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Airlines

Alitalia Joins Northwest/KLM Trans-Atlantic Joint Venture

Strategic Insights

— 2 min read

Northwest Airlines, Alitalia Italian Airlines, and KLM Royal Dutch Airlines have announced that Alitalia will join the Northwest/KLM trans-Atlantic joint venture. The three airlines signed a Commercial Cooperation & Integration Agreement and an Alliance Coordination Agreement in New York, marking a significant expansion of the partnership. The joint venture aims to increase air service, lower air fares, and improve travel experience for passengers. Northwest's executive vice president, Doug Steenland, praised the partnership, stating that it has produced "more air service and lower air fares" and that they look forward to extending these benefits to Alitalia's areas of service.

Key Takeaways:

  • Alitalia will join the Northwest/KLM trans-Atlantic joint venture, expanding the partnership to include three major airlines.
  • The joint venture aims to increase air service, lower air fares, and improve travel experience for passengers through codesharing, integration of frequent flyer programs, and reciprocal airport lounge access.
  • The partnership will also facilitate seamless service for connecting passengers, coordinate schedules at U.S. and Italian hubs and gateways, and allow for coordinated route and schedule planning throughout their global route networks.
  • The three airlines will make a joint application to the U.S. Department of Transportation for immunity from antitrust laws, similar to the Northwest/KLM application approved in 1993.
  • The benefits of alliances to the traveling public include lower interline fares, with alliance partners charging 36% lower fares than unaffiliated carriers.
  • Professor Jan K. Brueckner and W. Tom Whalen's study found that without the Northwest/KLM alliance, consumers would annually pay between $111 and $185 million more for air travel.
  • The joint venture will pursue opportunities in several areas, including pricing and inventory management, information systems integration, and procurement of goods and services.

Statistics:

  • The Northwest/KLM alliance has increased the number of trans-Atlantic flights by 87% since 1992.
  • Interline fares charged by unaffiliated carriers are, on average, 36% higher than the fares charged by alliance partners.
  • The estimated annual cost savings to consumers without the Northwest/KLM alliance is between $111 and $185 million.
  • The joint venture will implement cooperative cargo services, including the development of cargo products and coordinated use of cargo facilities and terminals.
  • The alliance has grown to include more than 500 cities in nearly 100 countries on 6 continents.

Sources:

  • "Northwest Airlines, Alitalia Italian Airlines, and KLM Royal Dutch Airlines Announce Expanded Trans-Atlantic Joint Venture", PRNewswire, May 10
  • Professor Jan K. Brueckner and W. Tom Whalen, "The Benefits of International Alliances to the Traveling Public", University of Illinois at Urbana-Champaign

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