What are airline alliances?
Alliances permit carriers to coordinate various behind the scenes procedures. They are a step further than a simple code share where one airline puts its code onto another's and sells each other's tickets.
For passengers, alliances mean through ticketing, smoother transfers, baggage that can be checked through to the final destination and an accumulation of frequent flier points using a variety of airlines.
For airlines, alliances permit carriers to undertake some aspects of their operation as if they were under common ownership. This is beneficial because ownership rules normally only permit minority stakes to be taken in airlines by foreign carriers. For example, Singapore Airlines has a 49 per cent stake in Virgin Atlantic, the maximum it can have because Singapore is not a European Union country.
With pressure on costs, alliance membership is becoming increasingly popular. It is estimated that the three main airline alliances (Oneworld, Star and SkyTeam) now account for more than 60 per cent of the total world airline capacity, with all 15 of the world’s biggest airlines signed up. Unaligned carriers account for less than 30 per cent of world capacity, with low cost carriers accounting for the remaining 10 per cent.
Oneworld's website gives some of the reasons for the popularity of alliances:
"More people want to fly to more places more easily and for greater value. Yet airlines are constrained in their ability to serve this demand by government restrictions and business economics which make it impossible for any one airline to serve all these markets by itself.
In the drive to reduce costs, particularly in the recent financially difficult times for the industry, airlines can achieve substantial efficiencies through working more closely together. Alliances help boost airline revenues and provide opportunities for growth, by feeding passengers between members’ networks. Individual passengers and corporate customers are increasingly recognising the value and benefits which an alliance can offer them."
Oneworld also believes it will become increasingly difficult for airlines to maintain their global market share unless they are allied to one of the global groupings.
"Competition in this industry is increasing between alliances, besides individual airlines," it says.
That's not to say that airline alliances are without their critics. To read an insightful piece by Alex McWhirter on the subject from the June 2008 issue of Business Traveller magazine, click here.
For the latest news from Oneworld, click here
Oneworld currently has 15 members. These are: Air Berlin, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malaysia Airlines, Qantas, Qatar Airways, Royal Jordanian, S7 Airlines, Sri Lankan Airlines, TAM Airlines and US Airways.
Oneworld also has 20 affiliates including American Eagle, a US regional carrier; Comair and Sun-Air, the British Airways franchisees in South Africa and Denmark; Dragonair, Cathay Pacific's partner and LAN Argentina, LAN Ecuador and LAN Peru, which expand oneworld’s coverage in South America.
Oneworld members carry 507 million passengers on a fleet of over 3,300 aircraft. They operate over 14,000 daily flights - an average of 10 departures or arrivals every minute around the clock.
The alliance offers premium passengers access to 604 airport lounges worldwide and serves around 1000 destinations in over 150 countries. Oneworld is the only alliance with a member in Australia or the Middle East.
Oneworld has a number of value fares including:
Oneworld Explorer: Prices are based on class of travel (Economy, Premium Economy where available, Business or First) and, uniquely, the number of continents visited - rather than mileage of the overall trip. Flights can be on any of the oneworld carriers. Oneworld Explorer is a good choice for anyone planning a global journey including sectors “Downunder” with oneworld’s Qantas, the only member of a global alliance operating a full domestic network within Australia, or in South America, with oneworld being the only alliance with a member in that region.
Global Explorer: Another round-the-world fare, but this time based on distance flown - and including some airlines which are not members of oneworld, extending destinations covered still further.
Visit Passes: Offering multi-sector flights on any oneworld carrier in a specific continent and also in Japan. Oneworld is the only alliance to offer this sort of pass covering all six continents. Prices are based on the number of sectors selected and their length.
Circle Explorer: Similar to oneworld Explorer, but does not require travel to North or South America, so you can fly halfway around the globe and back again, without actually circumnavigating the planet (for example London-Hong Kong-Sydney-Johannesburg-London).
Circle Pacific: Another Explorer variant, this time for trips around the Pacific Ocean, covering Australasia, North and South America.
Circle Asia and South West Pacific: Covering North East and South East Asia and the South West Pacific.
businessflyer™: Offering medium and small-sized business customers discounted fares in return for a more regular relationship with the alliance and its airlines. Launched in Germany, France, Netherlands, Switzerland, Belgium now also Italy too, with some 7,000 companies signed up.
Members of any oneworld airlines’ frequent flyer programme can earn miles or points on eligible fares and flights marketed and operated by any oneworld airline. Eligible flights also count towards their tier status. Frequent flyers can redeem miles or points on any flights operated by oneworld airlines.
Senior tier members of oneworld airlines’ frequent flyer programmes (Emerald and Sapphire card holders) are eligible to use airport lounges offered by member airlines. Emerald denotes the top tier in any programme, Sapphire the second tier and Ruby the third.
Formed in 2000, SkyTeam began with four members; Aeroméxico, Air France, Delta Air Lines and Korean Air to which have now been added Aeroflot, Aerolineas Argentinas, Air Europa, Alitalia, China Airlines, China Eastern, China Southern, Czech Airlines, Garuda Indonesia, Kenya Airways, KLM, Middle East Airlines, Saudia, Vietnam Airlines and Xiamen Airlines.
As of June 2014, the 20 members offer services to 1064 destinations in 178 countries worldwide. They carry 588 million passengers a year and have 189 million frequent flier members.
SkyTeam offers a number of ticket combinations, including its America Pass, China Pass, Europe Pass and Asia Pass which allow travel on any of its members airlines. within specific regions. These give discounts on three or more one-way regional flights when a trans-continental flight is purchased.
The alliance is also working towards offering common terminals at key airports. At Heathrow, it has taken over Terminal 4 for its operations. offering a single check-in and other benefits including a much-expanded business lounge.
Established in 1997, Star Alliance is the biggest of the three alliances.
The 26 full members are Adria Airways, Agean Airlines, Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, Austrian, Avianca, Brussels Airlines, Copa Airlines, Croatia Airlines, EgyptAir, Ethiopian Airlines, EVA Air, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAM Airlines, TAP Portugal, Thai Airways, Turkish Airlines and United.
Star carries 638 million passengers a year to 193 countries via 1,269 airports. It has a Move Under One Roof policy that is gradually seeing it take over whole airport terminals around the world.
The first of these was Tokyo Narita, where it cut down minimum transfer times from 100 minutes to 45 minutes. Similar facilities have been opened at Bangkok, Warsaw, Miami, Beijing and Shanghai. They are also planned for London, where Star will occupy the new Heathrow East building which will be constructed on the site of Terminals 1 and 2. Other Star terminals will be opened in Paris, Singapore, Seoul and Los Angeles.
Star runs two loyalty programmes aimed at business travellers, the Corporate Plus and Company Plus schemes.
Corporate Plus is for large multi-national business accounts, each of which have a dedicated Star Alliance manager. A single report detailing all travel on Star member airlines is produced.
Company Plus is an online incentive programme aimed at smaller businesses. Fliers build up Pluspoints that are exchangeable for free flights and upgrades. Membership is free and there is no minimum turnover requirement.