LOT had little choice but to join Star

Lufthansa and its Star Alliance partners would have posed a major threat to LOT Polish Airlines' (LOT) market share if LOT hadn't joined forces with them last week, according to government officials and the airline's management. "Star would further expand its position in Central Europe without us," Treasury Minister Wiesław Kaczmarek told the WBJ. "And this would happen at the expense of LOT's market position." LOT and Germany's Lufthansa took the first step last week toward LOT's full membership in Star, the world's largest airline alliance, led by Lufthansa and the U.S.-based United Airlines. LOT and Lufthansa reached a code-sharing agreement on all flights between Poland and Germany beginning in June. The deal ended four months of speculation as to whether Star or the British Airways' oneworld alliance would lure LOT into their camp. LOT President Jan Litwiński said the airline chose Star because it would have been a stronger competitor to LOT. Star has the best-developed network and the strongest presence in Central Europe, with Lufthansa, Austrian Airlines and the Scandinavian SAS dominating their countries' hub airports in Frankfurt, Munich, Berlin, Vienna, Copenhagen and Stockholm. The deal, however, sparked political concerns about LOT's potential to grow in the alliance.

"I'm not sure that an alliance (with Star) will not cause a drop in the number of passengers flying via Warsaw," said Bogusław Liberadzki, chairman of the Sejm's transport subcommittee and a former transport minister. Liberadzki said passengers flying from Poland's regional airports including Kraków, Katowice, Wrocław, Poznań and Gdańsk may prefer to fly with Austrian Airlines through Vienna, Lufthansa in Germany, and SAS through Copenhagen and Stockholm, rather than LOT's hub in Warsaw. More skeptical about Warsaw's future as a Star Alliance hub is Edward Maniura, a Civic Platform minister, who is concerned about competition posed by Berlin, Copenhagen, Frankfurt and Vienna. "Our chances to build up a hub in Warsaw will be smaller in the Star Alliance (than in oneworld)," Maniura said. "And Poland (wants) to develop a hub in Warsaw." LOT's Litwiński told the WBJ that the agreement with Lufthansa includes a clause that LOT will launch new service wherever new "traffic flows emerge." But new demand for direct flights from Warsaw may not emerge as LOT's own partners may take over passengers on long-haul routes, according to Liberadzki. "When Brazil's Varig joined the Star Alliance, it soon lost a major amount of traffic between Brazil and Russia," he said. "And it was not because the Russians stopped flying but because they preferred to fly with Lufthansa and not with Varig."

Although Lufthansa's president Jirgen Weber said that cooperation between the two carriers would be a win-win partnership, he said it is impossible to guarantee that LOT would continue to fly to Western and Southern Europe in four years' time. "So far, all we can do is trust their words," Liberadzki said.