LH and SN: No deal...

[zteven]

So I would suggest SN to prepare in time for an alternative : BA and Oneworld.

I like that idea! But can it be realised?

Greetz



Steven

[beaucaire]

This ruling is inapropriate at least -since all other airlines had an opportunity to aproach SN for a merger or buy-out. Neither BA ,IB or AF,Aeroflot or AA made a move . So what !
Flights from Belgium to Germany are open to all airlines that want to invest money in developping such new services.If Air Berlin ,TUIFLY ,Hamburg International or Germanwings want to do it-it's all theirs !
The lady should rather cultivate Roses in her property than get her fingers into preventing a much needed renovation of the Belgian airline-environment !!
Let airlines the opportunity to plan within a reasonable timeframes their investments in aircraft,staff,training and route-development costs.If the Comission wants to delay the take-over or restrict it by imposing political rules that make no sens,it will cost both -SN and LH additional capital.
Following "De Tijd" LH and SN would be requested to search themselves for a competing airline and offer them on a silver plate the opportunity to connect their flights onto SN flights.
That would be the same as if the Brussels commission would request BA to accomodate interlining agreements with Air France or Lufthansa,after they installed competing flights into LHR ..
The lady has a sick mind and seemingly has no clue on how airlines tick !!!
Sometimes the EEC commission shows what Brussels is all about-a huge ,useless waterhead that breeds furtile laws and basically fills pockets of lobbyists,politicians and crooks.
In French I would call the distinguished lady "..une mal baisé.."-but that's off topic..!

[euroflyer]

I guess all this might not be as dramatic as it sounds (and I hope I am correct here ).

The Commission wants to show they do not just give green light to everything, but they do a detailed check (hey, otherwise we would not need them ). And they want to show to consumers across the EU that it is the EU and the Commission which looks after their rights and their well being (especially in a year with elections of the European Parliament and in which a new EU Commission will be named in late summer).

On the other hand, LH certainly does not want to give up more slots than absolutely necessary.So they might just want to wait for the final ruling and than accept the outcome and the conditions instead of offering too much beforehand ...

From the competition point of view I can understand the doubts of the Commission on the BRU-FRA, BRU-TXL and BRU-MUC routes. Those routes have quite some traffic and would all have (except for the SXF-BRU flight of Easyjet) no competition left after the take over. If you see that LH already today asks for nearly 700€ for a fully flexible economy return ticket FRA-BRU-FRA you might understand the Commission feels there is a lack of competition (surprisingly the Brussels Airlines flights, which you can book return easily for 400€ in b.flex are always half empty ...).

And even if in principle Berlin, Munich or Hamburg are not restricted today, competitors might not get slots at the best times of the day.

So lets wait and see. I guess LH/SN would have to offer a substantial number of daily rotations at least on BRU-FRA and BRU-TXL to competitors at times of the days which are convenient to offer at least morning and evening flights.

I am "looking forward" to the AZ case in deed as well now, however it might be different as AF/KLM is "only" going for 25% of AZ and not for a full takeover. So different rules might apply?? And LH themselves are showing with their LH Italia flights from MXP that there is competition to be expected. So only the routes from FCO to CDG, AMS or other French towns could be part of the investigation I guess.

For BA/IB it would be much less problematic I expect because of the high percentage of low-cost flights between the UK and Spain. I am not even sure if BA & IB together would have 50% of the UK-Spain market with all the flights of Ryanair and Easyjet and all the holiday airlines? To a certain extent the success of LH in keeping the low cost carriers in Germany relatively small is bouncing back on them in such cases now.

What I cannot understand however is the discussion on the BRU-ZRH and BRU-GVA routes. On BRU-GVA there is already substantial competition from Easyjet and both airlines to cooperate already today anyway. So I cannot see how competition can be lost, as their is none today ?!?

Lets see how SN and LH will react now.

[euroflyer]

Interesting document with LH's (more general) position on consolidation in the sector
http://konzern.lufthansa.com/en/downloa ... Market.pdf

[tolipanebas]

For all those who hope SN can still be 'saved' from falling in German hands:

SN today announced a complete reshuffle of their product, including a re-introduction of a business class on its European flights in view of the planned STAR alliance membership. IT systems will be adapted and next month ticket sales will start, so that the new product can go online with the new summer season, allowing the start of code-shares with several STAR airlines (notably LH). As such it is clear SN is in bed with STAR and can't be pulled out of it, so don't set any hopes on BA. Besides, why would they want to move now, whereas they've had the chance for years when SN was up for grabs?

Also a question?
Am I right in assuming that the EU's decision doesn't need to delay LH taking a 45% stake in SN?
After all: the enquiry looks at them taking over SN, but the first stage of the deal is just a strategic minority participation, so LH could just go ahead with that and deal with the EU in the time between today and 2011 (when they were expected to take full control).

As to the conditions the EU has set on approving the deal: it proofs how totally lunatic EU burocrats sometimes are: SN/LH are supposedly going to have to look for competitors on the BRU to HAM, MUC and FRA routes themselves! I mean, what's next? SN/LH PAYING Easyjet or Air Berlin so they'd be able to fly profitably on the routes in competition to SN/LH?
I can understand the case of wanting to upen up FRA, but MUC or HAM???
Those airports are not-slot restricted: anybody who wants to fly there can do so freely... But does anybody even wants to?
BTW- I remember a similar problem with the VLM take-over by AF/KL: there too the EU requested VLM to open up LCY, yet despite looking for interested airlines for a long time, they didn't find anybody willing to give it a try and in the end just gave the slots to a tiny little UK airline which probably won't last long...
It just shows that sometimes the EU -infected by toxic words and automatic outcries by some low cost bigmouths- sees mergers as serious risks to competition, whereas in the real world, there often isn't anybody willing to compete anyway and the mergers protect the jobs of tens of thousands of people?!

[LJ]

What I cannot understand however is the discussion on the BRU-ZRH and BRU-GVA routes. On BRU-GVA there is already substantial competition from Easyjet and both airlines to cooperate already today anyway. So I cannot see how competition can be lost, as their is none today ?!?

Many people think that the EU is only looking at wheter or not there is competition on a specific route. This is not the case. The EU also looks at the relative strength of a particular on a specific market. This means that allthough there may be a competitor, the EU wants to make sure that that competitor has an opportunity to compete against the merged companies. Furthermore, it must be reassured that a competing airline can start an service in certain markets without having to face Goliath.

BTW the EU will have to investigate the AZ-AF-KL linkup. However due to Lufthansa Italy´s intention to fly AMS-MXP twice daily I don´t think there will be problems in this market.

[LJ]

BTW- I remember a similar problem with the VLM take-over by AF/KL: there too the EU requested VLM to open up LCY, yet despite looking for interested airlines for a long time, they didn't find anybody willing to give it a try and in the end just gave the slots to a tiny little UK airline which probably won't last long...
I

The VLM take over was blocked by the British Competition Authorities and not the EU. The EU was satisfied quite easily as BA already entered the market (allthough they do required VLM to give up some peak slots at LCY).

Also a question?
Am I right in assuming that the EU's decision doesn't need to delay LH taking a 45% stake in SN?
After all: the enquiry looks at them taking over SN, but the first stage of the deal is just a strategic minority participation, so LH could just go ahead with that and deal with the EU in the time between today and 2011 (when they were expected to take full control).

No, it doesn´t even require an equity participation. The EU is required to look at all forms of cooperation between two companies which may reduce competition. Thus the fact that SN enters the Star Alliance may be enough reason to investigate.

[summersso]

Unbelievable!
What about AF-KL between France and The Netherlands... or BA & IB between UK and Spain in the future?!

There's hardly a lack of competition on UK to Spain routes - plenty of low-cost carriers inc Ryanair and BMI. Paris to Amsterdam is not a major European route and the Thalys provides effective competition.

I must say that I think this is the correct decision by the Commission. Star Alliance (and Lufthansa) really are starting to dominate Central and Eastern Europe and Scandinavia to an unhealthy degree.

[sn-remember]

I'm a little bit surprised by this preliminary decision and I'm sure that management of both airlines is too.

I don't see how you can start putting monopoly rulings on single A to B non-domestic routes, this must be something some kind of bored junior politician is trying to implement.
One can put such rulings on entire markets but there are so many routes that are being flown on monopoly basis without limitations.

I think that this decision smells a bit like backstage manipulation (in more common words: corruption).

If this can't be approved, then surely there's no reason for them to approve AF-KLM's stake in AZ since there would be a monopoly on so many more routes.

Edit: Did some research on Neelie Kroes because I found the name to sound a bit ... Dutch.
http://nl.wikipedia.org/wiki/Neelie_Kroes

A Dutch politician who was a former transportation minister of Netherlands, ruling on LH-SN merger is maybe very inappropriate.

You are right NCB, this smells bad ...
"Backstage manipulation" -as u rightly suggest- is the only obvious explanation that comes up considering this appalling handling of the dossier
It's not the 1st time the EU ruling appalls me, I have in mind the forceful (and widely unpopular) enlargement opening to Turkey under the questionable impulse of commissioner Rehn (if my memory is good)
In my view, again a patent "backstage manipulation" case ...
It's very unfortunate indeed (also for the future of EU) that there seems to be no effective power to investigate how our eurocrats do take "surprising" decisions at times

[BrightCedars]

It's very unfortunate indeed (also for the future of EU) that there seems to be no effective power to investigate how our eurocrats do take "surprising" decisions at times

When Europe and the Europeans (EU) will be ready to elect a President by popular vote, we'll have gotten much closer to that, of course new problems will appear then.

[euroflyer]

You are right NCB, this smells bad ...
"Backstage manipulation" -as u rightly suggest- is the only obvious explanation that comes up considering this appalling handling of the dossier
It's not the 1st time the EU ruling appalls me, I have in mind the forceful (and widely unpopular) enlargement opening to Turkey under the questionable impulse of commissioner Rehn (if my memory is good)
In my view, again a patent "backstage manipulation" case ...
It's very unfortunate indeed (also for the future of EU) that there seems to be no effective power to investigate how our eurocrats do take "surprising" decisions at times

Honestly, it is not that bad with the EU (and a direct election of a President certainly would make it much worse, but that is off topic ). We should be careful on judging from "outside" without having all information available and we should remember no final decision on LH-B.Air has been made yet. So we cannot compare the outcome of earlier cases with the not-final stage of this LH-B.AIR case. The Commission has just announced they will investigate some routes more closely and therefore need more time. There is still the chance for LH & B.Air to convince them or to give some slots (probably mainly early morning ones at FRA and maybe BRU, MUC & TXL as well) to competitors and everything might be fine at the end (I am quite convinced it will be).

[Ducatibiker]

Correct me if I am wrong but isn't today LH the only carrier between BRU and HAJ, STR and NUE ?

[euroflyer]

Correct me if I am wrong but isn't today LH the only carrier between BRU and HAJ, STR and NUE ?

This is not the point. There might be no competition on those routes - bad enough from the EU Commission's point of view, but they cannot do anything about it.

BUT the takeover of B.Air by LH will see competition which does exist today on certain routes being stopped. So the situation will be worse (from their point of view) than it was before - and they can do something about it by stopping the takeover or setting conditions for the takeover and than they will do this.

All this is so far very normal and not worrying. They have done it in the past as well and they will continue to do it. Of course one has to have an eye on them and check if they always apply exactly the same rules, but this is not so easy of course because two takeovers are not always exactly the same, so they have an excuse for acting differently. And yes, of course a lot of lobbying is taking place behind the scenes, but that is part of the game.

[brusselsairlinesfan]

Any news on that point... since new articles just appeared on the internet/press (german)?

[euroflyer]

Any news on that point... since new articles just appeared on the internet/press (german)?

umpf, do not know. The articles I have seen yesterday and today are more about the Commission launching some inquiries into the practices of alliances in general and here focussing obviously mainly on *Alliance and OneWorld on North-Atlantic-Routes. So I see no connection here at all to the SN/LH case. But I might have missed something.

[airbuske]

Provisional deadline: 10 Jun 2009
So more then 1 month to go...

[Air Key West]

I find it rather astonishing that the inquieries launched yesterday by the EU Commission Direcorate General "Competition" headed by Dutch commissioner Neelie Kroes only concern AA-BA-IB (oneworld) and AC-LH-UA-CO (Star Alliance). No airlines (AF-KL-AZ) belonging to Skyteam seem to be targeted. Would the Dutch lady be protecting AF-KL ? Of course not
Apparently no NEW inquiery into the possible LH-SN merger. So, let's wait and see...

[sn26567]

An article in "Trends" today says that LH has not yet paid the first eurocent of the 65 million euros they were supposed to pay for 45% of SN Airholding. Not because they have lost interest in SN, but because of the European Commission enquiry. This enquiry is indeed taking an unusually long time. The AF-KL deal was rounded up quite faster. Where are you, Neelie Kroes?

[NCB]

I wouldn't be surprised to see the case hit the deadline without a deal.
What would that spell for SN? My guess is: disaster.
With recent traffic/LF numbers, SN can't be in a good position.

Perhaps in worst case we will see a rebirth under LH Belgium?
Perhaps if SN is put on bankruptcy, LH will have a chance to buy it without the EU interfering, and perhaps at a lower price...? Nelly Kroes may be doing LH a big favor

[Atlantis]

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