Air France-KLM joins forces with Etihad in latest airline tie-up

Air France-KLM and Abu Dhabi flag carrier Etihad yesterday unveiled a plan to offer passengers access to some of each other’s services, in a sign of improving relations between European and Middle Eastern airlines.

The so-called “code-share” deal will enable Etihad customers to fly on KLM’s daily Amsterdam to Abu Dhabi flight, while Air France customers will be able to travel on the daily Etihad service between Paris and the emirate.

At the same time, Air France announced a new code share agreement with Air Berlin, in which Etihad Airways holds a 29 per cent stake.

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The deals are seen as a further step towards improved relations between European carriers and younger state-backed Gulf carriers, which are aggressively growing globally.

The latest agreement comes hot on the heels of news that Qatar Airways will become the first Gulf carrier to join the Oneworld alliance, which includes British Airways and American Airlines.

Meanwhile Australian carrier Quantas recently weakened its ties with Oneworld in favour of a tie up with Dubai-based Emirates. The ten-year deal was given the green light by the Australian government yesterday.

Regional rivals Emirates, Etihad and Qatar Airways were among the few major airlines to stay out of a global system of alliances that developed in the 1990s as the industry sought to cut marketing costs and reduce empty seats.

Etihad said the arrangement with Air France-KLM – which falls short of being an all-out alliance – would be the first phase of a much larger strategic partnership.

The agreement will also offer additional lucrative long-haul routes to Air France-KLM, enabling the carrier to save on marketing expenses at a time when it is cutting staff and trimming its short-and medium-haul fleet to lower costs.

The Franco-Dutch firm is facing increasingly tough competition from low-cost carriers in Europe, while Gulf carriers are also eating into its long-haul premium business. Air France is in the process of cutting more than 5,000 jobs as it tries to return to growth.

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