LH and SN: No deal...

[euroflyer]

http://www.hln.be/hln/nl/942/Economie/a ... ines.dhtml

So it is 1 July now ... And LH has obviously made some proposals to the Commission especially regarding the BRU-FRA and BRU-ZRH routes? Has anybody an idea what that proposals could be?

[BrightCedars]

Why is it that everybody accepts that consolidation is the only way to go to create a few extremely competitive and competing entities in the mature US market and that the EU doesn't see that the same is bound to happen to our somewhat also mature market? Also AFKL created monopolies and it's not like there is much competition (if at all in fact) between, AMS and PAR.

SN is a mini-player in Europe, does not currently hold a dominant position at its own airport, there is currently almost no competition already on routes between Belgium and Germany or Switzerland, and if LH wanted they could kill the competition anyway and they could have SN bankrupt by now also. They are taking the long hard path and yet the bureaucrats aren't rewarding them.

People want better and cheaper education, people want better and affordable medical care, where is the authority when it comes to matters that people care about?

[TCAS_climb]

A monopoly is the only way to make money in this industry...


Resistance to change and NIMBY-attitudes are an all-time obstacle to smart improvements. National preferences still have a few good years ahead of them.

[tolipanebas]

So it is 1 July now ...

It is indeed.
It is very important that the whole process is completed before the EU elections, since there will be a new EU commission taking over after those election and the whole inquiry is at risk of having to be started pretty much all over...

LH has obviously made some proposals to the Commission especially regarding the BRU-FRA and BRU-ZRH routes?

Well, LH has clearly come to the rescue of SN who was in full charge of getting EU approval for the deal until recently, probably because the Germans have understood that the Commission is basically going to keep asking theoretical questions to which SN can not give sufficiently reassuring answers.
LH are known to be very keen on finally being able to start the collaboration, notably for the African routes and give head-on competition to AF-KL, so the fact LH has taken control of the matter definitely is a good thing, because it shows they are still very interested in SN and things might start to move a bit faster from now.
Besides, SN doesn't have a very good track record when it comes to successfully concluding big deals (Camair, Rwandair, AirDC,...), so maybe German efficiency can force the EU to decide soon, because if we have to depend on SN's skills in this field....

We've been told SN has recently received 150 pages full of new questions after it has already replied to almost 200 pages of the weirdest of questions! And new routes have suddenly been added to the inquiry too!
I wonder: asking tens of thousands of questions on commercial and competitive matters on just a handful of routes, how much substance can there still be in those questions?
At some point, you can't but start asking IF... IF... IF... IF... WHAT THEN questions.
Or are they just asking questions for the sake of asking questions and wasting time?

Has anybody an idea what that proposals could be?

Word has it LH has now offered the EU commission the chance to basically pick whatever slots on whatever slot-restricted route it sees between Belgium, Switzerland and Germany and give it to whatever competitor it can come up with... Can't be much fairer than that, can it? You want it? You get it!
Let all those bigmounths complaining to the EU put their money where there mouth is and take this most generous and unique offer with both hands, or shut up for good: start flying, or stop whining.
That's basically the offer LH has made.

The commission is now going to inquire to all potentially interested airlines if they'd be willing to take the offer. So if Air Berlin wants peak hour slots to fly between FRA or MUC and BRU, they can have them. If EZY wants ZRH-BRU (or anything elso), they can. Or if AF-KL wants to link Belgium with Germany, they can as well.

If the aim of all those whiners really is to compete on these intra-european routes, then they are now offered a unique chance to do so without any commercial handicaps whatsoever as they can pick the best bits out of the slots currently in use, but if the aim of their complaints was just to prevent SN teaming up with LH and thus avoid Belgian pax drained from our domestic market from going back to a combined SN-LH, then their complaints will be shown to be given in by protectionism rather than a desire to competite like they claim.

Somehow I have a feeling the EU is suddenly (and probably somewhat to its own surprise) going to have a really though time finding many interested parties amongst all those who have previously complained...

[Stij]

Word has it LH has now offered the EU commission the chance to basically pick whatever slots on whatever slot-restricted route it sees between Belgium, Switzerland and Germany and give it to whatever competitor it can come up with... Can't be much fairer than that, can it? You want it? You get it!
Let all those bigmounths complaining to the EU put their money where there mouth is and take this most generous and unique offer with both hands, or shut up for good: start flying, or stop whining.
That's basically the offer LH has made.

Bold move...

[TCAS_climb]

Bold move ? Mmmh, not sure... Demand and capacity are shrinking. Where do you find the planes, staff and money to invest on new routes ? To take up the challenge now offered by LH would be the real bold move.

[sn-remember]

Well this is indeed a smart offer ..

I really don't understand the commission ..
Any consolidation (fusion, acquisition etc ..) is bound to reduce competition on some routes ..obvious !
The question is to see if this represents a true handicap competition wise that concerns the industry as a whole or not .. Truly, FRA-BRU and the like are not relevant on the global scale of the airlines business.
It's not like say LHR-JFK route would be in just one operator's hands.

I am asking myself what the competition actually is on routes between the Netherlands and France ?
Pretty sure there is no significant competitor to AF/KL ..

Let's see the consolidation of the airlines business in the US:
Recently DL acquired NW making them by far the widest operator in the world. Sure lots of routes inside the US (and more impacting, international routes as well) are now deprived of significant competition. It is indeed the basics of any fusion. So why would the EU oppose fusions/acquisitions since it is actually a means for the airlines to survive better ?

Moreover, SNBA is so small that it is really ridiculous to start a fuss ..

[Conti764]

I doubt the commission knows alot about aviation...

Why on earth would AF/KLM step into the BRU - Germany/Switzerland market? Not a chance on earth they will go outside their own -strong- markets. They are merely trying to halt the cooperation between LH and SN and thus trying to make sure LH can't get a grip on SN's lucrative Africa market in competition with AF/KLM. With LH backing the company, SN could evolve into a real threat for the Francodutch operations in Africa.

Now, the possible reservations BA has against this construction are a bit easier to understand. BA and Oneworld (esp. AA) could use SN, while LH and *A only need the tiny company for it's African operations and for some minor advantages BRU offers them.

If, in the end, the EU commission votes against LH taking over SN, I am pretty sure the Germans will let the company go bankrupt, and the very next day start operations to Africa with Lufthansa Belgium followed by more European routes. SN is too much of a chance for LH to just let them pass.

AF/KLM is out of option for SN and BA/Oneworld by far doens't have the finances to outbid LH.

[sn-remember]

If, in the end, the EU commission votes against LH taking over SN, I am pretty sure the Germans will let the company go bankrupt, and the very next day start operations to Africa with Lufthansa Belgium followed by more European routes

I hope not ...
And I am not sure that LH-BEL would market so well.. specially on the african routes.
Let the people do what they do best ... and the belgians are among the pioneers in air travel to Africa.

[Vinnie-Winnie]

I strongly think that what the commission is trying to do is to see whether competition can be given a chance between Belgium, Switzerland & Germany. If no-one is interested in operating some routes or nobody has good enough reasons to oppose the merger then it will probably go through. Calling the commission incompetent is far fetched. They are only giving themselves more time to analyse the situation that's all...

[b720]

SN knows africa, but we must remember that the current operations are a shadow of what they used to be under SABENA. Current (25-27 weekly) flights are no threat to AF!!! almost neglibile effect on their africa traffic. To return to the NL-Paris traffic, indeed AF-KLM monopolize, but keep in mind that there is an alternative.. THALYS...BRU-ZURICH for instance, starting price at euro 450.. no alternative.. FrA-GVA also, starting (smart eco.) price EURO 280 O.W.!!! That's a lot of money, and not too difficult to post huge profits when a company's home market is based on ripping off its clients. I hope the EU would rectify the Germany-Switzerland-and now Belgian triangle of ripp-off fares situation.

[Stij]

SN knows africa, but we must remember that the current operations are a shadow of what they used to be under SABENA. Current (25-27 weekly) flights are no threat to AF!!! almost neglibile effect on their africa traffic. To return to the NL-Paris traffic, indeed AF-KLM monopolize, but keep in mind that there is an alternative.. THALYS...BRU-ZURICH for instance, starting price at euro 450.. no alternative.. FrA-GVA also, starting (smart eco.) price EURO 280 O.W.!!! That's a lot of money, and not too difficult to post huge profits when a company's home market is based on ripping off its clients. I hope the EU would rectify the Germany-Switzerland-and now Belgian triangle of ripp-off fares situation.

You remakr stands for the Brussels- Zurich market, but not for the Brussels-Frankfurt market as there you can choose for the ICE, just as you can choose for the Thalys between Paris and Amsterdam.

Cheers,

Stij

[LX-LGX]

Similar case : the acquisition of British Midland by Lufthansa.

Today, the European Commission has made a final decision ! If you want to know what it is, check here:
http://europa.eu/rapid/pressReleasesAct ... =IP/09/789

[LJ]

I am asking myself what the competition actually is on routes between the Netherlands and France ?
Pretty sure there is no significant competitor to AF/KL ..

However AF/KL is required to provide slots if necessary if a competitor want to start ops between any point in The Netherlands and any point in France (most notably AMS-CDG. The fact that no airline has taken this up (yet) is another issue (allthough at the time easyJet wanted to fly AMS-CDG, but then decided otherwise as AMS became too expansive for U2). What Lh now porposes is exacly what AF/KL was required to do when they merged (and what is required for an equity participation in AZ by AF/KL).

If you add to this that it is very difficult to get (good) slots at FRA you´ll understand why the EU Commision is a little bit carefull about any airline which LH wants to purchase (don´t call it a merger as none of the partners were equal to LH).

[BrightCedars]

Very good news for BD I would say. I guess now LH will start sorting out things out there and very soon we will see the synergies and a strong Star Alliance core emerge at LHR. I sincerely hope SN will be part of this group and I'm optimistic they eventually will.

There is little that could seriously push for a negative verdict in the LH takeover of SN.

[sn26567]

Similar case : the acquisition of British Midland by Lufthansa.

Today, the European Commission has made a final decision ! If you want to know what it is, check here:
http://europa.eu/rapid/pressReleasesAct ... =IP/09/789

It's funny to see that in the evaluation of the take-over of bmi by LH the Commission already considers SN as a subsidiary of LH. Why all this fuss then?

[BrightCedars]

Similar case : the acquisition of British Midland by Lufthansa.

Today, the European Commission has made a final decision ! If you want to know what it is, check here:
http://europa.eu/rapid/pressReleasesAct ... =IP/09/789

It's funny to see that in the evaluation of the take-over of bmi by LH the Commission already considers SN as a subsidiary of LH. Why all this fuss then?

Actually one would wonder because they should do the same in the case of the LH-SN investigation: consider BD as part of the LH group. And then also they should do two other scenario's that are LH-SN where BD would not be in LH due to EC rejection, and LH-BD without SN where SN would not be in LH due to EC rejection.

I do hope all the options are carefully looked at before taking a decision.

[SmilingBoy]

Why on earth would AF/KLM step into the BRU - Germany/Switzerland market? Not a chance on earth they will go outside their own -strong- markets.

They already did. VLM just started ANR-FRA-ANR.

[tolipanebas]

While waiting the final approval of the EU expected before July 1st, SN is already making use of every occasion it sees to move ever closer to LH/LX...

On 17 June for instance, the brand-new Barcelona Airport Terminal 1 will be opened, with Star Alliance member Spanair offering the very first flight out of this new infrastructure. All Star Alliance Members - Brussels Airlines already included- will be the first group of airlines moving towards the new terminal.

SN's new counters will be located on the departures level in the main check-in hall, right next to the Lufthansa & Swiss International Air Lines counters.

[shockcooling]

Still no news?
Any changes expected due to recent elections?