On 30 October 2013, Qatar Airways officially joined a global airline alliance, in this case oneworld. We are the first Gulf carrier to join an international alliance," says Éric Didier, Director of France at Qatar Airways. Another aviation first is that it took us just one year to join oneworld, thanks to our solidity and quality of service. This arrival is symbolic, because it puts an end to years of polemics and "little words" between the Middle Eastern carriers and the incumbent airlines.
For years, the existing alliances - oneworld and SkyTeam, but above all Star Alliance - vilified the players from the Gulf, accusing them of diverting connecting traffic from other airlines by offering low fares, the fruit of support from their supervisory states through more or less disguised subsidies. From then on, the aim was to bring these lost sheep back into line by integrating them. And that took a decade...
Of course, these three alliances had already taken a first step by welcoming airlines based in the region. Turkish Airlines and Egyptair joined Star Alliance, Royal Jordanian was welcomed by oneworld and SkyTeam welcomed Saudi Arabian and Middle East Airlines last year. But Qatar's entry into oneworld marks a further step forward, as it is one of the Gulf's three megacarriers. And its entry could encourage other players in this part of the world to join an alliance, starting with smaller carriers such as Oman Air, Gulf Air and Kuwait Air, all of which are seeking to raise their profile outside their home markets. Above all, it paves the way for the integration of another big player, Etihad Airways. Most likely to join SkyTeam, the airline having signed an extensive commercial partnership with Air France-KLM in 2012 and set up another agreement with Indonesia's Garuda, which will soon be joining SkyTeam.
Speculation is still rife, barely dampened by the comments of the company's CEO, James Hogan, published in July in the magazine The Economist. Indeed, James Hogan rejected, no more and no less, the idea of joining any of these organisations, which he described as They are "bureaucratic, rather slow to react, and find it hard to deliver what they promise their members".. Is this less than encouraging description intended to raise the stakes? Is Etihad negotiating its entry ticket?
Whatever happens, it's clear that alliances continue to have the wind in their sails. Between 2012 and the beginning of 2014, a dozen new airlines - and not the least - joined their ranks. Star, the largest of the three, welcomed the Latin American group formed by Avianca TACA (Colombia/Costa Rica) and Copa (Panama) in 2012, followed by the Chinese regional carrier Shenzhen Airlines and Taiwan's Eva Air. This brings the total number of members to 28. 2012 was also a very good year for SkyTeam, with Aerolineas Argentinas, Middle East Airlines (Lebanon), Saudi Arabian Airlines and China's Xiamen Airlines all joining in quick succession. 2014 will see the arrival of Garuda Indonesia. In all, the alliance will have 19 airlines next year.
Transfer to the summit
While oneworld only integrated one airline last year - Air Berlin - 2013 and 2014 are set to be excellent years. The alliance welcomed Malaysia Airlines in February, then Lan Colombia and Qatar Airways in October. We have already announced the arrival of SriLankan Airlines and above all, on 31 March 2014, Brazil's TAM, which will be swapping the Star Alliance colours for those of oneworld. This will bring the total number of members to 16 next year. "We currently have a market share of 24 % of traffic revenues in the top 100 business cities. With our new members, we will reach 27 %".says Michael Blunt, Vice President Communications for oneworld.
Planetary flight plans
There is now virtually no part of the world not covered by an alliance. There are still some relative weaknesses in Latin America - Central America in particular - Central and West Africa, North Africa and India. The three players are certainly present in these regions, serving the capitals or major economic centres, but the absence of a local partner limits the possibilities of connections or multi-stop journeys. This situation is mainly due to the poor economic health of potential partners in these areas. In West Africa, for example, it is currently almost impossible to find a company offering financial and strategic reliability, as local carriers have a knack of appearing or disappearing at the whim of political and economic events...
India, meanwhile, is in crisis, suffering from overcapacity in its air transport sector. This has led to the consolidation, and even the disappearance, of many airlines. Star Alliance, which announced the integration of Air India a few years ago, was finally forced to abandon its plans in the face of the ongoing restructuring of India's national airline. Air India recently reaffirmed its interest in joining Star, but the process is likely to be lengthy. For its part, SkyTeam is clearly eyeing Jet Airways to increase its footprint in the country. Jet Airways, renowned for its quality of service and excellent international network, has recently been joined by Etihad Airways. A real guarantee of stability! As for oneworld, it has finally found a replacement for Kingfisher, its original partner which has gone into liquidation, through SriLankan. According to Bruce Ashby, CEO of oneworld, Sri Lankan represents an excellent alternative to an Indian airline in liquidation. "offering high quality and reliability and an extensive network throughout the Indian sub-continent".he estimated last February in Kuala Lumpur. SriLankan serves 14 destinations in the region, including 10 in India.
But why are airlines so interested in joining an alliance? Mainly because of the operational cost savings they generate: grouped purchases of services, joint development of technological platforms, pooling of services at airports with shared check-in desks or lounges, etc. In an interview with the magazine New York TimesMarie-Joseph Malé, former CEO of SkyTeam, recounted how the grouping of SkyTeam airlines at London Heathrow terminal 4 had enabled the number of check-in counters to be reduced to 48, compared with more than 60 if each airline had continued to work separately...
"Knowing that multi-company cooperation is rather complex, Skyteam facilitates the development and implementation of joint projects as well as cost and revenue synergies.explains Michael Wisbrun, CEO of SkyTeam.. More than just expanding the network, we are focusing on developing customer services to offer them a seamless journey from end to end. For example, with the launch of our SkyPriority service, which guarantees VIP priority treatment for our high value passengers."
The second factor explaining this trend towards consolidation is that alliances give airlines universal recognition. This is an essential marketing tool for regional carriers, for whom alliances are the most practical, if not the only, way of offering passengers a global network. Our entry into SkyTeam has been decisive for our group's strategy," explains Alcino Ribeiro, Director of France and Belgium for the Spanish airline Air Europa. SkyTeam has enabled us to develop our Madrid hub by positioning it as a gateway to Latin America, with connections between Europe and a dozen cities in the region..
Don't go it alone
It's true that joining an alliance is expensive, costing around a hundred thousand dollars. But it's still a lot less than a capital-intensive merger or taking a stake in another carrier. All the more so as these often come up against the legislation of countries that are reluctant to see their national airline go under a foreign flag. So when a spokesman for Aeroflot told Reuters that it was considering leaving the SkyTeam alliance because it did not want to, his comments were immediately denied by the Russian carrier's CEO, Vitaly Saveliev, who said that the company could lose 20 million dollars by going it alone.
Finally, there are the services and products, the sinews of war for winning over and retaining the loyalty of business passengers. A lot of work goes on behind the scenes," Star Alliance CEO Mark Schwab told the Aviation Club of Washington last August. For example, we have created unique standards for the quality and consistency of our offer in areas as diverse as passenger services, the exchange of computer data and the standardisation of our technologies. These standards are essential and guarantee that our passengers will continue to judge us as better than our competitors.. This sentiment is shared by oneworld, which clearly targets business passengers: "We have based our entire alliance strategy on quality rather than quantity. The market segment we are targeting is business traffic to and from the world's 100 largest economic centres".says Michael Blunt.
Business services
The alliances have also created a wide range of travel management offers and tools in recent years. These range from online booking of itineraries integrating several airlines to specific programmes for companies - including SMEs - including customised solutions and specific fares. More recently, the alliances have introduced dedicated services for organisers of congresses or incentive trips. SkyTeam, for example, has set up its "SkyTeam Global Meetings" service, which handles travel management for large international conferences, while oneworld has launched a unique service - "oneworld events" - which centralises and simplifies the travel planning process. For its part, Star offers 'Conventions Plus', which entitles travellers to reduced fares if Star becomes the official alliance for an event, as well as 'Meetings Plus', which provides organisers with a single point of contact.
All the alliances have also been working on common smartphone applications. In May, for example, Star launched the Star Alliance Navigator application, which provides a 3D view, on an iPad, of the alliance's destinations and flights, as well as access to a wide range of services: timetable search, itinerary storage, flight status or even the location of an airport lounge, etc.
Other customer benefits offered by an alliance include the possibility of purchasing round-the-world fares and airpasses by continent, and full equivalence of frequent flyer programmes. Recognition among all the members of an alliance is one of the structuring elements for business passengers. "This is an important factor, because many airlines are only known in their own national markets. But in a global world, we need to be recognised beyond our own borders. At Alitalia, we realised this when SkyTeam introduced its SkyPriority offer. It has given our airline greater visibility abroad, because the same privileges are granted to passengers regardless of the airline they fly.says Fabrizio Mazzei, Sales Manager at Alitalia France. For its part, oneworld has set up a simplified connections solution with a dedicated team to advise and guide transfer passengers. This Global Support service is already operating in eight airports, including London Heathrow, Los Angeles, Madrid, New York and Sydney.
A future in suspension points
Does this mean that alliances are here to stay? The world of air transport is changing fast, very fast indeed, and a new form of partnership is already emerging on the horizon that could threaten their very existence: airline takeovers. This is the strategy being pursued by Etihad in particular - we keep coming back to this! In fact, the Abu Dhabi-based carrier has become a champion of acquiring stakes in airlines whose financial health is faltering. Air Berlin, Air Seychelles, Virgin Australia, Aer Lingus (Ireland), JAT (Serbia) and very recently Jet Airways (India) give Etihad a portfolio of airlines that it could eventually bring together under a global entity. This would enable it not to give in to SkyTeam's appeals. There are also whispers that IAG, which includes British Airways, Iberia and Vueling, is also considering integrating other carriers under its brand and consolidating them within its transatlantic joint venture with American Airlines. Airline conglomerates versus marketing alliances: here's a new duel that's likely to be exciting in the long term!
