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Airline alliance

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An airline alliance is an agreement between two or more airlines to cooperate on a substantial level. The three largest passenger alliances are the Star Alliance, SkyTeam and Oneworld. Alliances also form between cargo airlines, such as that of WOW Alliance, SkyTeam Cargo and ANA/UPS Alliance. Alliances provide a network of connectivity and convenience for international passengers and international packages. Alliances also provide convenient marketing branding to facilitate travelers making inter-airline codeshare connections within countries. This branding goes as far as to even include unified aircraft liveries among member airlines.

Rationale

Benefits can consist of:

  • An extended network: this is often realised through code sharing agreements. Many alliances started as only a code sharing network.
  • Cost reduction from sharing of:
    • Sales offices
    • Maintenance facilities
    • Operational facilities, e.g. catering or computer systems.
    • Operational staff, e.g. ground handling personnel, at check-in and boarding desks.
    • Investments and purchases, e.g. in order to negotiate extra volume discounts.
  • Traveler benefits can include:
    • Lower prices due to lowered operational costs for a given route.
    • More departure times to choose from on a given route.
    • More destinations within easy reach.
    • Shorter travel times as a result of optimised transfers.
    • A wider range of airport lounges shared with alliance members
    • Faster mileage rewards by earning miles for a single account on several different carriers.
    • Round-the-world tickets, enabling travelers to fly over the world for a relatively low price.

Airline alliances may also create disadvantages for the traveler, such as:

  • Higher prices when all competition is erased on a certain route.
  • Less frequent flights: for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5(3+2) times a day on the same route. This might be especially true between hub cities for each airline. e.g., flights between Detroit (a Delta Air Lines fortress hub) and Amsterdam (a KLM fortress hub).

Issues

The ability of an airline to join an alliance is often restricted by laws and regulations or subject to approval by authorities. Antitrust laws play a large role.

Landing rights may not be owned by the airlines themselves but by the nation in which their head office resides. If an airline loses its national identity by merging to a large extent with a foreign company, existing agreements may be declared void by a country which objects to the merger. In 2010 Swiss lost overflight rights after being bought by Lufthansa.[1]

History

The first airline alliance started in the 1930s, Air New Zealand and parent company Pan American World Airways agreed to exchange routes to Latin America. The first large alliance started in 1989, when Northwest Airlines and KLM Royal Dutch Airlines agreed to code sharing on a large scale. A huge step was taken in 1992 when The Netherlands signed the first open skies agreement with the United States, in spite of objections from the European Union authorities. This gave both countries unrestricted landing rights on each others' soil. Normally landing rights are granted for a fixed number of flights per week to a fixed destination. Each adjustment takes negotiating, often between governments rather than between the companies involved. The United States was so pleased with the independent position that the Dutch took versus the E.U. that it granted antitrust immunity to the alliance between Northwest and KLM. Other alliances would struggle for years to overcome transnational barriers or still do so.

The Star Alliance was founded in 1997 which forced competing airlines to form Oneworld in 1999 and SkyTeam in 2000. Richard Branson, chairman of the Virgin Group, announced his intention to form a fourth alliance among Virgin branded airlines (Virgin Atlantic; Virgin America; and the Virgin Australia Holdings group of airlines).[2]

Alliances

Membership and market data for the largest airline alliances (as of January 2012) [3] [4] [5]

Star Alliance
27 members
Founded 1997 		SkyTeam
15 members
Founded 2000 		Oneworld
12 members
Founded 1999 		Rest of Industry
(selected major non-aligned carriers)
Passengers per year 603.8 million 474 million 303 million Unavailable
Countries 185 173 147 Unavailable
Destinations 1185 916 766 Unavailable
Revenue Billion US$ (€) 156.8 (145) 97.9 (90) 89.875 (85) Unavailable
Market share 29.3% 24.6% 23.2% Unavailable
Participants¹ Members
(JP) Adria Airways
2004
(A3) Aegean Airlines
2010
(AC) Air Canada
founder
(CA) Air China
2007
(NZ) Air New Zealand
1999
(NH) ANA
1999
(OZ) Asiana Airlines
2003
(OS) Austrian Airlines
2000
(KF) Blue1
2004
(BD) BMI
2000
(SN) Brussels Airlines
2009
(OU) Croatia Airlines
2004
(MS) EgyptAir
2008
(ET) Ethiopian Airlines
2011
(LO) LOT Polish Airlines
2003
(LH) Lufthansa
founder
(SK) SAS
founder
(SQ) Singapore Airlines
2000
(SA) South African Airways
2006
(JK) Spanair
2003
(LX) Swiss International Air Lines
2006
(JJ) TAM Airlines
2010
(TP) TAP Portugal
2005
(TG) Thai Airways International
founder
(TK) Turkish Airlines
2008
(UA) United Airlines
founder
(US) US Airways
2004

Future Members
(AV) Avianca
2012
(TA) TACA
2012
(CM) Copa Airlines
2012
(ZH) Shenzhen Airlines
2012

Former Members
(AN) Ansett Airlines
1999–2001, defunct
(CO) Continental Airlines
2009–2011, merged with United Airlines
(MX) Mexicana
2000–2004, joined Oneworld 2009
(RG) Varig
founder, 1997–2007, ejected
(FM) Shanghai Airlines
2007–2010, merged with China Eastern and joined SkyTeam in 2011 		Members
(SU) Aeroflot
2006
(AM) Aeroméxico
founder
(UX) Air Europa
2007
(AF) Air France
founder
(AZ) Alitalia
2001–2009 as Alitalia-Linee Aeree Italiane, rejoined 2009
(CI) China Airlines
2011
(MU) China Eastern Airlines
2011
(CZ) China Southern Airlines
2007
(OK) Czech Airlines
2001
(DL) Delta Air Lines
founder
(KQ) Kenya Airways
2007
(KL) KLM
2004
(KE) Korean Air
founder
(RO) TAROM
2010
(VN) Vietnam Airlines
2010

Future Members
(AR) Aerolineas Argentinas
2012
(GA) Garuda Indonesia
2012
(ME) Middle East Airlines
2012
(SV) Saudi Arabian Airlines
2012
(MF) Xiamen Airlines
2012

Former Members
(CO) Continental Airlines
2004–2009, joined Star Alliance 2009
(CM) Copa Airlines
2007–2009, will join Star Alliance 2012
(NW) Northwest
2004–2009, merged with Delta 		Members
(AA) American Airlines
founder
(BA) British Airways
founder
(CX) Cathay Pacific
founder
(AY) Finnair
1999
(IB) Iberia
1999
(JL) Japan Airlines
2007
(LA) LAN
2000
(MA) Malév
2007
(MX) Mexicana
2009 (ceased operations in 2010 but still a member)
(QF) Qantas
founder
(RJ) Royal Jordanian
2007
(S7) S7 Airlines
2010

Future Members
(AB) Air Berlin
2012
(IT) Kingfisher Airlines
2012
(MH) Malaysia Airlines
2012

Former Members
(EI) Aer Lingus
2000–2007, left voluntarily
(CP) Canadian Airlines
founder, 1999–2000, acquired by Air Canada
Americas
(FL) AirTran Airways
(AS) Alaska Airlines
(CU) Cubana
(F9) Frontier
(G3) Gol Transportes Aéreos
(HA) Hawaiian Airlines
(B6) JetBlue
(WN) Southwest
(VX) Virgin America
(WS) Westjet
(NK) Spirit Airlines

Europe / C.I.S
(EI) Aer Lingus
(VV) Aerosvit
(KM) Air Malta
(CY) Cyprus Airways
(FI) Icelandair
(JU) Jat Airways
(DY) Norwegian Air Shuttle
(DY) Olympic Air
(FV) Rossiya
(UN) Transaero
(DY) Uzbekistan Airways
(VS) Virgin Atlantic

Africa & Middle East
(AH) Air Algérie
(W3) Arik Air
(LY) El Al
(EK) Emirates
(EY) Etihad Airways
(GF) Gulf Air
(IR) Iran Air
(QR) Qatar Airways
(AT) Royal Air Maroc
(TU) Tunisair

Asia
(AI) Air India
(BG) Biman Bangladesh Airlines
(BR) EVA Airways
(HU) Hainan Airlines
(9W) Jet Airways
(PK) Pakistan International Airlines
(PR) Philippine Airlines
(UL) SriLankan Airlines
Network Capacity
Within North America 23% 28% 15% 34%
Within South America 1% 2% 14% 83%
Within Europe 20% 16% 11% 53%
Within Middle East 2% 0% 3% 95%
Within Africa 23% 10% 4% 63%
Within Asia 35% 11% 9% 45%
Within Oceania 11% 0% 32% 57%
Between N. America and Europe 27% 34% 21% 18%
Between N. America and S. America 9% 29% 40% 22%
Between Europe and S. America 20% 28% 22% 30%
Between N. America and Asia 41% 29% 10% 20%
Between Europe and Asia 36% 22% 19% 23%
Quality
Average Star Rating 3.29 3.19 3.73 2.87
5-Star Airlines 40% 0% 20% 40%
4-Star Airlines 29.03% 12.9% 12.9% 45.17%
3-Star Airlines 13.93% 9.01% 4.91% 72.15%
2-Star Airlines 0% 0% 0% 100%
1-Star Airlines 0% 0% 0% 100%
0-Star Airlines 0% 0% 1,06% 98,94%
Airline Alliance Market Share By Network Capacity 2007

Notes

  • In 2005, SkyTeam launched its Associate Program, whereby existing codeshare alliances (such as Continental and Copa) can be integrated into SkyTeam's marketing (shared loyalty programs, etc.) Template:PDFlink.
  • Network strengths are continents or regions where listed airlines have one or more hubs or a major presence in several destinations.
  • Network weaknesses are continents or regions with no hubs and few (if any) flights for any airline in the alliance.
  • On June 19, 2008, Continental announced that it would be leaving SkyTeam on October 24, 2009 and began participating in Star Alliance on October 27, 2009 as part of a codesharing agreement with Star Alliance charter member United Airlines (Continental cut its codeshare ties to Delta and Northwest).[6][7] United and Continental merged in 2010.
  • As the table shows, the three alliances combined fly 60.8% of all passengers.

References

  1. ^ Moscow's muscle flexing about overflight rights aims beyond Switzerland | World | Deutsche Welle | 12.06.2010. Dw-world.de (2010-02-22). Retrieved on 2011-03-04.
  2. ^ Perman, Stacy. (2010-09-05) Virgin's Richard Branson Circles His Wagons. TIME. Retrieved on 2011-03-04.
  3. ^ [1]
  4. ^ [http://www.skyteam.com/en/General-information/FAQ/
  5. ^ [2]
  6. ^ Continental Airlines – Proud member of Star Alliance. Continental.com (2009-10-27). Retrieved on 2011-03-04.
  7. ^ [3][dead link‍]
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