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.