Also less than certain is the response of competition authorities in Brussels to the deal, although approval for SAir's recent takeover of Sabena would appear to have set a clear precedent.
However, the proposed BA-KLM merger is on a different scale to a Swissair/Sabena deal and analysts point out that it is not just the core London-to -Amsterdam route that is likely to come under scrutiny if and when BA and KLM get as far as the approval process. A wider measure could be based on the combined dominance of London and Amsterdam as a European hub system (see table right).
Elsewhere, the merger would have limited impact on the share of slots at the two home hubs in London and Amsterdam. The only exception is at London Stansted, where the combination of the two carrier's respective low-cost start-ups, Go and Buzz, would create a 40%share, overtaking the current leader Ryanair on 30%. Such shares are still lower than other of Europe's incumbent majors at their main hubs.
Any merger would also have to satisfy foreign ownership requirements, leaving KLM as a majority-owned Dutch company. But the two carriers have the luxury of waiting to see how Swissair and Sabena manage to tackle the same issue. They are considering separating out ownership of traffic rights into a separate national company, while merging all other operations. The issue may also be eased for BA/KLM by a long history of complex anglo-Dutch mergers such as Royal Dutch Shell, Unilever and Reed Elsevier, the publisher of Airline Business.
The tougher question is expected to hinge on KLM's valuation - the issue on which previous talks foundered eight years ago. Commerzbank analyst Chris Tarry argues that on the basis of underlying market capitalisation, stripping out share movements since the merger was announced, BA would represent 87% of the combined company's worth. KLM is now rumoured to be negotiating on the basis of a 30% share, which itself represents a climb down from the 45% it had demanded in 1992.
Across the Atlantic, meanwhile, the planned merger of United Airlines and US Airways also faces hurdles. A round of Congressional hearings kicked off in June with lawmakers making their scepticism of the deal known.| BA/KLM airport share of slots | |||
|
| Share of frequencies | ||
| Airport | BA | KLM | Total |
| London Heathrow | 38% | 2% | 40% |
| London Gatwick | 67% |
| 67% |
| London Stansted | 21% | 19% | 40% |
| Amsterdam Schipol | 4% | 53% | 57% |
| Note: Stansted share includes Buzz and Go. Source: OAG scheduled data May 2000 | |||
| Weekly frequencies to selected destinations | |||
| Destination | Paris CDG Air France | Frankfurt Lufthansa | London/AMS BA/KLM |
| Athens | 21 | 21 | 41 |
| Brussels | 35 | 46 | 97 |
| Copenhagen | 28 | 60 | 67 |
| Lisbon | 28 | 21 | 48 |
| Madrid | 61 | 21 | 133 |
| Oslo | 21 | 35 | 82 |
| Note: London includes LHR and LGW Source: Commerzbank/Airline Business | |||
Source: Airline Business
