BA and KLM agree to pool services on Middle East routes

British Airways and its Dutch counterpart KLM yesterday took the first tentative step towards a possible full-scale merger by agreeing to pool services to three Middle Eastern destinations.

The two airlines, which held abortive merger talks 18 months ago, stressed, however, they had not resumed discussions about a full-blown alliance.

The co-operation agreement between BA and KLM will last for six months and each airline intends to resume separate services to the destinations concerned when the market picks up.

Nevertheless, analysts described the pact as a "suck it and see" arrangement, saying if it proved successful, it could form the basis for further deeper co-operation in the future.

From 31 March BA and KLM will in effect combine services from their Heathrow and Schipol hubs to Muscat, Dammam in Saudi Arabia and Dubai in the United Arab Emirates.

On the Muscat route, KLM will suspend flights from Amsterdam while BA upgrades to a daily service from Heathrow and on Dammam, BA will suspend its four weekly flights while KLM continues its four from Amsterdam. On Dubai the two airlines will offer three daily services – two operated by BA from Heathrow and one operated by KLM from Schipol.

BA said the short-term arrangement was designed to help cut costs and maximise services to the Middle East in the wake of the downturn in passenger demand caused by 11 September.

The European Commission agreed to relax its competition rules to allow such pooling of services by airlines as part of a limited package of measures to help the aviation industry recover from the terror attacks.

As part of the BA-KLM pact, the two airlines have also agreed a frequent flyer arrangement to allow passengers on the Middle East routes to use their points with either carrier.

There was some disappointment that the pact did not extend further and include a code-sharing arrangement. KLM signed a code-share deal on transatlantic services with Continental last October.

The BA-KLM deal covers only a tiny fraction of their respective networks.