A conflict of interests over US partners has spelt the end for Canadian Airlines International's long-standing relationship with Lufthansa.

American Airlines, which has a 33 per cent stake in the Canadian carrier, moved to strengthen further the ties with its northern partner when it applied for antitrust immunity with Canadian last year.

This prompted the German flag to give notice of cancelling its codesharing agreement with Canadian from June. Canadian regional director Europe, Steve Taggart, says the link with American was a sticking point with Lufthansa owing to its own partnership with United. 'Our agreement with American did complicate things and was a sensitive issue with Lufthansa,' he says.

The two carriers had linked their frequent flyer programmes and would have cooperated on 19 flights in the 1996 summer schedule. Canadian says its own capacity increase will offset the loss of the Lufthansa codeshares. Taggart says the relationship was a 'profitable one'.

The alliance originally helped Canadian boost capacity across the Atlantic, which suffered from the government's defunct 'divide the world policy', in which Asia-Pacific was Canadian's market and Europe was Air Canada's.

Now neither Canadian nor American have significant European alliances. Taggart says Canadian is in talks with several European carriers which he hopes will lead to some marketing agreements being in place by mid-1996.

And Air Canada, which already codeshares with United, is talking to Lufthansa about a major alliance (see feature on page 44).

Sara Guild

Source: Airline Business