Dec 17, 2016

Etihad and Lufthansa move ever closer together against .. who?

There is a change of rhetoric going on between Lufthansa and Etihad that might remind us of Qantas and Emirates before they became best friends

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

Are these airberlin jets like ducks before the season is declared open?
Are these airberlin jets like ducks before the season is declared open?

So what exactly is going on between the Middle East carriers and their once sworn European enemies?

The latest prod in the ribs for the mightily offended major US carriers who are fearful of Gulf carriers investing in European carriers because of the adverse implications this might have for their grip on the North Atlantic market, is news that Etihad and Lufthansa are exploring deeper but unspecified opportunities for co-operation.

Of all of those reports overnight, this one, in the United Arab Emirates publication The National, includes this remarkable commentary from Etihad president and chief executive, James Hogan.

“It is very clear to us at Etihad Airways that Lufthansa is a like-minded, forward thinking organisation with which we can do strong, meaningful and mutually beneficial business.”

The first stage of the deal allows passengers to share codes on some flights between the UAE, Germany and South America, but its significance is far greater than this initial co-operation.

Lufthansa had been among the big European airlines that complained about Gulf airlines’ alleged anti-competitive practices in the long-running row over “open skies” policy.

The German carrier also supported a long-running legal action in Germany over code-shares by Etihad’s partner airberlin, which has since been resolved.

Mr Hogan said: “We have long seen Germany as a key strategic market for Etihad and this new relationship with Lufthansa marks the next step in our commitment to the leading European aviation group. Lufthansa is highly respected globally and I’m very pleased that we will work together in the future for the benefit of our customers.”

Given what Lufthansa and Etihad have said about each other in the past, it’s a reminder of how the venomous rhetoric Qantas used against Emirates in Australia in the corridors of power in Canberra was suddenly replaced by a very powerful alliance.

It isn’t unreasonable to read Mr Hogan’s commentary as the latest exhibit in a dossier of evidence that Etihad and Lufthansa find airberlin (which is 29.2 percent owned by Etihad) something of a mutual pain in rear and are getting together to deal with it before they resume a perhaps more constructive interaction than was the case in their previous attempts to ‘kill’ each other.

On any reading of the financial filings of Lufthansa and Etihad, Germany’s second largest airline airberlin (which can’t afford to properly capitalise its title) is a basket case that is intolerably inconvenient to its larger German competitor and an unaffordable disappointment to the part owner in Abu Dhabi.

But there are even bigger things than ‘fixing’ airberlin going on European-American-North Atlantic affairs. Qatar Airways earlier this year lifted its stake in IAG, the company that owns British Airways and Iberia, to 20 percent, and it definitely isn’t in that enterprise to sit quietly in the board room waiting for either of those brands to make it rich in their own sweet time.

Norwegian, with its offshoring of much of its rapidly expanding low cost European, trans Atlantic and Asian flights to bases in low tax or low cost business environments in Eire and Thailand, is now showing signs of getting cosy with Ryanair, the European low cost giant that is reportedly keen to act as a feeder for its long haul flights.

Put together two out of three of the leading ME carriers working their ambitions, and their capital, into the future activities of European and UK brands like Lufthansa, Alitalia, Iberia and British Airways, and Norwegian running amok with its low cost business model, and you have the US3 (American, United and Delta), wondering just how they might engage the Trump administration in actions that would protect them from more successful foreign competitors.

Until about a year ago, it was commonly assumed in America that the anti ME airline lobby that had gained some momentum in Washington DC at that time had allies in the European carriers.

That is no longer a safe nor credible assumption.

(Visited 2 times, 1 visits today)


Leave a comment

2 thoughts on “Etihad and Lufthansa move ever closer together against .. who?

  1. Dan Dair

    or to put it another way;
    There’s no need for a world strategic plan for aviation, just throw everything up in the air & we’ll carry-on with whatever it looks like after it’s fallen back to Earth.?

    It would be most strange to have a real Republican in the White House who genuinely believed that ‘the market’ was always right & that government interference in ‘the market’ was inherently wrong.!!
    The incoming POTUS could pontificate until he was blue in the face, whilst US carriers were squeezed out of the transatlantic sector by aggressive marketing & pricing by Qatar and Etihad & their European ‘partner’ airlines.

    Given more options, the transatlantic economy traveller might very quickly decide that being squeezed into a narrow seat in a US-owned B757 / 67 / 77 /87, is not necessarily the way they want to cross that particular pond.?

  2. [email protected]

    Here is a bit of a bombshell. Hogan being turfed from Etihad?

    It appears the never ending expansion at the ME3 might be about to be tempered by a lack of profits. Emirates are laying off staff as well as Etihad.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details