Carry on: Etihad strikes Lufthansa deal, Emirates rebuff and more

Etihad strikes deal with Lufthansa
The Etihad Aviation Group and Lufthansa German Airlines are joining forces, ending speculation of a takeover. Talk of Abu Dhabi-based Etihad’s future was sparked by the pending departure of chief executive James Hogan and the chief financial officer without explanation. Etihad’s business plan of rapid expansion through shareholdings in other airlines has only been partly successful, according to industry analysts.

Apart from boosting the parent airline from a fleet of 22 aircraft in 2006 to 700-plus 10 years later, Mr Hogan has also built equity partnerships –  49% of Alitalia, 29% of Airberlin, 49% of Air Serbia, 24% of Jet Airways (India), 20% of Virgin Australia, 40% of Air Seychelles and 33% of Etihad Regional (Switzerland), all under the Etihad Aviation Group banner.

Some of these (such as Air Serbia) have been successfully restructured and contribute to the Etihad global network; but others – Alitalia and Airberlin – have not. Closer to home, the investment in Virgin Australia is still in the red (prompting Air New Zealand to quit its interest at a large loss) but probably has a viable future with new Chinese airline shareholders. Jet Airways is said to have a promising future in the huge Indian aviation market.

Lufthansa, which has been a strong critic of the Gulf-based airlines' growth under favourable state ownership, says its new venture with Etihad will benefit both through a $US100 million global catering agreement and cooperation in aircraft maintenance, repair and overhaul.

It looks like a case of joining them if you can’t beat them on both sides. The financial strength of Lufthansa – the largest global operator out of Europe – will help Etihad should it need it in the future, while Lufthansa gets more connections in the Middle East, Asia and elsewhere.

The agreement signed this week says the airlines will also explore further cooperation in freight operations, procurement and passenger services. They have codeshares on flights between Abu Dhabi and Germany (Frankfurt and Munich) as well as flights from Frankfurt to Rio de Janeiro and Bogota in South America (subject to government approval). Etihad will move its bases at Frankfurt and Munich airports to the Lufthansa terminals.

In a previous deal last December, Lufthansa agreed to lease some 33 aircraft from Airberlin for its budget subsidiary Eurowings, after Airberlin had to scale back for financial reasons.

Kenya rebuffs Emirates expansion
Kenyan authorities have declined to approve Emirates Airline’s plans, reported here last week, to operate a third daily flight between Dubai and Nairobi. The development has come as “surprising” to Emirates, which had been planning to use a Boeing 777-300ER on the route. Kenyan media reports the country is seeking a review of the bilateral air service agreement to better balance the share of services operated by Emirates and the national carrier, Kenya Airways.

Jetstar for Badgery Creek
Qantas chief executive Alan Joyce says its budget carrier Jetstar will be based at Badgerys Creek, the site of a new airport for Sydney. Qantas will remain at Kingsford Smith. Speaking in Los Angeles, Mr Joyce said Badgerys Creek would be built to suit budget carriers, likening it to comparisons between London’s Stansted base for Ryanair, and Heathrow in terms of cost. Mr Joyce also says Badgerys Creek shouldn’t have a curfew either, meaning it can also operate as a freight hub.

Emirates embraces Wilderpeople
Major movies usually hit the inflight entertainment services of most international carriers at the same time. But Emirates is making special mention that the New Zealand hit film Hunt For The Wilderpeople will be seen this month on flights to 150 destinations alongside top Hollywood features such as The Girl On The Train. Emirates consistently wins awards for its entertainment system and says the added exposure will help to ensure this will be New Zealand’s most-viewed film ever.

Route news of the week
Air New Zealand codeshare partner Air China has delayed its planned Boeing 787-9 debut on the Beijing-Montréal-Havana route until August 31. It was previously scheduled to start on July 1. A three-class Boeing 777-300ER operates the service. The Beijing-Montréal leg will operate five times weekly overall from October 2, instead of six times weekly. United Airlines will replace a B777-200ER with a B787-9 Dreamliner on its second daily San Francisco-London Heathrow service from May 24 to September 5.