AA CARGO SPREADS ITS WINGS WITH ALITALIA ALLIANCE

AA CARGO SPREADS ITS WINGS WITH ALITALIA ALLIANCE

Barely two months after announcing a major alliance with Japan Airlines, American Airlines' cargo division has forged a similar deal with Italian-flag carrier Alitalia.

Under the Alitalia deal, which takes effect Sunday, AA Cargo will act as a general sales agent for Alitalia in most countries in Latin America, the Caribbean, and in part of Canada. In return, Alitalia will act as a general sales agent for AA Cargo in Italy and in parts of Africa and the Eastern Mediterranean.The carriers have also agreed to exchange freight between the Americas and Europe. AA cargo will provide feeder support to and from Alitalia's cargo operations in Miami. Other alliance benefits include additional interlining of cargo, possible sharing of cargo systems, the development of joint cargo products, and new ground handling agreements.

The Alitalia deal is very similar to American's agreement with JAL. That accord, which took effect Sept. 1, calls for American to act as general sales agent for JAL in 14 states in the United States and 26 countries in the Caribbean and Latin America. In return, JAL acts as a general sales agent for American in Japan and Thailand. Officials from both carriers expect to add other Asian countries to the roster in the future.

"When you combine Alitalia with the JAL alliance, we now have strategically placed global connecting hubs at our farthest route in the Pacific (which is Japan) and the Atlantic," which is Italy, American Airlines Cargo President Bill Boesch said. "We are very happy with this."

The two alliances give American a presence in places it doesn't serve, said Edward Martelle, a spokesman for the carrier. "JAL gives us reach in the Pacific, where we know we have no reasonable expectation of (gaining) route authorities for the next several years."

Mr. Martelle noted that Italy's aviation market is also tightly controlled by the government and not widely accessible to U.S. carriers, as well.

Ned Laird, president of the Air Cargo Management Group in Seattle, was not all that impressed. "It's a standard old-fashioned GSA (general sales agreement) with a marketing feature," he said. "They pay each other a

commission for business they originate for the other."

But, he added, it gives American some access to the African market and Mediterranean points that it does not serve. In exchange, Alitalia gets a marketing and interchange agreement to South America, where it does not fly.

The Alitalia accord is the third cargo alliance AA Cargo has forged since it was granted a separate status as an American Airlines division in 1991. It has cooperated for the past year with Australian-flag carrier Qantas on air cargo shipments to Australia and New Zealand, although that arrangement is somewhat more limited than the accords with JAL and Alitalia, Mr. Boesch said.

Mr. Boesch said American plans to add one more cargo alliance to its portfolio, "hopefully by the end of the year. Then we should be set very, very well."

He declined to name the carrier AA Cargo is courting, or to say how much revenue AA Cargo expects to generate from the alliances. Both the JAL and Alitalia agreements "should improve profits on a substantial basis," Mr. Boesch said.