BA and KLM agree deal on Mideast


KLM Royal Dutch Airlines has unveiled a short-term cooperation agreement with British Airways on Middle Eastern routes aimed at softening the blow they suffered from the September 11 US attacks.

BA and KLM, which have tried unsuccessfully in the past to merge, have said the agreement did not mean they were discussing a merger.

But analysts say the accord will give the pair experience of working together, which will help if they resume full-blown merger negotiations.

The agreement, which covers selected routes for six months from March 31, had been expected to be announced earlier this month but had been delayed as the airlines thrashed out details such as customer loyalty issues.

The arrangement covers routes between Muscat, Dammam and Dubai and London and Amsterdam.

BA, Europe's biggest airline, and KLM said last October they were discussing "limited short-term scheduling coordination" revolving around the sharing of route-booking codes and selling of seats on each other's flights.

That would permit the companies to trim operating costs by reducing overlap - allowing them to maintain service schedules while each cuts the number of planes flying certain routes.

Airlines the world over have been cutting back capacity and costs since the September 11 attacks in the United States sent air travel markets into a tailspin at a time when the industry was already suffering from a global economic slowdown.

KLM and US carrier Continental Airlines signed a code-sharing agreement in October to link their European and US hubs, to help stimulate traffic and to boost revenues for both airlines in the current difficult markets.

KLM already has a long-running transatlantic alliance with Northwest Airlines.