Reports on the demise of airline alliances are being greatly exaggerated

The death warrant for global alliances is routinely issued. It takes only a squabble between members or one airline’s partnership with a member outside the alliance to see the entire value of global alliances come into question, with a prediction of collapse, disbandment and obliteration. Yet in reality, reports of their demise have been greatly exaggerated; global alliances have been busy creating a new life.

Global alliances are seeking greater relevancy to the member airlines they serve. This ownership is often forgotten: alliances are not in pursuit of capitalism and self-promulgation; alliances serve the members they represent. A branded alliance has no utility if it has no member airlines.

Member airlines of all three alliances have some common developments for alliances to factor into their new strategies, which have come under review following recent leadership change at all three alliances. Alliances that are to be successful in the future will not just accommodate changes but support them and the new business activities of member airlines.

The most prominent and controversial need for alliances is to support joint ventures. When JVs are created amongst an alliance’s members, questions persist if the alliance is needed since members are forming ties amongst themselves that sometimes exclude other members. When JVs are created between a member and non-member, the purpose of global alliances comes under even greater question.

Global alliances have typically been the foundation for multiple-airline JVs; they are the platform for partners to take their relationships that step further. Global alliances can facilitate the invisible back end functions that link the members. This role has the potential to take on greater scope as airlines leverage the market and passenger data they have ignored for so long. On another level, these new areas of activity raise competition issues and need to be accompanied by ring-fencing and regulatory compliance.

The opportunities for global alliances to bring together and support member airlines and their passengers are in some ways greater than ever before. Yet cohesiveness at some airlines will require exclusion with other members. This will create casualties. The resulting changes have the potential to lead to alliance membership musical chairs.

This CAPA report looks at the three global alliances’ evolution of strategy and recent changes in management; how alliances are being tasked with three pillars to facilitate and support: joint-ventures, unbundling and how to grow membership, mostly in the LCC/hybrid space and the emergence of the first low-cost alliances.

READ MORE… Branded global alliances aren’t dead – yet