Skyteam bundles its forces in Asia

Despite the presence of Korean Air and China Southern, alliance Skyteam continues to lack visibility in Asia, a comment which does not seem to please Pierre Gourgeon, president and CEO of Air France-KLM, the driving force behind the alliance.

“This is not true! We have a very strong presence in Korea, Japan, and China, especially with our partners Korean Air and China Southern Airlines,” he said during a recent press conference in Paris. However, he is prompt to recognize that Skyteam remains weak in markets such as south Asia (India) and southeast Asia.

Year 2010 should bring welcome changes. Gourgeon confirms that Vietnam Airlines will enter the alliance by next year helping Skyteam to cover extensively southeast Asia from both Vietnam hubs in Ho Chi Minh City and Hanoi. Vietnam Airlines is now engaged into a modernization process prior to becoming an official member in June 2010. Since 2007, the airline has ordered 36 Airbus A-321, two Airbus A-350 900XWB, 16 Boeing B787 Dreamliners, and 11 ATR 72. Mid-November, the airline announced its intention to acquire four Airbus A380 with the contract being possibly finalized during the first quarter of 2010. Vietnam Airlines has currently a fleet of 52 planes flying 19 domestic and 25 international routes with a total passengers’ number of over nine million. It expects to triple its fleet and passengers number by 2020.

The airlines’ network has been reorganized to shorten transit time and improve transfers at HCM City airport, and it has recently increased the number of its weekly flights to Paris CDG, Air France-KLM’s main hub in Europe. Vietnam Airlines now flies eight times per week, up by two frequencies. Europe represents a turnover of €165 million in 2008 with three flights to Russia, Germany, and France. “We are currently working all together to bring Vietnam Airlines IT system to Skyteam’s standards”, said Gourgeon.

A new partner to be officially confirmed soon is Indonesia’s national carrier Garuda. “We are very pleased to support the candidacy of Garuda, a long-standing partner of us in Asia,” explained Peter Hartman, president and CEO of KLM. “In our last meeting, we decided to support Garuda’s process into Skyteam in conjunction with Korean Air and Delta Air Lines. I believe, however, that the process would take a year until Garuda’s official entry,” he explained. Year 2011 is also seen as the possible entry date by Garuda management as recently confirmed in exclusivity to eTurboNews by Emirsyah Satar, president and CEO of Garuda. “The soonest, the better. We now work on upgrading our reservation’s system and look to expand our fleet from 66 to 116 aircraft by 2014”, said Satar.

Air France is also looking closely at Japan Airlines. Hearing about the airline’s financial difficulties, Air France-KLM has joined Delta Air Lines and Skyteam to bid for a US$1.02 billion financial pakage to save the airline. The proposal by Delta and SkyTeam includes, among others, a US$500 million equity injection from SkyTeam and a US$300 million revenue guarantee from Delta. The Japanese carrier has just received the government’s approval for a loan of about yen 100 billion from the Development Bank of Japan bridge loans to keep itself operational after being granted authorization by the government. Gourgeon remains cautious about the outcome. “I can’t say more about it. It all depends [on] discussions’ results between the Japanese government and JAL management. We still do not know if the Japanese government will allow the entry of a foreign carrier into JAL ownership,” he said.

In India, Air France seems to have temporarily abandoned the idea to link up with an Indian carrier. “The air travel market is currently very difficult with few good opportunities to find a partner,” said Gourgeon cautiously.