Are airline alliances yesterday’s news?

Signing up with a global alliance still has many advantages

In this challenging era for airlines, signing up with a global alliance may be a solution: reaching greater numbers of high-value frequent travellers, generating increased revenues, pooling purchasing and marketing, and cutting costs by rationalising members’ networks. The three biggest passenger airline alliances – Star Alliance, SkyTeam and oneworld – control almost 55% of global air capacity.
Yet the fast-growing Middle East carriers Etihad Airways, Qatar Airways and Emirates, supported by their oil-rich governments, have so far ignored them. They bypass the traditional European hubs to connect increasing number of passengers at their own hubs. Tim Clark, president of Emirates, insists that “there are a lot of airlines, even in alliances today, that want to chart their own destiny.”
However, there are rumours that oneworld may bring in either Qatar or Etihad. That would not boost the alliance’s worldwide share of capacity a great deal, but it would be game-changing. Although alliances are evolving with the times, they still offer big advantages.
John Slosar, chief executive, Cathay Pacific: “I believe that alliance structures are going to change over time, to the extent that member airlines will have more opportunities to expand their reach in areas where the market makes sense. […] No airline is yet global enough to cover all the segments that customers in the various markets would like to cover.”
Christian Klick, vice president corporate, Star Alliance: “Only the alliances offer truly global travel solutions, where passengers are able to travel within one system to any corner of the globe, have access to more flights and routing alternatives, priority services and lounges, and superior mileage programs that allow them to earn and redeem miles on every flight within the alliance.”
Asian carriers seem to agree. Malaysia Airlines, SriLankan Airlines are scheduled to join oneworld in 2012 and 2013, respectively, with Garuda Indonesia due to join SkyTeam next year.
TTG Asia
[pictured: Aeroméxico with SkyTeam livery; courtesy SkyTeam]