Reviewing Airline Alliances

1. What is an airline alliance?

An airline alliance is a partnership or agreement between two or more airlines to cooperate and share resources in order to improve their overall services and provide better connectivity for their customers. This can include shared frequent flyer programs, codesharing (selling tickets on each other’s flights), coordinated schedules, and joint marketing efforts. These alliances allow member airlines to expand their network and reach more destinations, while also offering benefits such as seamless travel experiences, convenient connections, and loyalty program perks for passengers. Examples of airline alliances include Star Alliance, Oneworld, and SkyTeam.

2. How many major global airline alliances are there currently?

Currently, there are three major global airline alliances: Star Alliance, oneworld, and SkyTeam.

3. Can an airline be part of more than one alliance?

Yes, an airline can be a part of more than one alliance. Some airlines have codeshare agreements with multiple airlines in various alliances, allowing them to offer a wider range of destinations and benefits to their customers. For example, Delta Air Lines is a member of the SkyTeam alliance, but also has codeshare agreements with non-SkyTeam airlines such as Virgin Atlantic and WestJet.

4. How do airlines benefit from being part of an alliance?

Airlines benefit from being part of an alliance in several ways:

1. Extended network: By joining an alliance, airlines can expand their reach by accessing routes and destinations served by other member airlines. This allows them to offer customers a wider range of flight options and connections.

2. Code-sharing: Airlines in an alliance often sign code-sharing agreements, which allow them to sell tickets on each other’s flights, expanding their reach even further. This also enables seamless connectivity for customers traveling on multiple airlines within the alliance.

3. Cost savings: Being part of an alliance allows airlines to reduce costs through joint purchasing of equipment and services, such as fuel, ground handling, and catering.

4. Loyalty program benefits: Most alliances have a shared frequent flyer program, which means that members can earn and redeem miles or points across all member airlines. This encourages loyalty among customers and helps retain them within the alliance network.

5. Operational efficiency: Airlines in the same alliance can coordinate their schedules and operations, making it possible to streamline processes like baggage handling, check-in procedures, and aircraft maintenance.

6. Marketing opportunities: Being part of an alliance gives airlines access to joint marketing campaigns and promotions, increasing their brand visibility and potential customer base.

7. Cost-effective growth: Joining an alliance can help smaller or regional airlines gain a foothold in the global market without having to invest heavily in new routes or aircraft.

8. Knowledge sharing: Alliance members have the opportunity to share best practices, industry expertise, and technology advancements with each other, leading to improved operational performance.

Overall, being part of an airline alliance provides multiple benefits for member airlines as they strive towards growth, cost-efficiency, and enhanced customer experience.

5. What types of partnerships exist within an alliance?

Partnerships within an alliance can take on various forms depending on the specific needs and goals of the organizations involved. Some common types of partnerships within an alliance include:

1. Strategic Partnerships: This type of partnership involves two or more organizations coming together to achieve a shared goal or solve a specific problem. They may pool resources, share expertise, or collaborate in other ways to achieve their mutual objectives.

2. Joint Ventures: A joint venture is a partnership in which two or more organizations contribute resources and share the risks and rewards of a specific business project. They usually have a defined time frame and require significant investment from each partner.

3. Product/Service Partnerships: This type of partnership involves collaboration between two organizations to create new products or services by combining their respective strengths and capabilities.

4. Distribution Partnerships: Distribution partnerships involve cooperation between two companies to expand their reach into new markets by utilizing each other’s distribution channels.

5. Research and Development (R&D) Partnerships: R&D partnerships entail collaboration between companies to jointly develop new technologies, products, or services.

6. Marketing Alliances: A marketing alliance is a partnership between two brands in which they promote each other’s products or services, often through co-branding campaigns or joint marketing efforts.

7. Licensing Agreements: In this type of partnership, one company grants another company permission to use its intellectual property, such as patents, trademarks, or copyrights, in exchange for a fee.

8. Mergers and Acquisitions: While not technically a partnership, mergers and acquisitions involve the combination of two companies into one entity through either the acquisition of one company by another or the merging of equals.

9. Supplier Relationships: An alliance can also exist between an organization and its suppliers as they work together to ensure reliable access to essential goods and services required for operations.

10.Donor/Recipient Partnerships: Non-profit organizations often form partnerships with donors or recipients to support a specific cause or project. This type of alliance is typically based on a shared vision and common goals.

6. Are all members of an alliance required to have codeshare agreements with each other?

No, it is not a requirement for all members of an alliance to have codeshare agreements with each other. These agreements are voluntary partnerships between individual airlines and may not be necessary or feasible for all members. However, codeshare agreements can strengthen the overall benefits and connectivity within an alliance.

7. How are routes and schedules coordinated between alliance members?

Routes and schedules between alliance members are coordinated through regular meetings, communication channels like email or phone, and a common database for tracking flight schedules. The alliance may also have a dedicated team or department responsible for optimizing routes and schedules to maximize connectivity and profitability for all member airlines. Factors such as market demand, aircraft availability, and government regulations are taken into account when coordinating routes and schedules. Member airlines may also share data on customer demand and booking patterns to help determine the most effective routes and schedules. Changes in routes or schedules are communicated among alliance members in a timely manner to avoid disruption to operations.

8. Is there a common loyalty program for all members of an alliance?

Yes, some airline alliances have a common loyalty program for all their members. For example, Star Alliance has the Miles & More loyalty program that is shared by all its member airlines, including Lufthansa, United Airlines, and Singapore Airlines. Similarly, SkyTeam has the SkyTeam Elite and Elite Plus status levels that offer benefits across all its member airlines. However, not all alliances have a common loyalty program for their members. For instance, oneworld alliance does not have a single loyalty program for all its members, although some airlines within the alliance do share a frequent flyer program (e.g. American Airlines and British Airways both belong to both oneworld and Oneworld’s AAdvantage rewards program).

9. Do all airlines within an alliance offer the same level of service and amenities?

No, not all airlines within an alliance offer the same level of service and amenities. While they may have similar overall standards and policies, each individual airline has its own unique branding, products, and services. Some airlines within an alliance may offer more luxurious amenities and services than others, while some may focus on budget-friendly options. It is important to research each specific airline’s offerings before booking your flight.

10. How do new airlines join an existing alliance?

New airlines can join an existing alliance by following these steps:

1. Research and determine the best alliance for your airline: Before applying to join an alliance, it is important for the airline to research and determine which alliance best aligns with its business goals and target markets.

2. Determine eligibility requirements: Each alliance has its own set of eligibility requirements that airlines must meet in order to join. Some common requirements include financial stability, operational performance, and a certain number of routes or destinations.

3. Contact the alliance: Once the airline has identified the appropriate alliance, they should contact the alliance’s membership department to express their interest in joining. The contact details can usually be found on the alliance’s website.

4. Submit an application: The airline will be required to submit a formal application which includes detailed information about their operations, financial performance, and potential contributions to the alliance.

5. Evaluation process: After submitting an application, the airline will go through an evaluation process where their application will be thoroughly reviewed by members of the alliance.

6. Approval from existing members: Most alliances require approval from existing members before accepting a new member. Existing members may have concerns about competition or potential conflicts with new members.

7. Negotiate terms and conditions: If approved, the airline will enter negotiations with the alliance regarding terms and conditions of membership such as financial obligations, codeshare agreements, and route partnerships.

8. Membership acceptance: Once all terms are agreed upon, the final step is for the airline to officially become a member of the alliance.

9. Integration process: After joining an alliance, new airlines must go through an integration process where they align their operations with other member airlines such as frequent flyer programs, lounge access policies, and scheduling coordination.

10. Start participating in alliances programs and benefits: Once fully integrated into the alliance network, new members can start participating in joint programs and benefits such as code-sharing agreements, lounge access for customers, and joint marketing initiatives.

11. Can airlines merge without affecting their membership in their respective alliances?

Yes, airlines can merge without affecting their membership in their respective alliances. Membership in an alliance is typically determined by the airline’s network and operations, rather than its ownership or merger status. As long as the merged airline continues to meet the requirements and standards set by the alliance, it can maintain its membership. However, a major merger may sometimes require approval from the alliance’s other members.

12. Are passengers able to earn and redeem frequent flier miles across different member airlines within an alliance?

Yes, passengers can earn and redeem frequent flier miles across different member airlines within an alliance. For example, a member of the Star Alliance can earn and redeem miles with any other member airline such as United Airlines, Lufthansa, Air Canada, etc. Similarly, members of the oneworld alliance can earn and redeem miles with any other member airline such as American Airlines, British Airways, Cathay Pacific, etc.

13. What is a “codeshare flight” and how does it differ from a regular flight on a specific airline?

A codeshare flight is a commercial agreement between two or more airlines to share the same flight under their own airline designator and flight number. This allows each airline to sell seats on the same flight, giving passengers more options for booking and connecting flights.

This differs from a regular flight on a specific airline in that the codesharing airlines may have different operating procedures, baggage allowances, and frequent flyer programs. Passengers may also check-in with one airline, but fly on a plane operated by another.

14. Can travelers book a multi-leg trip using multiple member airlines within one reservation through an alliance partnership?

Yes, travelers can book a multi-leg trip using multiple member airlines within one reservation through an alliance partnership. This can be done by contacting the airline’s customer service or by using a travel agent who specializes in booking alliance partnerships.

15. Are there financial considerations involved with joining or maintaining membership in a global airline alliance?

Yes, there are financial considerations involved with joining or maintaining membership in a global airline alliance. These may include:

1. Joining and annual membership fees: Airlines are required to pay a joining fee when they first become members of an alliance, as well as annual membership fees to maintain their status.

2. Integration costs: Joining an alliance may also involve significant costs for the integration of airline systems, processes, and technologies. This can include things like updating booking systems, training staff, and implementing new marketing strategies.

3. Code sharing agreements: As part of their membership in an alliance, airlines often enter into code-sharing agreements with other member airlines. This requires them to make a financial investment in marketing and promoting each other’s flights.

4. Revenue sharing: Airlines in a global alliance share revenue from flights that are operated by partner airlines but sold under their own carrier codes. This means that while the alliance can increase overall sales for its members, each individual airline may earn less revenue per flight.

5. Distribution costs: Being part of an alliance typically involves being listed on its website and mobile app, as well as being included in promotional materials. While this can help increase visibility and sales for member airlines, it also comes at a cost.

6. Access to lounges and amenities: Many global alliances offer access to airport lounges and other amenities for their elite frequent flyers. These benefits can be costly for the airline providing them but are seen as valuable perks for loyal customers.

7. Marketing expenditure: Airlines in alliances may jointly fund marketing campaigns and sponsor events to promote the network as a whole. This could entail additional costs for member airlines.

8. Remedial expenditures: In some situations, alliances may require members to invest money in struggling or underperforming carriers to improve their performance or prevent them from leaving the alliance.

Overall, joining or maintaining membership in a global airline alliance involves significant financial investments for individual airlines. However, the benefits of increased network reach, cost savings through shared resources, and access to a larger customer base can make it a worthwhile decision in the long run.

16. Do alliances have any impact on ticket prices or competition between member airlines?

Alliances can have an impact on ticket prices and competition between member airlines, but the exact nature of this impact may vary. In some cases, alliances can lead to lower ticket prices due to increased cooperation and sharing of resources among member airlines. This can result in more competitive pricing and a wider range of flight options for passengers. However, in other cases, alliances may reduce competition by allowing member airlines to coordinate prices and schedules without fear of direct competition. This can potentially lead to higher ticket prices for passengers. Overall, the impact of alliances on ticket prices and competition will depend on the specific circumstances and dynamics within each alliance.

17. Can passengers expect seamless connections between flights when traveling on separate member airlines through an alliance?

Yes, passengers can typically expect seamless connections when traveling on separate member airlines through an alliance. Member airlines in an alliance work closely together to coordinate schedules and flight arrangements, making it easier for passengers to transfer between flights without any hassles. This may include joint check-in and baggage procedures, as well as assistance from alliance staff in case of any delays or changes in flight plans. Additionally, many alliances offer reciprocal benefits such as access to lounges and priority boarding for their members’ passengers, further enhancing the seamless travel experience.

18. How do regulatory agencies view and monitor airline alliances?

Regulatory agencies such as the Department of Transportation (DOT) and the European Commission (EC) view and monitor airline alliances through a combination of antitrust laws, open skies agreements, and voluntary cooperation.

1. Antitrust Laws: In the United States, the DOT and the Department of Justice (DOJ) enforce antitrust laws, which are designed to prevent companies from engaging in anti-competitive behavior that could harm consumers. This includes monitoring airline alliances for potential anti-competitive practices such as price fixing and market dominance.

2. Open Skies Agreements: Many countries have signed open skies agreements with each other, which allow airlines to operate without restrictions on routes, capacity or pricing. These agreements often include provisions for competition regulators to review and approve any joint ventures or alliances between airlines.

3. Voluntary Cooperation: Airlines can also voluntarily cooperate with regulatory agencies by submitting information about their alliance activities for review and approval. This may include details on codeshare partnerships, revenue sharing arrangements, and other cooperative arrangements within an alliance.

Additionally, regulatory agencies may also conduct periodic audits or investigations of alliance activities to ensure compliance with antitrust laws and open skies agreements. If any anti-competitive practices or violations are found, penalties may be imposed on the airlines involved.

In summary, regulatory agencies closely monitor airline alliances to ensure fair competition in the industry and protect consumer interests.

19.Have there been any notable cases of disputes or conflicts among member airlines within an alliance?

Yes, there have been several notable cases of disputes or conflicts among member airlines within an alliance. One example is the Qatar Airways and Emirates feud, where the two Gulf carriers engaged in a heated conflict over route rights and subsidies. This led to both airlines withdrawing from their respective alliances (Qatar Airways from Oneworld and Emirates from the SkyTeam) and pursuing individual strategies.

Another major dispute was between Delta Air Lines and other U.S. legacy carriers (American Airlines, United Airlines) over alleged anti-competitive practices by Gulf carriers such as Qatar Airways. This led to Delta leaving the airline alliance trade group, Airlines for America, and launching a campaign against alleged unfair competition from these Gulf carriers.

In addition, there have been conflicts over codesharing agreements among member airlines within alliances, such as the ongoing dispute between Lufthansa Group and several Star Alliance members over codeshare routes with Turkish Airlines. There have also been disagreements over distribution channels and commission rates for travel agents between different members of an alliance.

Overall, while airline alliances aim to foster cooperation between member airlines, conflicts can arise due to competition among partners or disagreements on strategy and policies.

20.Can small regional carriers also become members of a global airline alliance, or is it limited to larger national carriers only?

Yes, small regional carriers can also become members of a global airline alliance. The main criteria for joining an alliance is the size and reach of the airline, as well as their quality and reputation, rather than their nationality or ownership structure. Many global airline alliances have member airlines of various sizes and from different countries. For example, Star Alliance includes regional airlines such as Adria Airways and Aegean Airlines, while SkyTeam includes regional carriers like Aerolineas Argentinas and TAROM. Ultimately, it depends on the specific requirements and rules set by each alliance.