Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Is the forthcoming nuptials of Air France and KLM a love match, a marriage of convenience, or a union on the rebound? Do both parties really want to fully consummate the relationship, is it really just a commercial liaison or is the new love just a recoil from a previous serious affair?
The much predicted liaison between the State airlines of France and the Netherlands does need a thorough investigation (and will get it from the EU one would expect). It is clear that Air France was not the first choice of a partner for struggling KLM. That would seem to be British Airways, the national airline of Holland”s oldest and most trusted ally, a country with whom the lowlanders had been trading with for many hundreds of years. BA spurned KLM for reasons unknown. Clearly Lufthansa would have looked likely to be the next logical partner, but memories are long in Holland and the thought of a German collaborator for the national airline would never have passed the popularity test. That left Air France (with its potential associate Alitalia, KLM”s fianc”e not that long back, the broken engagement still leaving some sores) an elderly and reasonably wealthy suitor only too pleased to enter into a formal contract. Ever cautious of the French, the nervous Dutch inserted into the formal press release ”that the English version (of the release) is the only authentic text and shall prevail over the French text in the case of a contradiction between the two versions”.
Essentially the deal is a complex share swap to get around European legislation and dilutes the French government share of AF to 44%, the balance made up with 37% owned by existing shareholders and KLM common stockholders 19%.
The deal is expected to be signed within the next few weeks.
Typically British Airways has said nothing, Ryanair has come out with its standard tirade complaining that the consumer has been ripped off, and Northwest, erstwhile KLM”s partner on the North Atlantic commented ”what a great deal” but not one suspects with great enthusiasm. KLM will join the Skyteam Alliance which includes Delta. How the KLM relationship with both Northwest and Continental will deal with any associated problems remains to be seen.
OAG, the flight schedule information provider, has come up with some useful statistics which show that in terms of frequency the new Air France ” KLM would still rate only eighth on the world, behind seven US carriers and with only half the number of flights of top ranked Delta. However Delta is of course the AF partner across the North Atlantic. But it would overtake both BA and Lufthansa as Europe”s number one.
Certain assurances have been built into the deal but they are very much in the small print and include such terms as ”fair long term development of both long and medium haul services at the two hubs”. Who defines the meaning of the English word ”fair”. One for the future perhaps in an English court sitting presumably at Oxford (where they produce the dictionary)? In any event the KLM brand is to be retained.
If the deal comes off, and whilst it is to be scrutinised the French have a habit of persuading others to do things their way, the combined Air France ” KLM will still have a long way to go in rationalising airlines that combined currently employs 106,000 staff and operates 540 aircraft. CDG and Schiphol have traditionally handled around the same number of passengers, but will this balance continue? One only has to look at the last great European merger, that of British Airways and British Caledonian to see the long term effect. Gatwick has lost out. Will the same happen with Amsterdam? Only time will tell.