The UK's latest charter carrier is JMC Airlines, which was formed earlier this year through the merger of Flying Colours and Caledonian Airways. Preussag last year acquired a majority shareholding in Thomas Cook, previously part-owned by German charter airline LTU, which has since become part of SAirGroup. Flying Colours, which Thomas Cook acquired in 1998, was merged with Caledonian following the acquisition of its parent, Carlson Leisure, in 1999. The entire holiday group was rebranded at the start of the 2000 summer season as JMC, with Carlson Companies of the USA retaining a 22% shareholding in the group.

Preussag's plans for consolidating the operations of airlines JMC and Hapag-Lloyd under the Preussag umbrella had reached an advanced stage by the time the German parent launched its bid for TTG, while simultaneously pledging to divest its controlling stake in Thomas Cook.

The Preussag move, was cleared on by the European Commission on 26 July opening the door to a tie-up between Hapag-Lloyd and Europe's biggest charter carrier Britannia Airways, while JMC awaits the outcome of the next round of expected consolidation among the remaining tour operators.

Although the plans for co-operation between JMC and Hapag-Lloyd have proved to be stillborn, they nevertheless serve as an interesting case study into what can potentially be achieved through such cross-border tie-ups.

Under the stewardship of Wolfgang Kurth, Preussag tour operator subsidiary TUI board member and Hapag-Lloyd managing director, working groups had been set up to identify and secure annual cost savings estimated at $10-17 million for the two airlines. These were to have been derived mainly from areas such as maintenance, information technology, fuel purchasing, ground handling, insurance, aircraft leasing and catering.

Kurth says the co-operation was "beginning to work quite well" and says he was "surprised" at the magnitude of the synergies that could be achieved.

The airlines operate a combined fleet of some 60 aircraft and a joint fleet policy was being formulated, focusing on the 737-800 and 757 for European routes and almost certainly the Airbus A330-200/300 for long-haul and high-density missions. All of JMC's A320s were to have been phased out by 2004, to be replaced by 757s.

"We could identify the benefits of going to a standard fleet," says Kurth.

He admits that the aircraft acquisition process was initially "cumbersome", with JMC's plans to order 757-300s held up by several months. The acquisition first required approval by the Thomas Cook board, then by the TUI board, and finally by Preussag.

"Everyone realised we had to improve the process," says Kurth, who adds that the lessons learnt from the 757-300 experience were to have been applied to the planned joint acquisition of long-haul widebodies.

The widebody acquisition project got under way in December 1999, and detailed evaluations of the competing Boeing and Airbus products were due to have been completed by July this year, contract negotiations by September and final board approval by February 2001.

It is likely that Hapag-Lloyd's long-haul requirement will now be combined with that of Britannia Airways, which has a long-standing need for additional high-capacity widebodies.

Source: Flight International