The Lufthansa Group has participated in three strategically and commercially important joint ventures: the A++ transatlantic joint venture with United Airlines and Air Canada, the J+ bilateral Europe/Japan joint venture with All Nippon Airways (ANA) and the commercial Europe - Southeast Asia and Southwest Pacific joint venture with Singapore Airlines.
The A++ transatlantic joint venture
The A++ multilateral, transatlantic joint venture exists between Lufthansa – together with Austrian Airlines, SWISS and Brussels Airlines – Air Canada and the new United Airlines (UA with CO). A++ emerged from previous bilateral joint ventures between Lufthansa and United Airlines and Air Canada, respectively. It covers all of the airlines’ North Atlantic routes and associated connecting flights. A++ offers customers a choice of nearly 10000 transatlantic flights daily between Europe and North America (USA, Canada) to 570 destinations. These are linked to hundreds of connecting flights from the airlines’ hubs.
The J+ Europe/Japan joint venture
This joint venture between Lufthansa and ANA, Japan’s largest airline, was launched in early 2012. Austrian Airlines and SWISS joined the strategic joint venture in April 2013. The cooperation covers all 196 weekly flights on 11 of the participating airlines’ routes between Japan and Europe.
The commercial Europe - Southeast Asia and Southwest Pacific joint venture
The new commercial joint venture the Lufthansa Group and Singapore Airlines (SIA) signed back in November 2015 is bearing its first fruit. Collaboration partners Lufthansa, Singapore Airlines (SIA) and Swiss International Air Lines (Swiss) are expanding their codeshare agreements.
Lufthansa and Swiss customers can benefit from new codeshares with Singapore Airlines on further routes in Southeast Asia and the Southwest Pacific.
Singapore Airlines customers can now make the most of more than 20 codeshare routes via the Lufthansa Group’s Munich and Zurich hubs to travel comfortably and conveniently to and from various destinations within Europe.
Close partnership in many areas
The basic principle behind the joint ventures is so-called “metal neutrality” which is achieved through close cooperation in capacity and price planning as well as revenue management. This allows travelers to freely combine flights from a harmonized range of offers and take advantage of additional travel options and the increased availability of special fares and connecting flights. Passengers do not need to choose a preferred partner when buying a ticket – instead, they are “neutral” in terms of the “metal” they fly with. For the airlines to reach their targets together, revenues are managed in a single “pot,” itemized according to the share of production and then distributed.
Unlike the traditional form of cooperation in an airline alliance, joint ventures are subject to much stricter legal regulations. The prerequisite for such close coordination is antitrust immunity from the competition authorities based on the contractual arrangements governing the joint ventures. Austrian Airlines, Brussels Airlines and SWISS in the Lufthansa Group have also all been granted antitrust immunity with the joint venture partners.
Advantages of joint ventures
By coordinating key areas and virtually bundling resources, airlines can make better use of available capacity. This becomes easier with harmonized, combinable fares and the joint marketing of flights, which takes advantage of the partners’ sales strength in their home markets. Corporate customers and travel agencies in particular benefit from having a single point of contact for all airlines when the airlines bundle together a wide range of offers in an easy-to-manage agreement like this. Individual travelers benefit most from the ability to combine segments to reach their destination and from the increased availability of special fares and additional seating capacity so that they can use their bonus miles for free tickets.
Jointly marketing flights also reduces the economic risk of adding new routes – and sometimes makes these new routes possible in the first place.
A joint venture (JV) is currently the most intensive form of cooperation in an airline alliance. Unlike the manufacturing sector, the companies here contribute production and management resources instead of capital. This form of cooperation is contractually agreed and is therefore also known as a contractual joint venture.