SIA and Lufthansa get all-clear to jointly plan Asia-Europe flights

SIA and Lufthansa have been given approval by the Competition Commission of Singapore to jointly plan routes, schedules and fares.
SIA and Lufthansa have been given approval by the Competition Commission of Singapore to jointly plan routes, schedules and fares. PHOTO: SIA

Airlines agree to maintain capacity on routes; it will be more convenient for passengers to connect via S'pore

Singapore Airlines (SIA) and Lufthansa have received the official nod to jointly plan flights and schedules, as well as price and sell seats between Asia and Europe.

This is after they promised not to cut capacity, especially on the two routes that they dominate - Singapore-Frankfurt and Singapore-Zurich.

The airlines will also work together on flight planning and marketing activities for other Asia-Europe flights.

These include flights from Singapore, Indonesia, Malaysia and Australia, to points in Germany, Austria, Switzerland and Belgium.

The tie-up also includes revenue sharing on routes from Singapore to the European cities of Frankfurt, Munich, Dusseldorf and Zurich.

In giving the all-clear for the partnership, Singapore's competition watchdog set the condition of maintaining capacity to mitigate concerns that if allowed to freely cooperate, the two airlines could deliberately cut seats to increase fares.

The partnership with Lufthansa, one of SIA's closest allies, is a key strategic move by both airlines to strengthen their positions amid intense competition, especially from Middle Eastern carriers which have been expanding aggressively in Asia and Europe in recent years.

SIA and the German carrier are the only two airlines that operate direct flights between the cities, with a market share of more than 80 per cent.

In assuring the Competition Commission of Singapore (CCS) that the partnership would not compromise consumer interests, SIA and Lufthansa told the authority that they in fact plan to add seats to the two sectors.

To protect Singapore consumers, the airlines have also agreed to carry a stipulated minimum number of Singapore passengers on each route, every year.

The CCS, which took more than 10 months to approve the tie-up and sought public feedback for it, said yesterday it was satisfied with the commitments made by the airlines.

Additional capacity would bring more passengers and tourists to Singapore, benefiting the economy, it said.

The partnership with Lufthansa, one of SIA's closest allies, is a key strategic move by both airlines to strengthen their positions amid intense competition, especially from Middle Eastern carriers which have been expanding aggressively in Asia and Europe in recent years.

When the proposed tie-up was first announced about a year ago, chief executive of Deutsche Lufthansa Carsten Spohr called it a "cornerstone" of the airline's Asia strategy.

SIA spokesman Nicholas Ionides said yesterday: "Europe is an important market for SIA and the Singapore hub, and key to Singapore's position as a global hub."

The tie-up with Lufthansa - SIA's largest joint-venture partner - will make it more attractive and convenient for passengers to connect via Singapore.

This is critical as Changi Airport and SIA face competition from other partnerships, especially between Dubai's Emirates and Australia's Qantas, analysts said.

In 2013, Qantas moved its stopover point for European flights from Changi to Dubai, dealing a severe blow back then to Changi Airport and Singapore's status as a key hub between Asia and Europe.

A version of this article appeared in the print edition of The Straits Times on December 13, 2016, with the headline 'SIA and Lufthansa get all-clear to jointly plan Asia-Europe flights'. Print Edition | Subscribe