Lufthansa is quietly bringing its European subsidiaries into the Transatlantic Joint Venture (formally called the A++ Joint Venture) it formed with United Airlines and Air Canada. The UK based subsidiary British Midland International (BMI) has joined the JV on April 1, 2011. Two other Lufthansa owned airlines Swiss International Air Lines (Swiss) and Austrian Airlines are set to join on July 1, 2011. Lufthansa is working to bring in Brussels Airlines also, but the date is not finalized because the airline is not yet completely owned by the German carrier.
Lufthansa Passenger Airline Group - Courtesy: Lufthansa
Lufthansa wants to consolidate its position as a major force in the transatlantic market because competition is heating up. In addition to competing with other major European airlines, Lufthansa wants to prepare itself for the onslaught from the Middle East carriers, especially from Emirates Airlines, Qatar Airways and Etihad. Even though these airlines cannot directly serve the Europe – North America market, Lufthansa feels it is very important to offer the widest network choices so that it can maximize its revenue potential. According to one of its investor presentations, Lufthansa feels greatest threat from ever expanding Emirates Airlines. Bringing its subsidiaries into the Joint Venture will allow it offer wider choices for the corporate travel market.
US Airways Still not in the JV
Even though a part of the Star Alliance, US Airways is still a member of the Joint Venture. Its president Scott Kirby has indicated many times the willingness to join, but, I guess, United (still integrating the merger with Continental) is still not ready. The sooner US Airways joins the venture, the better for it. The reason is that all other major network carriers in the United States already have JVs – Delta Air Lines with Air France/KLM; American Airlines with British Airways and Iberia. US Airways will lose the revenue sharing opportunity if it takes more time to join the venture.