Rival airline claims KLM could pay high price for Martinair

Date: 29/04/1999

By Peter Chapman

EU COMPETITION officials are poised to make Dutch airline KLM pay a high price for taking full ownership of long-haul holiday airline Martinair, according to its biggest charter rival.

Under the deal, KLM plans to buy the 50&percent; of Martinair which it does not already own from transport, shipping and logistics group Nedlloyd, adding to its already sizeable charter empire.

But Ron Franken, marketing and business development manager for rival Holland Air, insists that KLM must pay dearly for the deal by surrendering valuable take-off and landing slots at Amsterdam's Schiphol airport.

Otherwise, he argues, his airline - which transports nearly a quarter of the Netherlands' 3.2 million passengers a year - and tour operators will not be able to compete fairly with the bigger, stronger KLM group.

Franken's call for significant concessions from KLM follows the introduction of a tough new noise control regime at the airport which will limit market growth to around 5&percent; a year, compared with the 8-12&percent; growth rate notched up by charter airlines in the past.

” If there were no constraints, we would have no objections to the deal. However, we see our growth and our competitive reaction vis-à-vis this new grouping flattened,” said Franken.

To make matters worse, he added, KLM would be able to mix and match slots between airlines in its group if it wanted to offer extra charter flight seats to soak up demand for Mediterranean and long-haul holidays, while Holland Air and rivals would have little access to new slots.

” They are a big group. Although they are not strictly speaking meant to, they can switch certain slots between themselves. There is nothing to stop them,” he said.

Holland Air is demanding that its share of new slots at the Dutch airport be doubled to 5&percent; from 2.5&percent; and says tour operators running charter flights should receive a similar boost, with all the extra slots coming from KLM and its partners.

Franken claimed that European Commission officials had “quite clearly” shared his company's analysis of the case at a special hearing held behind closed doors in Brussels earlier this month, although he conceded that there would be some “political horse trading” before the Commission took a final decision.

A spokesman for Acting Competition Commissioner Karel van Miert stressed this week that no decision had yet been taken by his directorate-general, but hinted that the question of adequate slot availability would be uppermost in their minds.

The spokesman said there was a questionmark over whether there were enough slots available at Schiphol “after a decade-long discussion on the need for a second airport built Hong-Kong style into the sea “.

But KLM spokesman Peter Wellhüner insisted that his company should not be forced to make concessions, arguing that the planned deal would not have an impact since it already owned 50&percent; of Martinair. He also insisted that “sufficient” slots were available at Schiphol.

A Commission decision on the deal is expected in June.