Airlines Team to Buy Standardized Planes
By BRAD FOSS
AP Business Writer
In an effort to negotiate lower prices from aircraft manufacturers, airlines around the globe are teaming up to design and purchase identical planes. If these nascent efforts to standardize everything from in-flight entertainment to cockpit design succeed, industry officials said it could spark an industrywide trend.
With airlines mired in a persistent revenue slump, two groups of mostly European carriers are banding together in hopes of wielding the type of bargaining power formerly reserved for the industry's biggest players.
One possible joint purchase, which would involve as many as 100 regional jets, is being worked out by Air Canada, Austrian Airlines, Lufthansa and Scandinavian Airlines System. These carriers are considering planes made by Chicago-based Boeing and France's Airbus, airline and aircraft officials said Tuesday.
Air France and Alitalia are working on a separate deal for an unspecified number of planes and, according to one Air France official, have held preliminary talks with Montreal-based Bombardier and Brazil's Embraer.
In the past, carriers were reluctant to embrace fleet standardization, fearing it would dilute their brands. In the current financial environment, though, cost-cutting has become the industry's top priority.
Another benefit of standardization is that the resale value of their planes will go up, since other carriers will be using identical aircraft in their fleets.
Aircraft manufacturers said they welcomed the carriers' emerging strategy since it will lower production costs and potentially jump-start sales amid an industrywide slowdown. That said, executives emphasized that many issues still need to be worked out.
``If you asked 50 airline CEOs, they would all agree on the need for standardization,'' John Leahy, chief commercial officer at Airbus SAS, said from the company's headquarters in Toulouse, France. But there is little consensus on what those standards should be, he said.
The most crucial design specifications that need to be worked out include the layout of the cockpit, the location of kitchens and bathrooms and the amount and type of in-flight entertainment.
Another hurdle will be agreeing to financing terms that are acceptable to all participants. Unless one of the larger carriers in the negotiating pool is willing to co-sign for the rest, the smallest airlines will not receive equally favorable pay schedules and conditions, Leahy said.
Michael Lamberty, a Frankfurt-based spokesman for Lufthansa, said the German carrier and its three partners could have specifications for a standard design worked out by the end of the summer.
Within the standard design, Lamberty said there would also be ``plenty of room'' for carriers to vary the product, such as the color of seats and how they are arranged.
The trend toward standardization isn't entirely new. Many of these carriers have been buying equipment and supplies in bulk for years.
Both groups of carriers were already in partnerships in which they sold seats on each other's flights, honored members' frequent-flier programs and collectively purchased certain supplies.
Air Canada and its partners are in the 14-member Star Alliance, while Air France and Alitalia are part of the six-member SkyTeam.
AP-NY-05-20-03 1628EDT
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