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johnnybgoode
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Regulators Oppose Lufthansa/Eurowings Deal

Wed Mar 07, 2001 3:31 am

got that from >http://biz.yahoo.com/news/airlines.html<

Regulators Protest Lufthansa Deal

BERLIN (AP) -- Antitrust regulators on Tuesday opposed German flagship carrier Lufthansa's link with the regional airline Eurowings, arguing that the damage to competition on domestic flights would outweigh any benefits on the European market.

Lufthansa bought a 24.9 percent stake in Germany's No. 3 airline in January, saying it wanted to offer passengers in Germany's biggest state, North Rhine-Westphalia, more direct connections to European business centers. It said it wanted to increase its holding to 49 percent.

But Cartel Office President Ulf Boege said Tuesday the plans would lead to a considerable and lasting weakening of competition on routes within Germany, where Lufthansa is already dominant.

The decision is an initial victory for Lufthansa's closest domestic rival, Deutsche BA. The British Airways subsidiary, which competes with Lufthansa on seven routes, maintains that the merger would lead to a ``dangerous monopolization'' of Germany's skies.

Lufthansa and Eurowings have until March 19 to amend their plans and convince Boege's office that competition won't be harmed.

According to the Cartel Office, Lufthansa has no competition on 66 of its 86 domestic routes. By joining forces with Eurowings, the number would rise to 70. Deutsche BA has said Lufthansa would control 80 percent of domestic flights.

Lufthansa plans to take up new routes from German cities to Paris, Amsterdam and Milan, but the regulator said even this step could damage competition. Eurowings had previously ferried passengers to rivals such as Air France and KLM for onward flights.


----

well, i´m wondering how LH/EW will react and what changes they´ll propose.


regards
daniel

If only pure sweetness was offered, why's this bitter taste left in my mouth.
 
johnnybgoode
Topic Author
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Thu Mar 08, 2001 2:59 am

hey, no germans visiting today?
this certainly has major impact on the german market...

another article, from the financial times...


German regulators block Lufthansa deal

The German federal cartel office said on Tuesday that it would block Lufthansa's planned acquisition of a minority stake in Eurowings, Germany's largest independent airline, unless the carriers offered concessions to improve competition.

Lufthansa agreed last autumn to take a 24.9 per cent stake in the privately-owned Eurowings with an option to raise the holding to 49 per cent after three years.

The cartel office said that the acquisition would strengthen Lufthansa's dominant position in the German domestic market.

The airlines' plans to add regional services to neighbouring countries in particular to Paris, Amsterdam and Milan would not offset the threat posed to competition on German domestic routes.

Jurgen Weber, Lufthansa chief executive, said in an interview in London that the airline would not offer any concessions but that talks with the regulator would continue.

"We have to make it clear to them that we are in a global environment, not in a German village," said Mr Weber.

He pointed to a series of acquisitions made last year by Air France in the French domestic market, which had been approved without any objections from the French competition authorities.

Mr Weber also said there was a widening gap between the pace of consolidation taking place in the US and in Europe.

The cartel office said that its objection was based on the fact that Lufthansa already had a monopoly on 66 of its 86 domestic routes, and the acquisition would eliminate competition on a further four routes.

Lufthansa would then face competition on only seven of its domestic services from Deutsche BA, the only significant rival remaining in the domestic market.

The high entry barrier to the industry would mean that the damage to competition would be permanent, said the cartel office.

It also voiced concerns that Lufthansa's acquisition of the Eurowings stake would undermine the smaller airline's feeder connections with Air France and KLM and would weaken competition for Lufthansa's main Frankfurt hub.

The cartel office said that it would give a final decision on the deal on March 19, and said that it was still open for concessions to be offered by the two airlines.

Lufthansa and Eurowings have already announced that they were planning to begin their co-operation on March 25 by codesharing on 1,500 flights a week. Eurowings would also join Lufthansa's Miles and More frequent flyer programme.

Eurowings' main presence is in the German state of North Rhine-Westphalia, and the airlines are planning to add several new non-stop services from the region including from Dortmund to Milan, Copenhagen and Vienna, from Düsseldorf to Newcastle and Bilbao and from Cologne/Bonn to Birmingham and Manchester.

The Lufthansa acquisition is aimed at stemming the loss of lucrative business traffic to rivals such as KLM and Air France.




If only pure sweetness was offered, why's this bitter taste left in my mouth.
 
Guest

RE: Regulators Oppose Lufthansa/Eurowings Deal

Thu Mar 08, 2001 3:31 am


Mhhh already thought so.
Am also wondering what they'll do as there are many routes scheduled already.

B737-700
 
WorldTraveller
Posts: 594
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Thu Mar 08, 2001 3:58 am

Well, here's another German!  Wink/being sarcastic

I simply think the deal would reduce competition, as Deutsche BA pointed out and I think the thing won't get through.

Das waren meine 2 cents...

Best regards
the WorldTraveller
 
airsicknessbag
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Fri Mar 09, 2001 1:15 am


Hier ist noch einer!

I wonder whether this concerns only the acquisisition of the 24.9 or 49 percent stake or the code sharing as well.
As I said in previous posts, I feel ambivalent towards this partnership: on the one hand, it´s great to have all the EW flights here in DTM bear LH numbers: up to now, we had LH flights to FRA and MUC, now we´ll have:
THF, DRS, FRA, HDF, STN, MXP, MUC, FMO, PAD, CDG, STR and ZRH! Plus VIE and CPH, but that won´t be EW and is thus no benefit from the LH/EW partnership.
On the other hand, I really enjoyed Team LH´s level of service which EW´s is far away from.
And you have to consider as well, that EW´s A319, which will fly for LH e.g. DUS-HAM has 142 pax, whereas LH´s A319 only has 126. But I really doubt the tickets will be cheaper...
Anyway, only time will tell how this story will continue...

Viele Gruesse,

Daniel Smile
 
airsicknessbag
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Fri Mar 09, 2001 2:11 am


Just forgot NUE on the list of LH destinations available from DTM from the summer schedule.

Daniel Smile
 
johnnybgoode
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Fri Mar 09, 2001 8:10 am

i´d like to know what they do with all their already scheduled co-operated services and all the already planned rotations, how they´re gonna change that, if the deal did not go through?
actually, i´d hoped that EW sticks to its routes and only takes over some LH routes from it´s primary airports, like NUR, DTM, and some regional routes.
and now they operate DUS-HAM. EW is certainly an excellent airline, and certainly LH will operate most of its DUS-HAM services itself (suppose so, haven´t seen the new timetable, yet), i somehow dislike such a development. perhaps i´m a little biased on that one...

schönen abend
daniel
If only pure sweetness was offered, why's this bitter taste left in my mouth.
 
johnnybgoode
Topic Author
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Joined: Wed Jan 03, 2001 8:47 pm

RE: Regulators Oppose Lufthansa/Eurowings Deal

Tue Mar 20, 2001 9:59 pm

according to a german newspaper, the german authorities just extended its review period of the so-called "pro-competitive measures" (that´s how they dubbed it) until 3rd september.
this review period initally was supposed to end yesterday, monday, the 19th march but now both airlines got more time to come up with solutions to appease the regulators.
in my eyes, it´s amazing that the airlines now received a further six months to discuss their partnership whereas at the beginning they only got 10 days!

rgds
daniel
If only pure sweetness was offered, why's this bitter taste left in my mouth.
 
Udo
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Tue Mar 20, 2001 10:17 pm

Und noch einer!!

Well I think the deal has to be stopped by the Bundeskartellamt. Lufthansa just tries to reduce competition once more again. As they have their problems to compete on service levels, they just cooperate (or eliminate) with a competitor.
I just remember Augsburg Airways which operated too successfully for LH. Suddenly they cooperated and Augsburg Aws had a clear decline in onboard service...

Stop LH-EW, a long term cooperation would mean the Eurowings brand will disappear, one more carrier wearing the boring LH Team cls...
EW should start to cooperate with Deutsche BA, or reactivate the cooperation with AF, or remain a KLM partner.

No way EW-LH!

Regards
Udo

Me & You & a Plane Named Blue...
 
patroni
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Wed Mar 21, 2001 8:56 am

Hi Daniel!

"in my eyes, it´s amazing that the airlines now received a further six months to discuss their partnership whereas at the beginning they only got 10 days! "

Well, it is not that amazing... these deadlines are set by legal regulations in the "Gesetz gegen Wettbewerbsbeschränkungen (GWB)". The Bundeskartellamt (BKartA) has to find a decision within one month. If they see bigger difficulties, they send an announcment to the concerned parties (in this case LH and EW) which gives them the possibility to sort out all problems within the rest of the 30 day deadline. If the companies fail to sort this out, the deadline has to be extended to a certain extent or the merger has to be forbidden.
It is always difficult to stop an acquistion below 25% (and LH initially purchases only 24.9%), so you have to prove that LH gets an influence on EW's business like a shareholder with more than 25% would get.

I didn't follow the whole merger details closely, but I think that exactly this is happening now....
I have worked for the BKartA for a couple of years before I decided to quit the public service.... since then the GWB was changed by the 6th novel, so I don't know the exact paragraphs any more, but from my experience I know that these merger controls within the very tight timeframes are not easy at all...especially when there's a public pressure involved...

Best regards,

Thomas
 
johnnybgoode
Topic Author
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RE: Regulators Oppose Lufthansa/Eurowings Deal

Wed Mar 21, 2001 11:38 pm

thanks, patroni, for this interesting insight.

udo, well, this LH-EW long-term cooperation will not mean that EW will start wearing the teamLH because LH explicitly stated the wanted to retain the EW brand because its highly recognized in germany. however, things could look different in 10 years from now...
augsburg operated too succesfully? they didn´t compete very much with LH. ok, they had some flights from augsburg to HAM and DUS, and they certainly competed against LH´s flight from MUC, but those flights weren´t quite popular among business travellers, because at that time, bad weather and fog in augsburg often caused heavy delays, and augsburg AW only offered a low number of frequencies, so i wouldn´t have called augsburg airways a competitor to LH.
i myself cannot judge augsburgs AW´s service, but from many sources, i have heard that it´s still very good.

i have often thought about deutsche ba and eurowings co-operating, or even merging, because that would really create a true competitor to LH.

best wishes
daniel
If only pure sweetness was offered, why's this bitter taste left in my mouth.

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