30 August 2009

LH And BMI - To Have And To Hold?

There is quite a bit of speculation surrounding what LH will do with its long and hard fought win of BD.

To recap what did it end up buying for arguably a pretty heft price?

It won a bunch of slots at LHR, and 3 separate airline groups plus some route authorities.

The integration of BD and LH in Europe is pretty extensive. I recently flew LHR-TXL on a LH flight number checked in at the LH counter in Terminal 1 but the metal was BD. The flight attendants and the ground service were not so clear as to which product I was travelling on. BD refused to check me in at the airport.

But enough about me! What about BD.

BD acquired BMED for a song last year and this has translated into a good market. It essentially got it for nothing - selling back the slots to BA. it operates the routes on a more sparse basis and manages to get some good yields with a thin service. The rest of BD's fleet is really Airbus but the A330s are doing mostly charter service and some long haul to KSA. Mumbai and the US routes having been dropped recently.

So it seems natural that BD mainline will be assimilated into LH. I would think it will be operated more like the LH Italia branded product out of Milan. The likelihood of the BMI brand surviving doesn't seem that promising. This is not similar to the case of LX and OS where the national branded carrier is at stake. BMI changed its name from British Midland and has had a fairly innocuous brand since then. It cannot compete in the branding stakes with the likes of British Airways and Virgin. Lufthansa Britannia anyone? (The Sun newspaper would have a field day with that one!).

So what about the other two parts of the airline - BD Regional and BMIBaby?

Anna.Aero thinks that regional will follow the old Brymon and co to Flybe. I would place money on LH wanting to move some of that connecting traffic into Europe and away from LHR. Further LH has a pretty robust regional business both direct and franchised.

Anna.Aero also speculates that LCC BMIBaby with its old fleet of B737-300s and 500s will go to someone in the UK like Jet2 part of Philip Meeson's group of airlines. I also beg to differ. With LH tharted in creating a second tier German airline of its own - it would more likely want to take the idea of expanding the concept to its own LCC German Wings and give the purple and yellow airline another UK base and a broader footprint. Why would LH give up such a business doesn't seem logical to me.

So what do you think?


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