Lufthansa and SIA in Joint Venture - AIN Online

SIA-Lufthansa JV Aimed at Gulf Carriers’ One-Stop Strength

by Chris Kjelgaard

 - November 24, 2015, 9:00 AM

Singapore Airlines and Lufthansa Airlines both fly Airbus A380s.

Lufthansa and Singapore Airlines (SIA) expect their recently announced proposed joint venture to prove “highly competitive” with the strong one-stop service offerings the Middle East ‘Big Three’ have established in Europe-Australasia and Europe-Southeast Asia markets.

“The joint venture enables us to increase our customers’ benefit[s] beyond what each airline could have done on its own…in terms of seat availability, connectivity and choice of fares, particularly on one-stop itineraries,” a Lufthansa Group spokeswoman told AIN. “Improved competitiveness will certainly then also be a consequence of these two strong brands joining forces.”

In announcing on November 11 the planned non-equity JV, which requires regulatory approval by European Union and Singaporean competition authorities, SIA and Lufthansa said the two groups intended to cooperate in key European, Southeast Asian and Australian markets.

Both Lufthansa and SIA operate A380s on the Frankfurt-Singapore route, while SIA operates A380s from Singapore to Auckland and Sydney and to various Asian destinations. Their joint offering to Australasia and Southeast Asia would compete with, for instance, the Emirates-Qantas combination’s one-stop offering via Dubai.

The Lufthansa-SIA JV plans to coordinate schedules to provide better one-stop connections between the two groups—Swiss International Air Lines, Austrian Airlines and SIA subsidiary SilkAir also would participate in the JV—at hubs at Singapore, Frankfurt, Munich and Zurich.

The partners also envision joint fare promotions, aligned corporate-sales programs, enhanced loyalty-program ties and expansion of mutual codesharing to more destinations in the Lufthansa and SIA group networks. The JVwould involve revenue-sharing arrangements, which remain unspecified.

While SIA doesn’t serve Zurich, Swiss International does operate Singapore-Zurich non-stops. The JV would include that route, hence Zurich’s inclusion as a JV hub. However, neither SIA nor Austrian Airlines operates between Singapore and Vienna, so Austrian’s initial role in the JV would be to provide feed at Frankfurt and Munich.

No flights operate between Singapore and Brussels, so Brussels Airlines remains one of three sizable Lufthansa Group carriers—along with Eurowings and Air Dolomiti—not initially included in the planned JV.

“The joint venture is designed to enhance and increase the flight offer between Lufthansa’s home markets and Singapore Airlines’ home markets,” said the Lufthansa spokeswoman.

Other than Swiss International’s long-haul role, “the Lufthansa Group carriers will be offering feeder flights for the joint venture,” she added. “But they are not parties to the agreement as they do not sell or price any flights or connections between Europe and Singapore Airlines’ home markets. If it makes sense commercially, other airlines of the Lufthansa Group might be included moving forward.” That seems likely. The JV would include SIA’s recently announced new Singapore-Düsseldorf route—scheduled for launch on July 21 using A350-900s. Since Düsseldorf Airport serves as Eurowings’ main hub, Eurowings also stands as a likely participant.