Airline Alliances

High on Hype or Valuable Perk?

by Takeoffeh.com

For frequent flyers, airline alliances are a way of life. Oneworld, Star Alliance, SkyTeam – they all claim to offer travellers the world on a silver wing. In looking into why the airlines formed these global agreements, it’s clear there are many advantages for them. But what about for you?

Alliances were created by airlines for airlines – they are businesses after all. The initial idea was to extend their networks through code-sharing agreements – in other words, while airline A may not fly directly to your destination, they can take you part of the way and hand you over to partner Airline B, who does. The appearance of a relatively seamless trip extends to selling the flights as being on one carrier – from the search results to ticketing.

Since governments are notoriously protective of their national airlines, they make the creation of global brands extremely difficult. Alliances have created a way to get around many of those obstacles.

Formed in 1997, Star Alliance was the first and remains the largest, with 28 members including Air Canada. More than 500 million passengers fly with Star Alliance members each year. Oneworld was next. Launched in 1999 it has just 11 members, but they include biggies like American Airlines, British Airways and Cathay Pacific. SkyTeam is the youngest of the group, formed in 2000 and featuring a dozen members. Together, the three alliances represent almost three-quarters of global air travel.

As alliances have grown in size and importance, they’ve also expanded in scope. Member airlines now share sales offices, maintenance, catering and IT facilities, operational staff and purchasing programs. These add up to cost savings that have become all but essential in a highly competitive marketplace.

So what’s in it for you? Frequently cited alliance benefits to travellers include lower fares due to lower operational costs, more departure times to choose from on a given route, easier access to more destinations, optimized connections, easier access to shared airport lounges and the ability to earn mileage rewards from multiple carriers for a single account.

Critics say alliances can have negative impacts on customers too, such as higher fares when competition on specific routes is reduced and less frequent flights on shared routes. And avid flyers and mileage collectors complain about variations in perks and policies between members of the same alliance. “There are still really deep pockets of incompatibility. It’s not always what it’s cracked up to be,” said Randy Petersen, founder of FlyerTalk.com, in a recent Wall Street Journal article.

Despite some complaints, for most frequent flyers the biggest attraction of alliances is earning miles and enjoying privileges like priority check-in, boarding and lounge access. Flying isn’t much fun these days and anything that eases the pain is welcome. In fact, alliances have now become so important for miles and perks that picking an alliance may be more important than picking an airline.

A recent Wall Street Journal article rated the three alliances on a variety of measures. For example, it suggested that using mileage points for a free ticket or to upgrade from economy to business class is generally easier if you’re a Star Alliance member. It found that airport lounge access is often better for frequent fliers at Oneworld. Overall, though, the Wall Street Journal gave decent marks to all three alliances, giving Star an A-, Oneworld a B and SkyTeam a B-.

Airline alliances have become a critical component of the industry and will remain so well into the future. “Alliances exist because airlines cannot offer comprehensive global coverage the way consumer brands like Nescafé or Coca-Cola do,” aviation consultant Olivier Fainsilber recently told Agence France Presse. “Everyone wins with alliances, which is why airlines and travellers like them and competition authorities accept them.”

Image Credits: DSGpro, staralliance.com, oneworld.com




Browse

Your email address will not be published. Required fields are marked *