Singapore Airlines, Lufthansa team up

Singapore Airlines, Lufthansa team up

By I. Christianto

SINGAPORE (JP): The German airline Lufthansa and Singapore
Airlines (SIA) signed an agreement here yesterday to enhance
their global competitiveness.

The agreement, signed by SIA's deputy chairman and chief
executive, Cheong Choong Kong, and Lufthansa's chairman and chief
executive officer, Juergen Weber, covers a range of cooperative
measures including code-sharing, network and schedule
development, frequent flyer programs, product development, ground
handling, customer service, information and cargo operations.

Cheong said the agreement would take effect gradually
beginning in April next year.

"Our alliance with Air New Zealand and Ansett (of Australia),
which was announced five months ago, was said to be the worst-
kept secret. Our alliance with Lufthansa is no different. I'm not
sure why it is such a badly-kept secret, especially since we have
not departed from our policy of never commenting on alliances and
the like until we are good and ready," Cheong said, adding that
discussions began a year ago.

Rumors on the SIA-Lufthansa alliance first broke out a couple
of months ago and climaxed last weekend. The agreement focuses
only on the two airlines and there was no plan at the current
stage for SIA to join the Star Alliance which was set up last May
joining Lufthansa, the Scandinavian airline SAS, United Airlines
of the United States, Thai Airways, Air Canada and Varig of
Brazil, he said.

"Today's agreement is a bilateral agreement. I'm not saying
that we are not considering the Star Alliance," he said. "We do
not comment on anything concerning alliances or equity
investments until we're ready to do so," he added.

He said that the latest deal was an expansion of a long-
standing commercial relationship between the SIA and Lufthansa
set in September 1989 on a joint cargo service linking Singapore
and Frankfurt.

Weber said that alliances had become a common feature in air
transportation.

"Our customers have become much more global in their thinking
and choices. And this is where airline alliances come in. They
are cross-border cooperations. We unite in order to take
advantage of each other's networks, seek synergies and offer what
the customer is looking for: seamless travel and smooth
connections," he said. He added that Lufthansa was still eying
other chances to ally with other airlines.

Both executives refused to give estimated figures on their
companies' growth rates.

"It's too premature to predict," Weber said.

SIA's deputy managing director, Michael J.N. Tan, said that
weekly services of the two airlines between Singapore and
Frankfurt would increase to 22 by next April from the current 14
flights.

According to Cheong, SIA's alliance with Ansett and Air New
Zealand in the Southeast and with Lufthansa in the Northwest,
would make his company a more competitive player along the
Europe-Southeast Asia, Asia-Australia axis.

"Frankfurt will be our European hub, just as Singapore is
Lufthansa's for Southeast Asia and Australia. The knowledgeable
observer and analyst will understand why we in SIA are so pleased
with these agreements," he said.

SIA also announced yesterday that it had broken off its
alliance with Swissair and U.S.-based Delta Air Lines.

He said that the Global Excellence Alliance among SIA, Delta
and Swissair, in the meantime, would have to be redefined as the
result of the new partnership signed yesterday.

"Those joint activities that are not in conflict with our
Lufthansa alliance can continue if the parties concerned are
agreeable. Where there's a conflict, the activities will have to
be phased out at a mutually acceptable pace. Our code-sharing
with Delta between Singapore and New York is one such example,
since we will be code-sharing with Lufthansa on this route,"
Cheong said.

Lufthansa, formed in 1926, carried 41 million passengers last
year. The Frankfurt-based airline operates 314 aircraft serving
458 cargo and passenger destinations around the world. The
company, which accomplished almost 18 percent of its turnover in
Asia last year, booked a Dm 327 million (some US$192 million)
operating profit in the first half of this year.

SIA was established in 1971 after splitting from Malaysia-
Singapore Airlines which first flew in 1947. The air carrier
currently has 80 jets, serving 77 destinations in 42 countries.
The company, which booked an operating profit of S$441 million
(some $293 million) in the April 1996 to Sept. 1997 period,
carried over 12 million passengers in 1996.