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Lufthansa calls on EU to block possible Etihad-Alitalia tie-up
(Reuters) - Germany's largest airline Lufthansa (LHAG.DE) has called on European regulators to block plans by Abu Dhabi's state-owned Etihad Airways to invest in ailing Italian carrier Alitalia CAITLA.UL, saying it would amount to unfair competition. (www.reuters.com) Más...
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Canada of course either refuses to intervene on takeovers or tacitly approves.
CP Air/ Canadian, or in the mists of time, Wardair.
In other words, they do what they want depending on which way the political wind blows, and of course, which party is puffing.
CP Air/ Canadian, or in the mists of time, Wardair.
In other words, they do what they want depending on which way the political wind blows, and of course, which party is puffing.
Why would governments intervene in commercial ventures? Chretien tried his best to bankrupt AC during the late nineties when Canadian was going to fold and was looking for a hand out. His solution was for AC to take over Canadian including all its debt. Earlier however, when other airlines were looking for handouts, such as Wardair, nothing was done. All had to merge with other carriers. That's the way of the market place. The Canadian example gave rise to WestJet and to a lesser degree, Porter. AC in the mean time has just emerged from a long spell of debt caused , in part, by this takeover. There was a great deal of debt, both corporate and pension related. WestJet were lucky in that they had a clean slate to start with.
Political interference is not always a good thing and, in the example of AC/Canadian, there were no winners. By the way, as of today there are 86 defunct Canadian airlines. A great many were absorbed by AC and Canadian or rebranded as adjuncts to current carriers. Both carriers, apart from regulatory reasons, should be left alone. When governments start to interfere there are only two losers, the tax payer and the travelling public. This would apply anywhere in the world.
Political interference is not always a good thing and, in the example of AC/Canadian, there were no winners. By the way, as of today there are 86 defunct Canadian airlines. A great many were absorbed by AC and Canadian or rebranded as adjuncts to current carriers. Both carriers, apart from regulatory reasons, should be left alone. When governments start to interfere there are only two losers, the tax payer and the travelling public. This would apply anywhere in the world.
That's true.
But I observe that:
1. Europeans through their government regulations penalize their airlines.
2. Middle East governments regard their state owned airlines as strategic investments, and support them (by not constantly penalizing their airlines).
It's not surprising that the Middle East carriers are taking away marketshare from European airlines, and succeeding where their European counterparts are struggling.
3. It's ironic that Middle East states can buy outright, invest in European airlines, but that European countries are forbidden to invest in their own airlines to 'level the playing field'.
4. I also note that the Indian regulator has been dragging its' feet in approving the state-owned Air India's Dreaminer from landing in Delhi fog.
5. Lastly everyone complains that the Middle East airlines are taking away their business. They fret that the ME carriers aren't competing fairly. But they fail to look inward. They fail to notice that their own government, their own regulator, their own airlines are the ones that are failing to compete fairly.
We'll are how things shake out in the future. It all depends on whether the guilt parties realize they are party of the problem, are willing to change their actions, whether they actually take real action to change, and when that change actually comes. Hopefully not too late.
Some day, the only European airlines left may be Ryanair or others that have fashioned themselves on O'Leary pride and joy. Others will be flying Middle East and other foreign owned carriers.
The way things are going now, all legacy European airlines, including all the former state-owned airlines are all destined for the waste bin.
If Lufthansa can't compete against Turkish (which is te case), what chance do all the other smaller airlines have.
But I observe that:
1. Europeans through their government regulations penalize their airlines.
2. Middle East governments regard their state owned airlines as strategic investments, and support them (by not constantly penalizing their airlines).
It's not surprising that the Middle East carriers are taking away marketshare from European airlines, and succeeding where their European counterparts are struggling.
3. It's ironic that Middle East states can buy outright, invest in European airlines, but that European countries are forbidden to invest in their own airlines to 'level the playing field'.
4. I also note that the Indian regulator has been dragging its' feet in approving the state-owned Air India's Dreaminer from landing in Delhi fog.
5. Lastly everyone complains that the Middle East airlines are taking away their business. They fret that the ME carriers aren't competing fairly. But they fail to look inward. They fail to notice that their own government, their own regulator, their own airlines are the ones that are failing to compete fairly.
We'll are how things shake out in the future. It all depends on whether the guilt parties realize they are party of the problem, are willing to change their actions, whether they actually take real action to change, and when that change actually comes. Hopefully not too late.
Some day, the only European airlines left may be Ryanair or others that have fashioned themselves on O'Leary pride and joy. Others will be flying Middle East and other foreign owned carriers.
The way things are going now, all legacy European airlines, including all the former state-owned airlines are all destined for the waste bin.
If Lufthansa can't compete against Turkish (which is te case), what chance do all the other smaller airlines have.
There is a world of difference between investing in your national airline and trying to keep them afloat with hand outs. The Middle Eastern airlines success is due, in part, to being able to access cheap money. Europe got rid of state owned airlines because they became too bloated with bureaucrats to function. BOAC and BE are two that come to mind. Etihad, Emirates, Kuwait Airlines etc. are awash with oil money. Their management teams are all European, with European ideas.
An example this side of the pond would be Air Canada. After the takeover of Canadian it found itself with 34000 employees. After a good deal of blood letting it is down to 27000, is much larger with vastly expanded route network and fleet. It has just come off its best year since its formation 77 years ago. It competes in one of the most competitive markets in the world and manages very well. Instead of whining about competition, Europeans should embrace it otherwise, as you say, there will be no airline.
An example this side of the pond would be Air Canada. After the takeover of Canadian it found itself with 34000 employees. After a good deal of blood letting it is down to 27000, is much larger with vastly expanded route network and fleet. It has just come off its best year since its formation 77 years ago. It competes in one of the most competitive markets in the world and manages very well. Instead of whining about competition, Europeans should embrace it otherwise, as you say, there will be no airline.
European airlines for years have been trying to stop " foreign" takeovers. Their thinking being that it would cut into their profits. Basket cases such as Alitalia and others have been subsidised for years by successive governments to the detriment of the market.
In North America airlines come and go with the wind without help from tax payers, as it should be. See Eastern, Pan Am et al.
There was some government investment after 9-11 but that was a special deal and not the norm. If Etihad want to risk their money on an airline, so be it. That is the way of capitalism. I am sure Lufthansa will survive as will others. I believe the word is " competition"
Incidentally, Etihad are not a large airline, yet. But I think that Lufthansa and others are worried about Etihad's recent deal with Boeing for up to 56 new aircraft. Why that would be so I have no idea as Lufthansa is far larger and has just ordered approx. 75 aircraft itself.
In North America airlines come and go with the wind without help from tax payers, as it should be. See Eastern, Pan Am et al.
There was some government investment after 9-11 but that was a special deal and not the norm. If Etihad want to risk their money on an airline, so be it. That is the way of capitalism. I am sure Lufthansa will survive as will others. I believe the word is " competition"
Incidentally, Etihad are not a large airline, yet. But I think that Lufthansa and others are worried about Etihad's recent deal with Boeing for up to 56 new aircraft. Why that would be so I have no idea as Lufthansa is far larger and has just ordered approx. 75 aircraft itself.
I made the same argument.
As a competitor, Lufthansa has conflicting motivations. They'd rather have Alitialia fail so that their own position would be strengthened.
But there is a certain perverse logic in blocking a nation from investing in their own national airline, but allowing foreign states to invest in the same airlines through their state-owned airlines.
It's like the Europeans are intentionally making European companies fail, and allowing foreign companies to compete against locally based companies with preferential rules.