International airline executive questions U.S. merger wisdom
If the Northwest Airlines brand disappears in a merger with Delta Air Lines, would that be a smart move? Not according to Christoph Franz, the chief executive of Swiss International Air Lines.
Last year, Lufthansa purchased Swiss and made it a wholly-owned subsidiary. But it decided not to merge the two airline identities.
While the larger merged airline has some advantages such as more favorable aircraft purchasing conditions, the executives at Swiss and Lufthansa have opted to create two competing brands — both with a strong upscale element.
Lufthansa has created a First Class environment at its Frankfurt home that is second to none. First Class passengers have their own terminal (basically a private lounge with a gourmet restaurant and complete office facilities) with private limousine transportation to the aircraft.
When I visited, several passengers indicated that they come to the airport early, because it gives them quiet time to get work done away from the demands of their office. Lufthansa has opted to keep their first class lounges exclusively for Lufthansa passengers (and in some cases Swiss passengers) — airline alliance partners have access to less-exclusive lounges.
Now Swiss International Air Lines has announced that they will be developing their own business class seats rather than continue with service similar to Lufthansa in their business class environment.
Produced by Switzerland’s Lantal, the seats feature a 2-m.-long air-filled cushion that the passenger can make harder or softer. Swiss will begin installing them on A340s and A330-300s (of which it will begin taking delivery next year) in 2009 and plans to have its entire long-haul fleet of 26 aircraft equipped with 45-47 of the seats by 2011. The A340s/A330-300s also will feature eight first-class seats and 164-183 economy seats.
Franz questioned the premise of total airline integration.
“Are you aiming at innovation or are you just trying to reduce overhead on a onetime basis?” he asked. “I think it’s a fantastic proposition that passengers have two choices and two interpretations of quality.” He went on to state, “I think you have to integrate only where it makes sense.”
Anyone who has flown on Lufthansa and Swiss and spoken with the different crew members knows that there is a healthy competition between the two organizations.
Perhaps American airlines rushing towards mergers should look at merging where the economics may make sense such as in purchasing and the executive staffing. Leave the corporate cultures intact where they serve different markets — maybe keep the Northwest brand for the Orient where it first started and focus on Delta for Europe and South America.
Of course, these are ruminations about the Delta/Northwest merger. Whether Delta and Northwest consummate their union will depend on pilots, other labor unions and whether these airline executives can convince investors that their marriage will lower the price of jet fuel.
That hasn’t happened yet.
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