SkyTeam completes slot shuffle

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Northwest has joined alliance partners Continental and Delta in revealing plans to serve London Heathrow

Northwest Airlines and KLM are expanding their highly profitable transatlantic joint venture to include three new routes from London Heathrow, made possible by EU-US Open Skies.

The two carriers in mid-December celebrated the 10th anniversary of their landmark joint venture. Two days prior to the celebration in Amsterdam, Northwest unveiled plans to launch by mid-2008 daily services to Heathrow from Detroit, Minneapolis and Seattle using six slot pairs leased from KLM.

The new routes will give the two carriers 275 weekly flights across the Atlantic next summer, a 40% increase over their summer 2006 schedule (see chart). Northwest and KLM say they have been expanding the joint venture as fast as they can get their hands on extra aircraft.

"The Atlantic profitability has been punching above its weight," says Northwest vice-president of international alliances Nat Pieper. The joint venture now accounts for 10-15% of Northwest's revenues and 20-22% of KLM's revenues but a much higher proportion of their profits. The venture now generates $4 billion in annual revenues, a 65% increase compared with the $2.4 billion generated in its first year, despite only a 13% increase in capacity over the 10-year period.

To make room for Northwest's new Heathrow operation, KLM is reducing its Heathrow-Rotterdam service from three to two daily flights and shifting its two daily Heathrow-Eindhoven flights to London City. KLM will keep all 10 of its Heathrow-Amsterdam flights for now but senior vice-president network Pieter Elbers foresees this potentially dropping to seven to make way for more transatlantic flying.

Air France earlier unveiled plans to cut five of its 12 Heathrow-Paris flights to make room for five new transatlantic flights. ­Elbers says seven flights is the minimum needed to feed all banks at both Amsterdam and Paris but Air France-KLM was willing to reduce London-Paris flights faster due to stiff ­competition from high-speed rail operator Eurostar.

Northwest will join KLM, Continental and Delta Air Lines at Heathrow Terminal 4. Air France was planning to also move to Terminal 4 by the end of 2008 but now says it will likely have to stay in Terminal 2 a few more months than expected.

Delta will lease three slot pairs from Air France to support two daily flights from New York JFK and one from Atlanta. Air France will use one of its other extra slot pairs to launch Heathrow-Los Angeles, while the final pair has been leased to Continental. In November, Continental unveiled plans to launch two daily flights from both Newark and Houston, mainly using slots acquired from non-SkyTeam carriers.

Elbers says the leasing of seven of Air France-KLM's 27 slot pairs to US carriers follows a major reshuffling of its Heathrow slots to support transatlantic flight times. Air France-KLM has been working with SkyTeam's three US carriers on the slot shuffle since shortly after Open Skies was unveiled in March 2007. "We've burned a lot of time on the phone," Pieper says.

Star Alliance member US Airways also announced in November it had acquired a single slot pair at Heathrow to support one daily flight from Philadelphia. The two US carriers that now have access to Heathrow, American and United, are also expanding their Heathrow operation by one additional frequency each.

Atlantic profitability has been punching above its weight, says Nat Pieper