Eurosharks - The Germano-Austro-Russo-Siberian Connection

So thanks to the other Professor Alex for this one. There are two and I will need to figure out a way to differentiate them. They are for the record both German!

So it seems that what is going on in Austria is far from a simple battle within our industry. it almost reads like an international spy novel. Take the explosive mix of the mega EuroShark Carriers (LH, AF-KL and BA) and the minnow S7 all in a fight for the carcass of Austrian Airlines. We know what is going on with the big chaps but if we scratch the surface we see that the "minnow" is not so small. It may actually be a great white in disguise. Read on...

Let's just ignore the hilarious attempt at participation by THY Turkish "oops not on time" Airlines who found out they did not have time to mount a serious effort to buy the Austrian carrier. Next time chaps call those nice people at T2Impact - they are very good at this sort of thing!

But S7 does appear to be serious. They have been running ads in the local Vienna papers extolling the benefits of the S7 deal and alluding to the fact that they have lots of energy cash to slosh around. Actually I have been impressed with the chaps at S7, they are not your average CIS carrier. Couple that with the fact that on their payroll they have a very interesting lobbyist.

So you thought the Germano-Austrian part was for LH. Not so my dear friends. This is in reference to the (said) powerful lobbyist one Mr Gerhard Schroeder. He is the chap who is engaged to fight for the inclusion in the party of S7 in the deal with the Austrian Government for their shares in Austrian Airlines. Still with me?

Hmmm but what about the Russo part? Well guess who Mr Schroeder's real employer is? It turns out to be Gazprom OAO, THE Russian Energy Company. Gazprom has a strong investment in S7. Of course most people were somewhat surprised when Schroeder left office and then announced he was going to work for Gazprom. He definitely caused a lot of consternation when he left the leadership of one of the west's largest democracies and headed to work for one of Mr Putin's friends.

I present for your further reading pleasure an article on the switch from none other than the Washington Post.

http://www.washingtonpost.com/wp-dyn/content/article/2005/12/12/AR2005121201060.html

So this sounds like a bit of a soap opera. The Austrians must on the one hand be very happy that they are going to off load their national airline to another poor sucker and that a bidding war has broken out but on the other they had better be careful what they wish for... it might just happen.

Cheers

Timothy

Eurosharks - and when the smoke cleared there were 4

For Austrian Airlines - not surprising to some - but perhaps a shock to others - the game of musical ownership shares/chairs now looks like this:

There are 4 declared short listed bidders for Austrian Airlines' publicly held shares. They are (drum roll please):
BA, AF/KL and LH plus a dark horse bid from S7.

This sets up the battle for the big boys to buy something. So the battle lines are drawn and everyone is going to battle for each and every one of the little/poorly guys. And dont count out the rich chaps. Austrian has no value to someone like Ryanair or Easyjet but dont expect them to sit on the sidelines when Sabena (excuse me I mean Brussels Airlines) comes on the block more formally.

Interestingly I was doing some filing over the weekend and came across an old copy of Air Transport World April 2008 entitled "SAS Alone" which was the cover story. Judging by the recent frenzy the task to reform SAS just got a WHOLE LOT harder.

All airlines are now keeping their heads down. I hear that many airlines are canceling participation in conferences. Now why do you think that? it can't just be that they dont want people to travel does it?

Do we hear any fat ladies warming up? I think I hear quite a few. Certainly the dogs around me are howling in anticipation of the final chorus

So LH drops a rather large bomb on the German market

...and Austrian, Lichtenstein and Switzerland...

Having read the document and discussed the situation with a number of players inside and outside the Germanic markets - I believe that we are indeed achieving a tipping point of fundamental change in European distribution of airfares.

Here is the article and analysis from Michele MacDonald in her excellent newsletter TTU - Travel Technology Update and reprinted in ATW - Air Transport World.

Here is the public link where you can read the article.

http://www.atwonline.com/news/story.html?storyID=11477

Lufthansa is able to leverage its not inconsiderable market power within its home markets and those of its vassal carriers - Swiss Air Lines and Austria Airlines in their respective home markets.

This event is analogous to the expiration of the DCA contracts in the USA market. Clearly a lot of legal eagles have been working on this for some time!

For those of you who have been waiting for the other shoe to fall in Europe - folks this is it. Don't wait any longer. Go make sure you have an independent solution that allows GDS and non-GDS content to be combined in your own environment. Hopefully you can make a euro or two at it.

Cheers

Timothy