When the first two big global alliances formed about 15 years ago, it was sold as a seamless travel experience where you could change airlines as easily as changing planes within the same airline.
Of course, it didn’t always work like that in practice. Travellers complained about missing airport lounges and other missing perks that had been promised.
It was to be a bonus for frequent flyers, who would, for the first time, be able to access global points-earning-and-burning networks. Then travellers started to read the fine print – about points earning rates on partner carriers that might be only half what they thought they were getting.
In fact, my theory of why Oneworld and Star Alliance, then Sky Team, were invented was more to do with inhibiting competition than increasing customer convenience.
If an alliance could imprint every region of the earth with a brand, any new competitor was going to think twice about taking on a new patch of territory.
Alliances became virtual brands. Alliance-bound airlines became brokers of brands. Brokerage deals could be worked out by the airlines within an alliance to split up the revenue in a way that would advantage them all.
Internally, however, the alliances required the member airlines to effectively defy gravity.
If another airline was carrying your passengers, you weren’t earning the revenue. The idea that alliance passengers were “your” customers was a bit of an illusion.
That is one of the fatal flaws of the alliance concept, which explains why the brilliant idea of the 1990s is threatening to turn into a pointless self-imposed restriction in the second decade of the new century.
Qatar Airways, voted the 2012 airline of the year which flies to Melbourne and Perth from its base in Doha, is expected to announce today it is joining the Oneworld alliance, anchored by American Airlines and British Airways, just as Qantas weakens the alliance by going it alone in a joint venture with Qatar’s Gulf neighbour Emirates.
Emirates is now the world’s biggest international carrier and chief executive Tim Clark hates alliances, whose behaviour he likens to global “gang warfare”.
“I’m so opposed to alliances because I believe they distort and channel and direct for the greater good of the alliance thing, rather than the consumers that are driving it all,” he told Flightglobal.com.
Clark says the alliances – particularly Star – have created “a difficult, vicious structure internationally” and are paranoid about Emirates.
“We have learnt that we are considered to be the single largest threat to the Star Alliance group on the planet today,” he says. “While I’m hugely flattered by this, it is also a worry because it shouldn’t be that. There is actually room for us and our way of doing things, and the way they do. I don’t spend my time trying to take down Star Alliance. I’d rather work with all these airlines on an independent basis, and that’s what we do.”
According to Flightglobal.com, Emirates recently published a paper, Aviation at the Crossroads – Safeguarding Competition and Consumer Choice, in which it highlights tactics by the alliances that create a “join or perish” commercial incentive for non-aligned airlines. “The emergence of three mega-alliances presents public policy concerns that merit careful attention”, and could “harm consumers”, Emirates says in the paper.
But why is Clark so implacably opposed to the alliances? Well, part of it is the back-room dynamics.
“You must have total command and control of what you do,” he says. “You can’t allow yourself to be subjected to the whims of an amorphous board, like the Star Alliance, saying ‘you can’t do this, you can’t do that; you’ve got to buy this aeroplane; you’ve got to fly this route’. Not in the world as it is today.”
Instead, Emirates has simple code-shares with no fewer than a dozen airlines around the world designed simply to provide feed to its A380 and B777 jets in key cities around the world like New York (JetBlue), Johannesburg (South African Airways) and Tokyo (Japan Airlines) even though those airlines may be members of alliances.
Its latest joint venture with Qantas promises to be a bonanza as it gives Emirates access to the entire Qantas domestic and international network to feet its Dubai hub.
It’s hardly known outside the business press that Australasia (Australia and New Zealand) is Emirates’ biggest single region with the biggest single chunk of revenue in the world – about 30 per cent of its global network in terms of daily flights.
It’s also instructive that Virgin Australia, a young airline invented in 2000, also shuns the big alliances, reckoning it gets better value out of specific joint-venture one-on-one relationships with other airlines such as Etihad, Delta and Singapore Airlines.
Have you found that it has been worth doing all of your flying with one of the alliances, Oneworld, Star Alliance or Sky Team? Are there significant benefits? Have you found there are problems? Are you barracking for particular alliance developments in the years ahead? Post a comment below.