SkyTeam Welcomes Garuda Indonesia to Its Fold This Year

AMSTERDAM, KOMPAS.com -SkyTeam, an airline alliance that counts Air France-KLM (AF.FR) and Delta Air Lines Inc. (DAL) among its members, Thursday said it plans to invest in its priority treatment service for high-spending customers, as it jostles with rival alliances for a larger slice of a competitive airline market.

“We'll invest around EUR10 million in the standard SkyPriority service for our top passengers in the next two years,“ SkyTeam Chief Executive Michael Wisbrun said during an interview with Dow Jones Newswires.

“From previous experience at Delta Air Lines, which was the first to introduce SkyPriority in 2010, we've learned that a sales increase of 1% to 2% can be established through the loyalty of existing passengers and the attraction of new ones. At the SkyTeam level I think it's possible to gain additional sales of EUR100 million to EUR200 million annually,“ said Wisbrun, a former head of Air France-KLM Cargo.

The alliance also aims to cut costs by standardizing its airlines' ground handling services, he said. He expects the savings to be “considerable“ but wasn't specific.

“At London Heathrow, for instance, we've been able to save 50% on handling by concentrating the SkyTeam airlines at Terminal 4.“

Wisbrun said that from early 2013 all first- and business-class passengers and Elite Plus Card holders will have priority on all handling processes at the more than 1,000 airports where SkyTeam airlines operate. Priority treatment will be introduced in the coming months at airports including Amsterdam, Atlanta, Guangzhou, Nairobi and Taipei.

Much of SkyTeam's investment will be directed toward training for ground handling staff, as well as handling-related costs such as signposting and boarding cards, said Wisbrun.

He said the move will enable SkyTeam to take a competitive edge over rival alliances Star and Oneworld.

SkyTeam is this year welcoming Middle East Airlines from Lebanon, Saudi Arabian Airlines, Aerolinas Argentinas, Xiamen Airlines and Garuda Indonesia to its fold, and aims to add partners in India and Brazil in the future, Wisbrun said.

“In the most important global markets our presence is sufficient, with a No. 1 or 2 position in the U.S., China and Europe,“ he said. “We now cover 80% of the world and 95% of the--to us--relevant, highly profitable markets.“

Wisbrun said the alliance's next priority will be to improve passenger transfer processes between flights operated by different SkyTeam carriers.

On the industry as a whole, he said: “Consolidation on continents will mainly take place through mergers such as Air France-KLM and Delta that bought Northwest Airlines. Consolidation between continents will continue to take place primarily through alliances.“