Global aviation in Europe is very much controlled by the ”big three” European airline groups — Air France-KLM, IAG, and Lufthansa Group. These airline groups strategically try to buy up independent airlines, largely in order to prevent competitors from doing the same.
Continue reading: Lufthansa Wants To Invest In TAP Air Portugal
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Government aid would break EU rules, but an airline owning so many European airlines isn't a problem? Lufthansa excels at being mediocre. That said, the appeal of TP is undeniable. Demand to / from Portugal is off the charts, and its not just LIS (which is an awful hub for transfers) but also OPO. LH would benefit from TP's exposure to Brazil and would keep TP in Star Alliance.
Out of the major three European groups Lufthansa Group buying TAP wouldn't be good for passengers. Especially after their pursuit of ITA. Starting with Lufthansa's awful choices in catering and ending with TAPs role in keeping fares competitive not just to South America but also North America and within Europe.
Unlike ITA (which never should have been approved by EC), I don't see much problem with LHG acquiring TAP. There is no geographic overlap. It would be sad to see TAP brought down to LHG standards, as they're a pretty nice airline, but I don't see a problem with such transaction. For IAG on the other hand it would be virtually impossible to get approval since Iberia is just around the corner, serving more or less the same market. AFKL buying TAP would be very nice and probably not problematic, but they are currently spending their cash on SAS so I don't see this very likely.
Government aid has fixed rules, basically you can't have a government-financed airline at all. At most, a temporary scheme may be provided to get through "tough times". As for LHG "owning so many airlines", it's really one airline just with different brands. In the US you have the big 3 operating everything under one brand, in Europe it's split into smaller local brands for historical reasons, but otherwise it's the same concept. Plus in Europe we also have strong LCCs in addition to the big 3.
Saying that TAP would be brought down to LHG standards is a pretty bold statement. While their crew is nicer (a bit more friendly than LHG) their overall product certainly is below LHG standards. Admittedly I have not flown them recently but before the pandemic it certainly was. Also I can only judge the business class products as I hardly ever fly eco.
And then, what would be very nice if AFKL would be buying them? Do you mean product-wise? Comparing LHG and AFKL I do not see much of a difference and between the two groups. Being Platinum member with AFKL Flying Blue and HON Circle with LHG I think I am able to judge the product of the two groups.
On your take on EC competition approvals I totally agree.
TAP fares 'across the Atlantic' aren't cheap at all. They do have great deals in both classes on their North American routes (including CUN), but they rarely offer anything attractive to Brazil, and awards are also hard to find - presumably they get good yields on GRU/GIG because business pax value the multiple frequencies and everywhere else because they are the only game in town.
Funny, quite a few people are more or less saying enjoy the decent food on ITA while you can, before LHG starts cost cutting with that airlines catering budget. While TAP isn't one of the top airlines in terms of it's catering, it's still above average...for now.
I personally think that AFKL is a better fit for the TAP network, and will also be easier to integrate from an organisational culture perspective, but a LH minority stake would suit me really well as I have both *G status and a general preference for the alliance. A full takeover would be pretty bad for competition- maybe the transatlantic overlap isn't huge, but TAP offer connections to regional Spanish airports, Morocco, and West Africa (both continental and islands) where LHG can be one of a small number of options if travelling from/to the rest of Europe.
For a long time IAG has been eyeing up TAP. Since their failure to takeover Air Europa which was blocked by the EU on, this has become even more of a goal to consolidate their position in that part of Europe so I think there will be a bit of bun fight if Lufthansa is now moving in to seal a deal.
From a pure Star Alliance perspective, this is a needed development. The loss of SAS, a founding member, probably still stings a bit and the only other group I could see aggressively pursuing this is AF/KLM, which would not be a good development for Lufthansa and Star. I have flown TAP in the past and personally neutral as to the impact this could eventually have on the soft and hard product vs "LH standards"... you'd gain some, you'd loose some
TAP has been improving a lot imo, but there’s one really major thing holding them back, which is that LIS airport is way too small. Nearly every other Lisbon flight is remote stand departure or arrival.
I appreciate how close it is to the city center, but the capacity is a big problem for them. Truthfully, there isn’t a lot of value for LH group in investing in TAP, other than to block out IAG group.
the big advantage of TAP is Brazil - Neither sky team nor Star alliance have a reliable partner there, and TAP has 12 destinations in Brazil. Less important but relevant is Venezuela where TAP is the only European star alliance carrier flying there alongside TK. to some extend Africa. North America has been growing massively. IAG, AFKL and LH will want to invest. a new airport has been announced. A remote stand can be annoying but I never understood why walking so much and taking trains is any better like in CDG. Or Istambul - what's the purpose of having stands everywhere if you end up walking 1 hour sometimes!
TAP business flights from Europe to North America are usually ridiculously cheap—similar to Icelandair. And they offer cheap one ways which most full service airlines don’t.
Not sure IAG/TP would be such a challenge. Yes they have a Europe - South America overlap but they look at route connections not continental overlap. Their routes to South America are quite complementary. Maybe overlap in GRU and possibly GIG but that is it. And competition from LH, AFKL, LATAM and Air Europa is quite strong for those airports.
For business flights within Europe TAP has much better catering. I consider Lufthansa catering on European flights to be in last place. My last flight with Lufthansa I had to ask the purser why the food for sale in Economy (they had a menu) looked better and more plentiful than the poor excuse for it offered in business.
I see a huge big difference in quality of the food offered on Air France vs Lufthansa. KLM was on par with LH for a while but very slowly might be improving. IB, TAP, and others are ahead of LH as well.
That's why I think LH acquiring TAP would be bad for competition. Lufthansa strategy seems to acquire as many European airlines as they can and then standardize them to the same low standard. Lufthansa flights are consistently the lowest fare in European business but I still won't book them because the product is sub par.
And I'm AFKL Platinum too as well as Star Gold and BA Silver at the moment so get around a bit.
I mean why stop with TAP? Maybe Lufthansa should buy IAG and AF/KL as well and just basically own every airline in europe instead of the current NEARLY every airline in europe.
I am sure it will be waved through by the EU regulators with their very obvious favouritism to LH/Germany.
IAG purchase small Spanish company Air Europa - on no, regulator thinks BAD for consumer.
LH purchase ITA oh yes GOOD for consumer.
Farcical.
Iberia, Air Europa and Turkish still all fly to Caracas. Not TAP, so far as I’m aware.
The competition hurdle for IAG may be over-stated: TAP and Iberia have largely complementary networks. Much less troubling for competition regulators than Iberia+Air Europa networks.
Latam is the largest international carrier in Brazil and, while it is not part of SkyTeam, it is partially owned by DL which has a JV with LA across a half dozen S. American countries.
Gol has multiple relationships across alliance lines
S. America has simply not "fallen in line" with alliance relationships as Europe has.
IAG's purchase of Air Europa is problematic due to geographic proximity. Yes, the same can be said about LHG's acquisition of ITA, but that was backed by two large member states, EC doesn't really have the power to stand up against that. Who's gonna back IAG? It's effectively a British company and I don't think Spanish government cares much about Air Europa.
Exactly my point Samo. A double standard because of politics.
The due diligence of the competition authorities is a joke.
That’s not quite how EC Competition Regulation works lol. Proximity has nothing to do with it. It’s the degree of competition on routes. Iberia and Air Europe was a concern because there was a loass of competition on domestic Spanish routes and some routes were going to be monopolised by IAG. That isn’t really the case with IB/TP. MAD-LIS and OPO-MAD may be a concern but there is low cost competition.
Except not true. Most EU flag carriers are under some form of govt ownership. For example…
AFKLM - FR 28.6% NL 9.3%
Air Baltic - Latvia 80%
Croatia - Croatia 100%
Finnair - Finland 56%
KM Malta - Malta 100%
LOT - Poland 100%
Lufthansa - Germany 20%
Luxair - Luxembourg 78%
SAS - Denmark 26%
TAROM - Romania 97%
Basically IAG, Ryanair and EasyJet are the only large European airlines without government ownership.
Portugal won't sell TAP to IAG. Plaine simple. They'll use IAG interest to get the best possible deal from AFKL or LH.
As someone who frequents Portugal often for pleasure, family and business: I welcome this very much. As much as tourism has grown in Portugal and Lisboa specifically, the potential is far from maximum potential and their airport is a culprit but then with Lufthansa as an owner it can help push for expansion and the big airport being built or being put into action across river - still a good spot only 20-30 min from city and cheap ass Ubers - starting the project which will take 5-10 years once approved. TAP also needs the tightening of processes and customer service it lacks dearly, and I hate saying this but it does, that Lufthansa could bring. right now, there are very few direct from usa to Lisbon flights and this could help with that.
the commenter re: F&B -- what an asinine remark considering how subjective and not rally accurate to this as they wouldn't be German food! sheesh
TAP needs to grow. id love a direct flight to Portugal from DFW. theres def a market for it and with DFW expanding and creating a whole new terminal - its def one of routes begging to be added
TAP has lacked dearly on the inner workings beyond their shiny user interface when issues occur and Lufthansa can help with that. hopefully bc I hate it so much.
Let's see but I look forward to TAP realizing its potential along with the country of Portugal and it benefit the country as well. a big operation, a bigger work force, etc etc all helps the country and thats all I want. viva Portugal!
To be fair, in terms of development, I could see TP better on AFKL (and if AFKL could, they'll also acquire UX, and there you have powerful Latin American market)
As from a certain forum, as much as it brings alliance network balance, LH buying TP wouldn't be good for their business, giving their recent track record with another stake buying airlines (OS, LX, etc) which must feed from their main hub at MUC / FRA, which is why SAS exited *A on the first place