Lufthansa (LH) finally decided to pull the trigger today and purchase British Midland Airways, or bmi. The German carrier, who already has a 20% stake in the company will be taking over a majority share and absorbing the airline through the beginning of next year.
The merger had several strategic purposes. Primarily, as we’ve been seeing all this past summer, airlines have been keen to hook up to save on crazy fuel prices, operations and labor costs. Delta and Northwest are pulling the same hijinks in the States, and we’ve been hearing all sorts of crazy rumors about Continental and United and American. So in a way, it’s sort of a natural progression for the industry.
The other big advantage of to the acquisition is that now LH will have a larger share in landing slots at Heathrow, one of the world’s most sought after airports. This greater share will leverage the airline better against British Airways, who have the lion’s share of spots, and hopefully increase transatlantic revenue.
Conversely, from a miles perspective, many are considering this merger as the unfortunate loss of another great frequent flyer program. bmi’s Diamond club has always been one of the most generous, easy to qualify for programs, and as it gets usurped into Lufthansa’s Miles & More program, many are mourning the loss of their easy upgrades and lounge access around the globe. I suppose all good things have to come to an end.