Booking an airline ticket used to be easy -- no perks (except
smoking on board, of course). But now with frequent flyer points,
airline statuses, baggage fees, priority security
clearance/boarding and sumptuous lounges on offer, how can anyone
know how to make the most of it all?
At the center of all this confusion are airline alliances, first
introduced just 15 years ago. But while cracking their code can be
baffling, determining which one is best for you may not even be
your choice.
Premier Traveler's features editor and award-winning reporter
Janet Forman spoke with airline executives to dissect the major
alliances (Star Alliance, SkyTeam and oneworld) -- along with the
"young bucks" forging their own way -- to outline the pros and cons
of these strategic partnerships. Read on to learn how airlines are
making the most of these arrangements, and how that affects your
travels in Premier Traveler's special report.
Click here for full story.
Premier Traveler, Special
Report
Buddy Up
In today's crowded skies, no airline stands alone. Premier
Traveler looks closely at airline partnerships and discovers why
even competitors must sometimes be the best of friends.
The jumbo jet transformed travel in the 1970s, bringing air
transport to the masses. The Internet changed the landscape again,
letting us view, book and fly to remote corners of the world with a
finger tap. A third innovation, less technological than commercial,
also changed travel in a way that was both subtle and profound: the
airline alliance. "Before alliances we had a world of major
destinations, which didn't include the villages around them,"
recalls Michael Wisbrun, managing director of SkyTeam. "You did
your business and took your holiday around the destinations of the
airline on which you bought your ticket, and that was it. Now the
connectivity created by alliances makes the Global Village
real."
Codeshares were still a novelty in 1989 when KLM and Northwest
picked up the idea, but by the end of the twentieth century
business travelers needed more: to check in once for a long-haul
multi-country flight, schedules coordinated to let them sleep
soundly on the plane (not fitfully at the airport), access to a
lounge where they could take care of business, then kick back with
a cocktail until boarding at a nearby gate, and a sea of
frequent-flier miles -- "What are those?" our Mad Men counterparts
would have wondered -- in a few neat piles; stardust for a dream
trip to come. In response, three massive alliances were born: Star
Alliance in 1997, oneworld in 1999 and SkyTeam in 2000.
The alliances that now fly two-thirds of the world's consumer
air traffic were formed to counter the aviation industry's unique
constraints: "The airline business is different from other
industries," explains Michael Blunt, corporate communications
vice-president for oneworld. "International aviation is controlled
by a network of treaties between governments, which makes it
difficult for airlines to operate like businesses in other sectors;
to buy each other out, to expand their brands, to gain
international territories. While foreign automotive operators can
manufacture and sell cars in the U.S., and petrochemical companies
can explore in the Gulf of Mexico and sell Americans oil and gas,
at the moment, if American Airlines, for example, wants to fly its
customers between London and India with all the benefits that they
enjoy when flying on their own planes, it needs likeminded partners
to do so."
These days, regulatory systems are beginning to catch up with
the realities of commerce. As more airlines receive bilateral
agreements, freedom from the nationalistic system that governs
international air services, and immunization from antitrust
restrictions that prohibit monopolies, a constellation of
arrangements between airlines has emerged. Moving far beyond
traditional interline agreements that allow passengers to fly two
airlines on one ticket, and codeshares, where airlines place their
own codes on one another's flights (you've seen it on the departure
board -- one flight with four different numbers from four different
airlines), cooperation is even closer in alliances and joint
ventures, or "JVs," in airline lingo. JVs can range from simple
marketing agreements to intense collaboration on many fronts: from
pricing to schedules, to "metal neutral" deals like the one between
American Airlines and JAL, where the bottom line is shared no
matter whose plane, or "metal," a passenger flies. Part ownership
is another route: Right now the Abu Dhabi flag carrier Etihad owns
30 percent of airberlin, 40 percent of Air Seychelles, nearly 3
percent of Aer Lingus, and is cleared to increase its share of
Virgin Australia from 6.1 percent to 10 percent. The playing field
also shifts when airlines from different alliances merge: Witness
SkyTeam's Continental moving to Star Alliance upon its union with
United, and at year's end we'll know the landing spot for the new
South American behemoth LATAM, oneworld's LAN combined with Star
Alliance's TAM.
"If you assume that the alliances will change, you're right,"
declares SkyTeam's Wisbrun. "As the wishes of customers change, the
alliances will move." In the future, he feels "scale won't be the
priority." The quest to add more airlines to the roster, each with
its own customs, corporate culture and IT system, will be replaced
by better synchronization. SkyTeam's current effort to create
seamless connections for the time zone-battered business traveler
is SkyPriority, an idea they picked up from Delta: a distinctive
logo and attentive ground personnel to speed Elite Plus, First- and
Business-Class passengers through check-in, bag drop, security,
boarding and baggage handling; even passport clearance, when
governments allow.
As in many businesses, careful consolidation can streamline
systems, which benefits the traveler as well as the airlines'
bottom line. When airlines cooperate to fill seats, share check-in
counters and standardize IT systems, costs go down for everyone:
IATA studies show that passengers flying airlines with
antitrustimmunized alliances save 27 percent over flying
non-aligned carriers. Alliance carriers also pool resources for
research and development.
Star Alliance members have been collaborating since 2008 to
create a coach seat that is more comfortable, lighter, and less
expensive to buy and maintain, with variable parts to accommodate
different plane configurations and branding specs. Okay, they're
still working on it -- seats will be delivered in late 2012, with
the first aircraft in service by early 2013 -- but it's certainly a
big step in the right direction. Star Alliance's endeavors on the
ground are already paying off: Move under one Roof (MuoR) aspires
to eliminate the Olympic-style airport sprint by bringing member
airlines' check-in counters and gates closer together. Indeed, the
first Star Alliance Integrated Terminal (SAIT, for acronym fans) is
slated for 2014 at Heathrow Terminal 2. Star Alliance is also
perfecting "through-check-in," or TCI, to let customers check in
remotely for all legs of their long-haul international flights,
with every boarding card delivered at the trip's start and bags
checked through to the final destination.
"We are getting there step by step, as we continue to identify
the kinks between the airlines' IT systems and government's
regulation," says Anita Elste, Star Alliance manager of products
and services.
As for the bewitching lure of frequent flier miles, now
alliances and joint venture partners let travelers freely mix and
match their accounts. A unified policy on upgrades, however,
remains a Holy Grail.
Still, some airlines eschew the alliances. Low-cost carriers, or
LCCs, don't wish to add all the bells and whistles alliances
require, although a wave of new model hybrid low-cost carriers --
that's an HLCC -- such as airberlin, are adding services and moving
under the alliance umbrella. At the other end of the spectrum, the
three powerful Middle East carriers are "young bucks," growing so
quickly they prefer to forge partnerships in their own ways,
through codeshares, marketing efforts, and enhanced frequent flyer
programs, such as Etihad's reciprocal "earn and burn" agreements
with airlines that include American Airlines, airberlin, Air New
Zealand and Asiana Airlines. And of course those equity purchases
bring partners very close indeed.
While Aer Lingus made the decision to leave oneworld in 2006,
they continue to work with individual members of the three major
alliances, in addition to JetBlue Airways, whose terminal they'll
share in 2013.
"We do recognize that we need airline partnerships to provide
support to our network," notes Aer Lingus spokesperson Helen
Maguire, "but we prefer the hybrid approach of choosing partners
with a good brand-fit and network-fit, as opposed to having to
embrace the whole team that comes along with an alliance."
The Virgin Group prizes its singular identity above all. "Virgin
got into the airline business three decades ago to offer great
value and a brilliant experience," declares Virgin Group founder
Sir Richard Branson. "Today's travelers still choose Virgin for the
same reason: because we do things differently." This year Virgin
America, Virgin Atlantic and Virgin Australia fully linked their
frequent flyer programs so members can fly to any Virgin
destination around the world.
Still, Virgin America president and CEO David Cush is well aware
that "the primary criteria most guests look at when evaluating an
airline alliance is probably the reach of its network." So in the
last six months Virgin America has signed more than half a dozen
additional partners for a roster that includes Air New Zealand,
Cathay Pacific, El Al, Emirates, Ethiopian Airlines, Singapore
Airlines, South African Airways and Qantas.
Yet even as the alliances grow and mature, one distinctive
airline, El Al, has not yet found its place. "We want very much to
join one of the alliances," maintains Danny Saadon, vice president
of North and Central America, "but so far we have not been
successful. I think it would be a big advantage for us: An alliance
would open a lot of new routes we can't ticket today, which would
make life much easier for our customers." El Al has codeshare and
interline agreements with several airlines, exchanges frequent
flyer points with American Airlines and claims over a million
frequent fliers of its own. "But these days you're not competing
against one airline, you're competing against a whole alliance with
twenty partners, so we have to be very creative and come up with
bright marketing ideas every day."
Cumbersome as they may appear on the surface, these massive
alliances can make the airlines more nimble and responsive. Adding
destinations by selling seats on a partner's aircraft is far more
cost-effective than developing new routes far from home; small
airlines benefit from brand recognition of larger ones; and all
airlines can learn something from one another. So if air travel
appears ever more complicated these days as airlines sprout, merge
or sometimes fall by the wayside, the alliances have their work cut
out: to simplify, to provide a fallback position when plans go awry
and, in that perfect world, to provide a comfortable lounge with
powerful Wi-Fi right near the gate.
Alliances at a Glance Business travelers
don't really choose an airline alliance: In practical terms, an
alliance chooses you, according to your home base and most frequent
ports of call. When you do have a choice, you won't find the kind
of rating system that works for hotels, restaurants or wines. Each
alliance wins its share of awards and each has "white spots" --
places where service is sparse -- balanced by regions where the
network is dense. All three are keen to expand in fast-growing
economic regions -- Latin America, Asia, the Middle East -- and all
three have major hubs in North America and Europe. What follows are
notes on each alliance -- statistics, new developments, cultural
sidelights -- that may be of some use when choosing a flight, but
will likely have more impact on cocktail party conversation.
- Star Alliance - The oldest, formed in
1997, and largest by a good stretch, with 27 members serving 1,356
destinations in 193 countries. Boldface airlines include United and
Air Canada in North America, Singapore Airlines and Asiana Airlines
in Asia, Lufthansa in Europe, and South African Airways in Africa.
Airlines serving lesser-known spots are Adria Airways in Slovenia,
Blue1 in Finland and Aegean Airlines in Greece, with Shenzhen
Airlines and EVA Airways coming soon. Beyond the charitable and
cultural programs of its member airlines, Star Alliance's own
initiatives include: Biosphere Connections, to promote
environmental sustainability; the China Advocacy Program, to build
communications with Chinese business travelers; Meeting of Minds,
to highlight the work of young entrepreneurs; and Undiscovered
Business Entrepreneurs, to focus on breakthrough business concepts
around the world. staralliance.com
- SkyTeam - The midsized alliance, founded
in 2000, has 18 members, serving 993 destinations in 186 countries.
Its anchor members include Delta Air Lines in North America, Air
France-KLM in Europe and Korean Air in Asia. It now blankets China
with three airlines -- China Airlines in Taiwan, China Eastern
Airlines out of Shanghai and China Southern Airlines in Guangzhou,
with Xiamen Airlines coming on board shortly. Two airlines
represent the Middle East: Lebanon's Middle East Airlines and Saudi
Arabia's Saudia Airlines, while Kenya Airways links Africa. From
South America, Aerolíneas Argentinas has just joined, and
Indonesia's Garuda is scheduled to become a member in 2013.
skyteam.com
- oneworld - Founded in 1999, the smallest
alliance by just a few strokes has 12 members, who serve 810
destinations in 149 countries. American Airlines covers North
America, British Airways is the big name in Europe, Cathay Pacific
and Japan Airlines are the Asia hubs, Qantas covers Australia, S7
serves destinations in Russia and Royal Jordanian brings passengers
to the Middle East. oneworld.com
www.premiertravelerusa.com
PDF Attachment Available:
http://media.marketwire.com/attachments/201210/52260_PMTR0912_cover.pdf
Image Available:
http://www2.marketwire.com/mw/frame_mw?attachid=2119410 Image
Available: http://www2.marketwire.com/mw/frame_mw?attachid=2119347
Image Available:
http://www2.marketwire.com/mw/frame_mw?attachid=2119350 Image
Available: http://www2.marketwire.com/mw/frame_mw?attachid=2119365
Image Available:
http://www2.marketwire.com/mw/frame_mw?attachid=2119344 Image
Available: http://www2.marketwire.com/mw/frame_mw?attachid=2119353
Image Available:
http://www2.marketwire.com/mw/frame_mw?attachid=2119356 Image
Available: http://www2.marketwire.com/mw/frame_mw?attachid=2119359
Image Available:
http://www2.marketwire.com/mw/frame_mw?attachid=2119362
Add to Digg Bookmark with del.icio.us Add to Newsvine
For information, contact: Premier Traveler Magazine
press@jarppubs.com www.premiertravelerusa.com