How Airline Alliances Are Changing the Face of Travel

It used to be that domestic travel was dominated by three major carriers – United, Delta and American – who cashed in on customer loyalty. Now, the travel industry is becoming dominated by three airline alliances – Oneworld, Star and Skyteam – which industry experts say are making major carriers less relevant.

“In 10 years, it might not make much difference whether it’s United or American flying the airplane. It will be competition among Star, Oneworld and SkyTeam,” Michael Boyd of consulting firm Boyd Group told the New York Times.

What Is an Airline Alliance?
The major hallmark of an airline alliance is an agreement between two or more airlines to operate under the same flight number or code for different routes. Also called code-sharing, a passenger can buy a seat on a specific flight from one airline, but that flight might actually be operated by another airline.

Code-sharing gives participating airlines a market in more cities, without actually having to offer any additional flights, and it allows passengers to easily book flights – especially to international destinations – without forfeiting frequent flier points.

According to a recent article in the New York Times, airline alliances became popular in the 1990s when airlines wanted to expand their international routes, offer a more integrated travel experience for passengers, and share revenue.

It was a way for airlines to get around rules that limited the number of flights a foreign airline could operate in and between countries, according to a USA Today article. For example, a U.S. airline can fly to Canada, but it cannot operate flights between Canadian cities or from Canadian cities to cities in other foreign destinations.

With airline alliances, a U.S carrier can offer connecting flights at international destinations that are operated by another alliance member. Because of strict restrictions on mergers with foreign airlines, U.S. carriers especially are looking toward alliances as a way to cut costs while increasing sales, according to Reuters.

What Are the Major Alliances?

Oneworld
Founded: 1999 by American Airlines, British Airways, Canadian Airlines, Cathay Pacific and Qantas.
Size: 12 member airlines
Destination countries: 150
Full members: American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malev, Mexicana, Qantas, Royal Jordanian, S7 Airlines

Star Alliance
Founded: 1997 by United Airlines, Air Canada, Lufthansa, Scandinavian Airlines and Thai Airways International
Size: 28 member airlines
Destination countries: 189
Full members: Adria Airways, Aegean Airways, Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, Austrian Airlines, Blue1, bmi, Brussels Airlines, Croatia Airlines, EgyptAir, Ethiopian Airlines, LOT Polish Airlines, Lufthansa, Singapore Airlines, South African Airways, Spanair, Swiss International Air Lines, TAM Airlines, TAP Portugal, Thai Airways International, Turkish Airlines, United Airlines, US Airways.

Skyteam
Founded: 2000 by Aeromexico, Air France, Delta Air Lines and Korean Air
Size: 15 member airlines
Destination countries: 173
Full members: Aeroflot, Aeromexico, Air Europa, Air France, Alitalia, China Airlines, China Eastern Airlines, China Southern Airlines, Czech Airlines, Delta Air Lines, Kenya Airways, KLM, Korean Air, TAROM and Vietnam Airlines.

How do Alliances Affect Passengers?
Alliances offer more seamless travel to passengers – especially international business passengers. But for those who travel less frequently, they might create some confusion.

An ABCNews.com article offered the following scenario as an example:

Say you buy a ticket from American Airlines for a flight offered by Alaska Airlines on a route not served by American Airlines. American Airlines gets your ticket money in return for an American Airlines flight number; however, the flight is actually an Alaska Airlines flight operated by Alaska Airlines crew on an Alaska Airlines route. (That’s right, American gets your money but Alaska provides the plane, crew and gas).

If that is not confusing enough, when you look at the departures board, the flight is listed as an American Airlines flight; however, you won’t be able to check in or check your bags at the American Airlines counter – you will have to go over to the Alaska Airlines counter.

The biggest advantage to passengers is that if they are members of one frequent flier program, they can earn and redeem points or miles through other airlines in the alliance.

Elite members, however, need to be aware that the experience is not consistent for each member airline. Your elite status on one airline won’t necessarily get you those free upgrades you have come to enjoy on another airline in the alliance – although you can probably still get access to lounges, priority boarding and higher status levels.

Other advantages to passengers when it comes to airline alliances include:

  • More departure times to a given route
  • Lower prices because of reduced operational costs
  • More destinations
  • Shorter travel time because of optimized connections
  • Greater access to lounges

Be alert for the words “code-share” when booking your flight online or by phone. It is important to know who you are flying with before you arrive at the airport!

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Published: January 5, 2012