Air France and KLM have been holding talks on the possible inclusion of the Dutch flag carrier in the SkyTeam alliance. The proposed tie-up is closely linked to the attempt by Air France ally Delta Air Lines to tie up with KLM's long standing partner Northwest Airlines, and Continental Airlines.

The French and Dutch openly acknowledge that they have been talking to each other, although Air France is quick to dismiss press reports that it is prepared to take an equity stake in KLM. Air France chairman Jean-Cyril Spinetta has always made it plain he prefers a period of successful co-operation before equity stakes are taken.

The Air France-KLM talks have raised questions over how two fiercely competing hubs, Paris Charles de Gaulle and Amsterdam Schiphol, can co-exist within a single alliance. Delta's president, Fred Reid, admits that while an Air France/KLM link would bring certain benefits, the greatest challenge from such a tie-up would be the complexities of integrating the hubs of Paris and Schiphol into a joint network.

However, Delta senior vice-president for network and revenue management Subodh Karnik points out that Schiphol offers "some unique opportunities in Africa and Asia". He adds that Schiphol would not necessarily have the problem of duplication that is widely presumed.

Air France executive vice-president for network management and marketing, Bruno Matheu says that Paris and Amsterdam served different markets and that Paris is in some ways more for long-haul markets. He sees Europe as becoming "a multi-hub system rather than [one of] a few big hubs".

Air France suggests that with KLM having a strong presence in northern Europe, and Alitalia having a similar position in southern Europe, the two partners could offer SkyTeam passengers good coverage in these areas, with Air France concentrating more on transatlantic traffic. With the latter traditionally the most profitable for European mainline carriers, it remains to be seen whether an acceptable deal can be reached.

Source: Airline Business