The prospect of establishing franchise operations in the USA, which is part of the latest EU-US Open Skies package, has received a muted reaction from European carriers so far.
The US offer of a franchise arrangement rather than more liberal ownership and control laws has met a cool reception from the most likely user of such a scheme, the Virgin Group. "We don't see that as a substitute at all," says Virgin Atlantic director of external affairs Barry Humphreys.
Under the franchising option, European carriers would be able to use their brand for domestic US operations. "Lufthansa will be able to affix her name, her mark, her colours, to sell her know-how with an American company for American interior transport," says Transport Commissioner Jacques Barrot. According to a Brussels-based lawyer: "Its quite innovative, but its not the same as having management control, even without voting control. It's a much more fragile relationship."
Humphreys adds that plans to allow European-owned airlines to fly to the USA from Africa are also insignificant. Virgin Nigeria's request to start US services was turned down by the US government last year and Humphreys says it was made clear that this would not have happened if a carrier-unaffiliated to Virgin or British Airways had made the request.
BA already has franchise arrangements with several carriers, including British Mediterranean, GB Airways, Loganair, Sun Air and South Africa's Comair. But it declined to comment on the opportunity created by the Open Skies proposal to establish a franchise in the USA.
While BA is an outspoken critic of the deal, other major European carriers have put their weight behind the proposal but they say it is too early to say whether they would be interested in establishing franchises in the USA.
Lufthansa chief executive Wolfgang Mayrhuber, while admitting that the US offer falls short of what Europe was seeking, describes the deal as "a step in the right direction".
"It is disappointing, but you have to accept this. That's the result of negotiations," says Mayrhuber, adding that harmonised security arrangements would benefit passengers. Mayrhuber says that he does not see any need for Lufthansa to invest in European or US airlines. "In the short-term that is irrelevant for us."
But he stresses the caveat "for the time being" and repeated his assertion, which has also been made by Air France-KLM chief executive Jean-Cyril Spinetta, that Europe needs to build strong carriers that can punch their weight on a global scale.
"Europe has to decide whether it wants to link into rest of the world or leave it to others," Mayrhuber says, adding that Lufthansa has the capacity to invest, but will only do so if the price is right. "Things have to add up."
Source: Flight International
