Air France KLM plans to take a 19.9% stake in beleaguered Scandinavian Airlines.
- Once the deal is approved by regulators, the founding Star Alliance member will exit that alliance in favor of SkyTeam
- And join the Delta-Air France KLM-VIrgin Atlantic revenue-sharing partnership across the Atlantic.
Scandinavian, often stylized as SAS (“Scandinavian Airlines System Denmark-Norway-Sweden”), is the flag carrier of Denmark, Norway, and Sweden. They have about a dozen widebodies; around 60 mainline narrowbody aircraft; and then another 50 or so narrowbody Airbus A320 and regional aircraft operated by subsidiaries.
The Air France KLM investment helps the financially troubled airline which offers strong connectivity for passengers seeking travel into Northern Europe.
The deal requires approval of the U.S. bankruptcy court overseeing administration of Scandinavian, as well as Swedish and European authorities. Adding SAS into the Delta-Air France joint venture will require approval of competition authorities on both sides of the Atlantic.
For Star Alliance members,
- SAS award availability has historically been poor for long haul business class. It’s a loss, the inventory did exist, but it’s not going to move the needle for most.
- The airline often ran great fare sales, and it was nice then to be able to credit SAS flights to a Star Alliance frequent flyer program. SkyTeam programs are uniformly less generous, though Air France KLM Flying Blue is by far the best program in the alliance.
- It means a loss of access to some connecting destinations.
Many Americans will see this as a blip. It’s another step in European airline consolidation, with Lufthansa likely taking control of the new Alitalia and bringing it inside of its own joint venture (along with controlling Swiss, Austrian, Brussels Airlines and more) and British Airways’ parent IAG also taking control of Air Europa on top of Iberia, Aer Lingus and Vueling.
With Lufthansa tied to United and Air Canada, Air France KLM tied to Delta, and British Airways tied to American the transatlantic market has become far more concentrated inside of “metal neutral, anti-trust immunized, revenue-sharing joint ventures.” There are only a handful of players across the Pond operating with significant frequency outside of the one of these deals.
Typo in first paragraph, first narrowbody I believe should be wide. Otherwise, fascinating as always!
@Trevor – actually looks right to me!
I would rather have had LH buy SAS and keep them in Star Alliance.
That hurts. Olso, Copenhagen, and Stockholm are great airports to connect through. Helsinki as well but they are Oneworld. That really means Frankfurt/Munich and I suppose Vienna if you’re trying to get to/around Scandinavia.
This will destroy a lot of Germans, Belgians and Swiss who had been relying on SK’s EuroBonus as opposed to Miles and More. If EB does not become a copy of Flying Blue, it may still be appealing for some otherwise what’s left: Aegean M&B or Turkish M&S? Though the new Miles and More looks like a good challenger to Flying Blue.
As a frequent Delta (sky team) flier, how does SAS stack up against KLM (e.g., service, on time, etc.)? They’ve got to be better than AF.
Does anyone have a URL to a detailed description of the financial arrangements behind these airline alliances? What exactly do the contracts stipulate?
Thks.
I wonder if the Dutch governments clamp down of slot availability at AMS influenced this decision. Doubt SAS cares either way…long as they get capital they are happy.
First, SAS was not a part of the UA/LH Group joint venture so AF/KL offered SAS a bigger seat at the table than they had before.
second, AMS’ moves to limit capacity absolutely influenced AF/KL’s decision to diversify their network.
third, this is a huge shot at LH Group and UA. AMS, CDG plus ARN and CPH completely surround LH Group hubs and the large local market.
fourth, TAP Air Portugal is still apparently in talks for foreign investment. LIS is a helpful geographic location for southern Europe connections and far more valuable than ITA.
fifth, ITA hasn’t really proven that its restructuring will work. SAS is far more likely to be turned around financially, making an investment worth it.
and there will be some flights moving from UA’s hubs – EWR and ORD – to DL hubs – JFK and ATL
Never flew SAS. Can’t be as good as KLM. But I’m leaving SkyTeam and it’s Band-Aid ripper.
Get rid of the anti trust immunizations!!!
“ AF/KL offered SAS a bigger seat at the table than they had before”? No, they didn’t. AF/KL offered Denmark what Denmark wanted, and SAS went along for the ride under a Dutch CEO who got his aviation industry start in Scandinavia with KL and is playing nicely for his old masters.
Maybe ORD flights will transfer to MSP, and the EWR flights switch SEA. Then DL could move their CPH flight from JFK to ATL and SAS will keep JFK.
GU,
SAS was never allowed to be a part of the AC/UA-LH Group joint venture. AF/KL offered it which means that DL and VS agreed as well.
Doesn’t matter where any of the players came from; the alliance playbook in Europe is being reset.
Star is weaker than it used to be – and LOT and TAP are both still in play.
@Trevor, @Gary…LOL, actually the REAL typo from the article is in THIS line near the beginning of the article (the all caps is mine):
“Once the deal is approved by regulators, the founding Star Alliance member will EXIST that alliance in favor of SkyTeam…”
…which, I believe, ought to read “EXIT,” not “EXIST.”
Sorry, but I’m a retired school teacher, and my eye catches these things. Spellcheck is not a substitute for proofreading (at least three times!). LOL, be well!
Also, being the Senior that I am, I seem to remember that, long ago, SAS was considered a really premium airline to Europe…not so anymore?
Hopefully there will be a full court press to disallow SAS from being cleared into the DL-AF/KL-led revenue-sharing transatlantic cartel.that screws over consumers.
Thankfully there are some in the Biden Admin who are receptive to the idea of not granting SAS antitrust immunity sufficient to be cleared into the DL-AF/KL-VS revenue-sharing joint venture. I hope they don’t cave in to the airline unions and other special interest groups.
So JetBlue and Spirit cant merge, but US regulators will approve another imunized joint venture across the atlantic which has now been reduced to 3 alliances?
My only advice is to know the USD-Krone exchange rate when connecting in Denmark. I blew through my company’s expense limit having a sandwich, beer, and dessert at the airport. No different than Newark, but I at least know what the limits are.
Brian
you clearly don’t get it. but you really DON’T WANT TO.
The DOJ is objecting to the B6/NK merger because they will reduce capacity on every aircraft that is converted to B6 and B6 will raise fares – which is bad for consumers.
SAS is not part of any joint venture and will join an EXISTING ONE in a region where more connectivity will bring fares down and add more competition.
Methinks you can’t accept that B6 simply had a failed business strategy while others figured out to succeed
There is no way in hell that SAS, or anyone else joining an anti-trust immunized JV will lower prices. That’s a crude lie airlines sell up trucks tire and the public.
Just look at how the current JVs monopolize routes and gouge customers wherever they hehe the market power to do so.
@Tim Dunn: “in a region where more connectivity will bring fares down and add more competition.”. Unproven. Lowest fares in Europe are the pint-to-point SWA clones (especially Ryannair). Ryannair has something like seven times the number of plances of SAS so SAS is a price taker I would expect.
yes, there is abundant evidence that joint ventures do increase competition AGAINST other alliances . Do you know how high fares are to LH Group hubs from the US and Canada compared to Skyteam hubs?
SK wasn’t allowed into the Star JV because SK’s hubs didn’t command the average fares as high as LH Group.
SK will be part of the wall that AF, DL, KL and VS are building in western Europe that will allow far greater penetration of central Europe which will break up the monopoly the LH Group and the Star JV has on pricing.
@Tim Dunn: “there is abundant evidence that joint ventures do increase competition AGAINST other alliances” Citations?
The government needs to revoke all of these revenue-sharing joint ventures. They are anti-consumer.
My goodness, just the mention of Delta or Sky Miles and we get a diatribe from the usual suspect. Create town blog Tim Dunn and we can ignore you there…….please