SAS and Etihad have just announced a code-sharing and reciprocal benefits agreement for their loyalty programs, the timing of which can only be questioned.
SAS and Etihad share code
SAS and Etihad will share their codes, so that the Scandinavian airline’s passengers can benefit from the Gulf carrier’s network, particularly to Asia and Oceania, while Etihad’s passengers will have access to SAS’s very rich network in northern countries.
The agreement will come into effect at the end of 2023, for travels starting in January 2024.
Another particularly interesting part of the announcement is that members of the Etihad Guest frequent flyer program will earn points on all SAS flights in the same way that SAS Eurobonus members will earn points on all Etihad flights, whether codeshare or not.
And given the rates, it’s an excellent deal for Eurobonus members.
A logical strategy for both airlines
This agreement comes as no surprise, and is in line with the logic we described for the recent partnership between Etihad and Air France-KLM.
The two airlines do not have the critical mass to survive on their own, so they have to multiply cooperation instruments with their peers.
This is quite obvious for Etihad, which is not a member of any of the alliances, which is initially a weakness, but allows it to forge opportunistic partnerships with airlines from all three alliances after the failure of its Etihad Partners program.
It was a little less so for SAS, which benefited from the impressive network of its Star Alliance partners. But Air France-KLM’s planned acquisition of a stake in SAS (subject to regulatory approval) and the airline’s consequent exit from the alliance in favor of Skyteam are reshuffling the cards.
Although Etihad is not a member of Skyteam, it is not in a competing alliance either, and has just forged a strategic partnership with a future shareholder of the Scandinavian airline, one of the founding members of the alliance. What’s more, it has a highly developed network in parts of the world where Skyteam is weak.
A sequence of announcements that can only raise questions: are these individual initiatives in the same direction, or coherent elements of a more global plan?
What could be hidden behind the partnership between SAS and Etihad?
Air France may buy SAS (We say may because in our opinion, the impact of the acquisition is overestimated until SAS has demonstrated that it can return to profitability); gets closer to Etihad, which gets closer to SAS… it’s easy to think that it’s all connected.
The next steps could be Etihad’s entry into Skyteam, a joint venture between Air France-KLM and Etihad to serve Asia ( similar to the one with Delta and Virgin Atlantic on transatlantic routes), or even a shareholding or takeover of the Gulf airline by the Franco-Dutch group.
Before going that far, the mergers between Air France-KLM and SAS on the one hand, and Etihad and SAS on the other, should have been coordinated. Given the time needed to reach such agreements, Air Frace-KLM would have revealed its plans for SAS to Etihad during the Scandinavian airline’s refinancing process. Given the level of confidentiality required in this type of agreement, the non-disclosure agreements and the level of secrecy surrounding this announcement, which took everyone by surprise, we don’t think so. Possible but highly unlikely.
It’s also worth noting that the codeshare between SAS and Etihad is anything but new. A precedent has existed since 2014, but it was less ambitious than this one.
Not surprisingly, given their respective backgrounds, the two airlines have sought to deepen their commercial synergies.
An agreement that opens up new prospects
We could be wrong, but we believe that the mergers between Air France-KLM and Etihad and SAS on the one hand, and between SAS and Etihad on the other, are two very distinct operations made possible by Etihad’s independence from alliances.
In other words, we don’t believe that Air France-KLM and Etihad acted in concert, but rather that the context made them move in the same direction, and that it wasn’t the European group that was at the helm. At the very most, the fact that the first was chosen by the Scandinavian airline validated the interest of the operation for the other two, or rather showed that it did not pose a problem (which might have been different if Lufthansa had been chosen to finance SAS).
And this, it should be remembered, despite the fact that the agreement already existed between SAS and Etihad.
Two distinct but converging operations that can open up new opportunities? Certainly, but we have to bear in mind, once again, that Air France-KLM will be at least a minority shareholder in SAS for the next two years if the operation is approved, and that there is no guarantee that it will take control later on.
And we come back to what we said a week ago.
– Etihad to join Skyteam? Very possible, but not mandatory.
– An Air France-KLM-Etihad joint venture on Asian routes? A good idea, all the more so as the two Skyteam airlines it would overshadow (Korean Air and Saudia) do not weigh enough to prevent it. Unless they join it.
– An Air France-KLM stake in Etihad? Politically very unlikely. Gulf people have their pride and this would be unacceptable.
– An Air France-KLM takeover of Etihad? If a shareholding is virtually impossible, a takeover is a fantasy.
The potential takeover of TAP is on the horizon, and then the time will come to decide whether Air France-KLM goes further with SAS or abandons the project…if finances are better than before, Air France-KLM will still have to choose its battles. Depending on who buys TAP Why not.
Air France-KLM, Etihad and SAS are forging closer ties and entering into bipartite commercial and even capital agreements, without any indication that this is part of a concerted plan.
The highly political nature of Air France-KLM’s acquisition of a stake in Etihad and the hypothetical nature of its takeover of SAS rather suggest strong partnerships.