23 May 2007

Why Iberia? Can BA capitalize?

Flanking the Skyteam Alliance anchored around 2 Northern European airports (CDG and AMS) has been a goal of BA. Of late BA has been feeling the heat with the infrastructure failures at LHR which has resulted in generally a loss of connecting traffic at the world's busiest international airport. As someone who connects frequently through the major EU hubs I can assure you they are usually pretty bad. But AMS is still the champ at this. I am sure many of my fellow travellers can recite tales of horror from FRA (the furthest A gates) LHR (the staircase to heaven or the escalators to hell), or CDG (the bus rides around Northern France). The new Madrid airport terminal feels like a positive dream. BA is hoping its new T5 will be just as terrific and give them the edge against all its new competitors.

BA desperately needs another platform to retain its dominance. Wednesday's (May 23) article in the WSJ was a good overview of the motivations. But BA has been either very lucky (financially from its 2 major investments) or very unlucky (less than fulfillment of traffic potential) in its alliances. This time its hoping for success on both accounts.

BA's failures have been when it meddles in other people's markets. The US Air investment and involvement was unhappy for all concerned. But Qantas worked out just fine. Because Ayling and his successors wisely left them alone. TPG's team is not a group of hands off players. So we can be prepared for some fireworks in execution if the team wins. Right now they are the only game in town. With 35% of the shares locked up - anyone else hoping for a look in will be hard pressed. Let’s just hope there isn’t a repeat of the APA debacle.


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