Air France-KLM seeks closer ties with Etihad

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Air France-KLM is aiming to expand its codeshare co-operation with Etihad Airways to a revenue-sharing partnership.

The Franco-Dutch airline group is discussing potential revenue-sharing arrangements as part of negotiations about closer ties with the Abu Dhabi carrier, said KLM chief executive Camiel Eurlings during a results briefing on 20 February.

Sharing revenue is the “key issue” in forging closer links with Etihad, says Air France-KLM chief executive Alexandre de Juniac.

While Air France-KLM has formed joint ventures with other carriers – such as SkyTeam partner Delta Air Lines for transatlantic traffic – negotiations with the Gulf carriers will be more challenging, because they are in a commercially stronger position and arguably less dependent on partnerships with their European competitors, says Eurlings. “The situation is different” with Middle Eastern airlines, because they are “growing very fast on a very advantageous cost base”, he says.

“If we go on revenue sharing – name it a JV [joint venture] or not – that will be a structural move that will tie us to them for a very long time. The fact that we are talking about these kinds of deeper co-operations is the first time this happens between a European company and Middle East carrier,” adds Eurlings.

De Juniac says it is not a necessary requirement to form a joint venture with Etihad for a revenue-sharing partnership.

Both executives were speaking in reference to Air France-KLM’s shareholding in Brazilian low-cost carrier Gol. De Juniac says the investment was made at Gol’s request.

Air France-KLM’s $100 million investment – $52 million of which will be used to acquire shares equivalent to 1.5% of Gol's total capital – was similar to Delta’s investment in the Latin American airline two years ago, de Juniac adds.

The shareholding is the basis for a "strong" long-term partnership with Gol which will include shared revenue management and systems, says Eurlings.