Lufthansa to purchase bmi

by Grant Martin on

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.

How much are those Heathrow landing slots worth?

by Grant Martin on

Now that Open Skies is in full effect, carriers left and right are scrambling to take advantage of all of the sweet landing slots in the EU’s congested airports.

Case in point, London‘s Heathrow Airport. Most travelers flying into the United Kingdom prefer landing at Heathrow because of better connections and proximity to London via the Tube. But landing slots at LHR are all full, so whenever one opens up, competition is hot to fill it in. Similarly, carriers want to hold on to their high-value slots to make sure that any competition doesn’t come in and snatch up some capacity.

So what do you do when you can’t book enough passengers to justify flying in and out of your slot? This case might show up if, say hypothetically, you’ve been cutting capacity like crazy to save cash and demand is low because travel is so expensive. Sound like any economy you know?

In that case, what do you do with your landing slot? Well, according to BMI, or British Midland Airways, you keep flying. Without passengers.

British Airways did the same thing earlier this year to try to preserve landing slots and we figured that the subsequent disgust with their MO combined with the price of fuel would be a deterrent for other carriers to do the same thing. But I guess those slots are just too valuable.

Why not at least auction off the empty seats on the aircraft? I know that you have to pay flight attendants if you have passengers onboard, but I feel like you can make enough to pay a few employees and offset the price of jet fuel a bit. But I guess that would make too much sense.