View from City Road: Lufthansa could have done better

The late arrival of Lufthansa to the fast-expanding club of European carriers with airline partners across the pond probably owes as much to teutonic arrogance as anything.

For years, the German flag-carrier has been casting around the world in search of another airline only to discover that no one else's standards quite matched its own.

By the time Lufthansa had realised that this way lay lonely spinsterhood, it found that most of its would-be partners were already spoken for - USAir by British Airways, Delta by Swissair, Northwest by KLM.

Not that Lufthansa has done badly by ending up with United Airlines. The alliance brings together a European carrier whose strengths, rather like the cars its country produces, are sound engineering, safety and technical sophistication, with a commercially driven airline that is also the biggest in the world.

But it might have done better. The key to all the recent airline alliances is code-sharing - the system that gives one carrier access to the other's markets in a way that is complementary, not competing.

The best example, perhaps, of the potential for code-sharing is the BA-USAir alliance, which matches the biggest international airline in the world operating from the busiest international airport with an airline that has a healthy share of the world's biggest domestic airline market but no significant international operations.

The fear with Lufthansa and United is that they may discover themselves stepping on one another's toes by competing for the same passengers.

The two carriers will, of course, argue that the strategic benefits of the partnership outweigh such minor qualms. For United, the prize is to have secured a place alongside one of the handful of continental carriers guaranteed to be still around no matter what deregulation and liberalisation of the European airline market brings. For Lufthansa, as it negotiates the runway to privatisation, the United alliance should strengthen its commercial edge and its attractiveness to investors.