UK/Russian Federation Bilateral Air Services Agreement to be implemented on 1 April 2012, allowing both U2 to start and UN to restart LON-MOS services.
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 3:41 am

Quoting VV701 (Reply 34):

Is there any "problem" country apart from Russia? As you also should add is that Russia has special issues regarding the EU as it resents that former parts of the Soviet Union, now separate countries, have become members, have applied to be members or want to associate with the EU.

And after your long list of problems regarding the over flight issue, you seem to say that all the stuff is in the past, even according to you it was resolved in 2014.

Regarding The EU External Aviation Policy:

http://ec.europa.eu/transport/modes/...olicy/horizontal_agreements_en.htm

Quote:

Certain traditions of international air services regulation, dating back from 1944, had become contrary to the principles of the single aviation market established in Europe. Whereas, traditionally, each international airline should have a determined nationality, the EU has over the last decades developed a single internal market where nationals of one EU Member State can invest in, establish and control airlines licensed in any other EU Member State. The notion of "EU air carrier" has been reinforced by the fact that airlines in the EU are established and licensed under the same rules and can operate any route within the EU. High standards are maintained and further improved through common rules on key issues such as licensing, safety and security.

The 2002 European Union Court of Justice judgments also reflected the fact that some aspects covered in bilateral air services agreements are within exclusive EU competences and in consequence should not be negotiated by EU Member States on an autonomous basis.

At the June 2003 Transport Council, the Commission and the Member States agreed on the modalities to solve the issues identified by the CJEU. Two methods were developed for amending the existing bilateral air services agreements: either bilateral negotiations between each EU Member State concerned and its partners, amending each bilateral ASA separately, or the negotiation of single "horizontal" agreements, with the Commission acting on a mandate from EU Member States. Each "horizontal" agreement aims at amending relevant provisions of all existing bilateral ASAs in the context of a single negotiation with one third country.

Between June 2003 and September 2010, the method of separate bilateral negotiations has led to changes with 62 partner States, representing 155 bilateral agreements corrected. Using the second method, horizontal negotiations have led to changes with 44 countries and one regional organisation with 8 member states, representing an additional 745 bilateral agreements. The latter has the advantages of simplicity as well as cost and time efficiency.

I do believe that there are still certain problem areas. But in principal the EU acts as a single unit in regards to air traffic agreements and without discrimination between carriers of different EU countries.

List of amended bilateral agreements: http://ec.europa.eu/transport/modes/...ce_ecj_judgments-_january_2013.pdf



Information regarding the EU external aviation policy: http://ec.europa.eu/transport/modes/...oc/2005_10_12_info_note_faq_en.pdf


[Edited 2015-04-05 21:15:16]

[Edited 2015-04-05 21:19:48]

[Edited 2015-04-05 21:21:03]
 
User avatar
LAX772LR
Posts: 13976
Joined: Sun Nov 09, 2014 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 6:07 am

Quoting OO-VEG (Reply 13):
Not entirely true. Take Wizzair, it consists of multiple entities under the same name.

Actually, you just contradicted your own self: Indeed, multiple entities (each with distinct certifications and rights) just utilizing a single marketing name. They're not a unified operating entity like a US carrier.

Quoting JetBuddy (Reply 24):
You're wrong. The EU operates as a single market with regards to traffic rights in almost all areas.

Sorry, but that's just not true.

The majority of countries do NOT view, nor (more importantly) have they formally established a bilateral with, the EU as a single market.

India, China, and nearly all countries in Africa and Latin America are examples thereof.
I myself, suspect a more prosaic motive... ~Thranduil
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 10:07 am

Quoting mjoelnir (Reply 35):
And after your long list of problems regarding the over flight issue, you seem to say that all the stuff is in the past, even according to you it was resolved in 2014.

Sorry if you interpreted what I said as indicating that all the problems were solved. What I wanted to make clear is that the Russian Federation agreed to conform with the international legal requirement with reference to overflying charges as agreed in 2006 but not implanted many years later.

Quoting VV701 (Reply 34):
was later resolved effective on 1 January 2014

.

As your list dated 30 January 2013 clearly shows at that time only two (out od 27?) national bilateral agreements with the Russian Federation had been satisfactorily renegotiated. It also clearly states that at that time EU negotiations with the Russian Federation and nine other countries were on going.

The situation with the Russian Federation confirms that that existed in April 2012. At that time UN were awarded two daily remedy LHR slot pairs and U2 were specified to operate LON (LGW) - MOS within the otherwise unamended UK / Russian federation bilateral agreement. This was at the behest of the EC. It was to address the competitive LON-MOS situation following the purchase of BD by IAG and the resulting discontinuation of that airline's former LHR-DME service.

What I cannot say is that the current position is unchanged since January 2013. On the other hand I can find no evidence that it has changed.

As to other potential problem areas it is clear that when IAG was created it established a corporate structure that addressed the position that the EC pointed out could particularly impact BA, KL, OS and SN. Here it is worth noting that before the formation of IAG BA regularly published the percentage of overseas ownership of their common stock in their annual report. Their Articles of Association at that time allowed them to require the sale of any stock purchased by non-British institutions or individuals that increased non-British ownership of the airline to above 49.9 per cent. This enabled them to maintaini their rights under any bilateral air service agreement negotiated by the British government. LH also published their percentage foreign ownership in their Annual Report. I assume this was for the same reason but do not know if they had an equivalent 'ofrced sale' clause in their articles of association. Here it is worth noting that foreign (primarily American) ownership of BA shares in its latter days of stand-alone independence was between 40 and 45 per cent.

The situation created by the impasse with the Russian Federation over 'EU designation' undoubtedly was reflected at one time or another in many bilateral agreements between EU member states and other countries. The list you provided shows many (744) but certainly not all had then been renegotiated. Some of these probably have no practical significance with no air services between some EU and non-EU countries. Others are significant. Indeed your list shows that in addition to the Russian Federation there were on-going negotiations at that time with several key countries including China, Kuwait and South Africa. BA serves six different destinations in these three countries with between one an three daily flights. I have seen no more recent indication that any issue over 'EU designation' in these or the other listed countries have either been resolved or remain outstanding.
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 10:39 am

Quoting LAX772LR (Reply 36):
Quoting LAX772LR (Reply 36):
Quoting JetBuddy (Reply 24):
You're wrong. The EU operates as a single market with regards to traffic rights in almost all areas.

Sorry, but that's just not true.

The majority of countries do NOT view, nor (more importantly) have they formally established a bilateral with, the EU as a single market.

India, China, and nearly all countries in Africa and Latin America are examples thereof.

List of amended bilateral agreements: http://ec.europa.eu/transport/modes/...ce_ecj_judgments-_january_2013.pdf

Quote: TOTAL numberr of third countries that accepted EU designation: 117

Could you define majority?

As an example, the amended agreement with India:http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22008A1015(01)&from=EN

[Edited 2015-04-06 03:50:17]
 
User avatar
distanthorizon
Posts: 207
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RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 10:53 am

I am, like kl911, and above all, European. Proudly.
Regards
Nelson SE
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 10:57 am

Quoting VV701 (Reply 37):

I agreed that there is trouble with Russia.

Is your argument, that because of Russia does not recognize the EU as one whole regarding air traffic agreements, that the principle does not exist?

I have not said that all agreements have been renegotiated, but the majority have. And the renegotiation process has not ended.
I agree that Russia is the one country least likely to except amended agreements.
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 12:48 pm

Quoting mjoelnir (Reply 40):
Is your argument, that because of Russia does not recognize the EU as one whole regarding air traffic agreements, that the principle does not exist?

No. I was directly addressing the title of this thread as well as the TO's opening paragraph. Let me remind you. The thread title is:

'US Megacarriers Vs European "groups" '

You can check the opening paragraph for yourself and then you will realise what I have been talking about.

I did not occur to me to say that my contribution to the thread directly addressed its title and the issue raised by the TO, nothing more, nothing less. I thought that would be self evident.

I am more than concerned that you now suggest that I may be denying a principle that I have acknowledged more than several times in this thread. Note my many references to 'EU designation'. This, of course, is the EC's own description of the very same principle that to which you refer. So you are suggesting I may be in denial of a principle that I have directly referred to many times. Indeed I consistently used the phrase that the founder of the principle used to identify it. Could I have been clearer? Forgive me if I do not thank you for making this ridiculous suggestion.

So why do you not now address the title of this thread? Please provide your explanation.. Exactly why do you believe we have three American Megacarriers and no American "groups" but three European "groups" and no European fully integrated Megacarrier? Why does the US airline America West plus the US airline US Airways plus the US airline American Airlines now equal the US airline American Airlines while International Consolidated Airlines Group now equals British Airways plus Iberia plus Vueling and potentially plus Aer Lingus?
 
CiC
Posts: 75
Joined: Mon Jun 28, 2010 6:51 am

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 1:03 pm

Quoting lancelot07 (Reply 12):
Main problem: "American Airlines" works perfectly fine for AA+US. But you can't really merge AF+KL and call them "Air France".

I remember that in the early 1960ies the governments of France and Germany intended to merge AF & LH (and SN+AZ) to "Air Union".

The one and only example in Europe at that time was SK (a 1946 merger of DDL, DNL and SILA, with a Danish domination in the old SK).

It didn't work as Germany and France could not agree on the share% the governments intended to get on the new airline.
The French wanted to get the biggest portion, but Germany proved that they have they should get the biggest share, based on #of passengers, pax kilometers as well as cargo!!!

So Air Union never happened and I think it won't happen...

For the German speaking guys a link here:
http://www.spiegel.de/spiegel/print/d-45140908.html

Maybe the french friends have some online- archives also they can post here...
 
airbazar
Posts: 10377
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RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 2:56 pm

Quoting JetBuddy (Reply 24):
You're wrong. The EU operates as a single market with regards to traffic rights in almost all areas.

None-sense. The EU does but the rest of the World, or most of the rest of the World does not recognize the EU as a single market. And there lies the problem. Ask LH how many weekly flights they are allowed into LAD and if they would like to have more, like the 10 that TP is allowed. Or, why can't EK get more frequencies into Germany? I could list countless examples where member states supersede the EU.

Quoting JetBuddy (Reply 24):

The things you speak of are barely any more different between each EU state as it is between each US state. Cost differences, laws and regulations, labor laws.. it's different from state to state in the US as well.

That's because they barely exist in the U.S.  But that's fair although I suspect it's a bit more complicated and costly to do it across borders.

Quoting jfk777 (Reply 30):
All EU are treaties are done by at the EU level not the individual member states. IT is the new EU-USA treaty which opened Heathrow to Delta, Continental, USair and Northwest.

Correct, however the individual countries have treaties of their own EU.

There is another very important aspect that no one has pointed out: Chapter 11. the EU doesn't have it. US mergers/acquisitions have all come as a result of some airline being able to shed costs and assets during Ch.11 and thus making it attractive for a take-over. There is little incentive in Europe to take over another airline without restructuring and cost cutting.
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 3:09 pm

Quoting VV701 (Reply 42):

You quote my post about BA being able to fly from Spain to other countries like a Spanish airline with a rant about Russia.

In this thread, like so many others, there are quite a few posters claiming that a real EU single market regarding air transport does not exist. And that most countries would not except the EU as a single entity.

As it is 117 countries seem to have excepted the view of the EU as a single entity with Russia being one of the exceptions and some other countries still being in negotiations.

Regarding that big European aviation groups are operating with different units for different markets have a multitude of reasons and not all of them the same for every group.

The situations with the bilateral agreements is just one of many and you weakened that argument with Russia looking at Austria as a German operation because LH has the majority.
There are marketing reasons. There are union contracts for example letting LH keep three different airlines in Germany alone. One would have to do the analysis for every single group and look if there are really common reasons.
Even an airline as small as Icelandair calls itself group and operates two airlines, international and domestic, and several operations supporting the airlines all as different companies. And none of the reasons for that has to do with landing rights.

And the premises that merging the airlines is simple in the USA but difficult in Europe is not as simple as that.
Perhaps do European airline groups like to operate that way.
 
lancelot07
Posts: 1078
Joined: Mon Apr 21, 2014 8:22 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 3:37 pm

Quoting mjoelnir (Reply 46):
The situations with the bilateral agreements is just one of many and you weakened that argument with Russia looking at Austria as a German operation because LH has the majority.

This is a bit special, because a Russian airline (S7) wanted to buy OS and was turned down using the same argument in the other direction.
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 3:57 pm

Quoting airbazar (Reply 45):
Quoting JetBuddy (Reply 24):
You're wrong. The EU operates as a single market with regards to traffic rights in almost all areas.

None-sense. The EU does but the rest of the World, or most of the rest of the World does not recognize the EU as a single market. And there lies the problem. Ask LH how many weekly flights they are allowed into LAD and if they would like to have more, like the 10 that TP is allowed. Or, why can't EK get more frequencies into Germany? I could list countless examples where member states supersede the EU.

That is absolute nonsense. You find a minority of countries not recognizing the EU as a single entity regarding to air transport agreements. 117 countries do recognize it, and between them the most important ones.

I have in reply 35 posted the relevant links, read up on it.
 
mjoelnir
Posts: 9652
Joined: Sun Feb 03, 2013 11:06 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 7:27 pm

Quoting lancelot07 (Reply 47):
This is a bit special, because a Russian airline (S7) wanted to buy OS and was turned down using the same argument in the other direction.

It is not the same argument. There are restrictions on companies outside of the EU/EEA buying an EU airline. I assume there are restrictions on EU companies buying Russian airlines.
 
lancelot07
Posts: 1078
Joined: Mon Apr 21, 2014 8:22 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 7:39 pm

Quoting mjoelnir (Reply 49):
It is not the same argument. There are restrictions on companies outside of the EU/EEA buying an EU airline. I assume there are restrictions on EU companies buying Russian airlines.

There are no restrictions against buying an airline. But with russion ownership and control, it is considered a russian airline, and will be treated as such regarding traffic rights. No more EU open sky, e.g.
 
jetblue1965
Posts: 5050
Joined: Wed Mar 19, 2014 1:28 pm

RE: US Megacarriers Vs European "groups"

Mon Apr 06, 2015 7:47 pm

At the risk of sidetracking, I'm surprised that this intra-alliance pan-continent concept hasn't really reached East Asia. All the new multi-nation carriers are all LCCs.

On the flip side, South America is the worst offender of them all, with LATAM and Avianca controlling the super majority of market share, limiting consumer choice and keeping fares for foreigners through the roof.

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