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KarelXWB
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BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 12:04 am

BA and EK have some opinions to share about the future or airline alliances:

Speaking overnight at London's World Travel Market expo, Walsh said that “alliances add value today but I would question whether they will continue that in the future. There was a need and there still is a role for them to play but I would be surprised and question whether they will exist in 10 years from now."

Instead, the future will be paved with bespoke arrangements between individual airlines.

"I think relationships have changed and you are seeing more deals such as joint ventures," Walsh added.

Emirates' president Tim Clark, speaking at the same travel conference, opined that alliances may well survive "but take a different format."


Source
http://www.ausbt.com.au/ba-emirates-chi ... -alliances

Thoughts?
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910A
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 12:56 am

I have to agree with Mr. Walsh. Does an alliance really accomplish anything anymore? What does Air Berlin bring to OneWorld, or Brussels/Croatia bring to Star that couldn't be accomplished by interline agreements, or joint ventures?
 
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TheFlyingDisk
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 1:10 am

The fact that OW is very liberal when it comes to extra-alliance partnership (think EK & QF/MH) just goes to show that the current alliance model will falter. The only question is when.
I FLY KLM+ALASKA+QATAR+MALAYSIA+AIRASIA+MALINDO
 
bill142
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 1:16 am

You only need to look at Virgin Australia's "virtual alliance" to see what a failure a hodgepodge of agreements and joint ventures will be. Proper alliances offer consistency to your frequent flyers.
 
xiaotung
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 1:26 am

I bet Mr Walsh will not say the same if BA were in Star or SkyTeam. He just gets frustrated that oneworld cannot find a proper partner in important markets like China and India.
 
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KruegerFlaps
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 1:40 am

That Tim Clark expresses such a view isn't surprising. He has long argued that formal alliances are restrictive and impede the ability to respond quickly to changing circumstances. Despite that, he and Emirates have shown a willingness to enter into limited partnerships with individual airlines where it offers advantages. The current alliance with Qantas is an example.

His reference to B2C highlights the way in which formal alliances, while not obsolete, are of less relevance as would be passengers can go directly to inventories and select routing and airlines to suit themselves rather than relying on either one airline sales representative or travel agents tied to a particular alliance.
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vhtje
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 1:50 am

910A wrote:
I have to agree with Mr. Walsh. Does an alliance really accomplish anything anymore? What does Air Berlin bring to OneWorld, or Brussels/Croatia bring to Star that couldn't be accomplished by interline agreements, or joint ventures?


I think it depends on to whom the question is posed. Mr Walsh and Mr Clark run airlines. For them, the alliance is all about what passenger feed they get (and therefore what revenue) from the alliance vs what additional costs they incur by being in the alliance.

For passengers, however, the view point is very different, and I'll wager that for the majority of frequent flyers, alliance is important. I know for myself when given the choice between an alliance carrier and a non-alliance option, I will choose the alliance carrier every time, even if it costs more. Why? Simple: I get benefits on alliance carriers that I would not if I chose outside of my alliance. Perhaps small, but nevertheless meaningful differences; enough to make a difference to my journey. Airmiles are icing on the cake.

Airlines may indeed decide alliances are no longer worth the cost and effort, but unless they can influence passenger behaviour, they may lose out by leaving an alliance. Aer Lingus may be an interesting study - did they lose passengers when they left oneworld?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
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LAX772LR
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 2:31 am

xiaotung wrote:
I bet Mr Walsh will not say the same if BA were in Star or SkyTeam.

I bet he would.

Alliances were the optimal path in the '90s/'00s.

Immunized J/Vs + equity states, are now more the rule than the exception, in terms of what carriers would prefer; and that's not unique to OneWorld.
I myself, suspect a more prosaic motive... ~Thranduil
 
YIMBY
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Nov 09, 2016 5:43 am

Alliances matter depending on the regularisation. The rules can be changed.

They may matter the most to the frequent travellers with their bonus programmes. In my opinion, those programmes are anticompetitive - often even corruptive - and should be prohibited by law.
 
downdata
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 4:36 am

YIMBY wrote:
Alliances matter depending on the regularisation. The rules can be changed.

They may matter the most to the frequent travellers with their bonus programmes. In my opinion, those programmes are anticompetitive - often even corruptive - and should be prohibited by law.


Yes well the same could be said about any loyalty program including, say, starbucks. Outlawing all of them is simply not possible to begin with.
 
drdisque
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 4:47 am

Even take it from a Star Member like United's position. They get a ton out of the A++ JV with AC and the LH group of airlines (LH, LX, OS, soon to be SN) and their J+ JV with ANA. However, the forced alliance with Asiana actually is a competitor to J++ since they are forced to pro-rate a ticket sold on OZ metal while a ticket sold on UA/NH metal all stays in the JV. This is why even though they could sell a lot of tickets if they offered more service on UA metal to ICN, they don't as it would just compete with their own connections in NRT and HND. The same is true but to a lesser degree with TAP (since TAP is a much smaller carrier with few real connections beyond LIS) or Aegean (Aegean is at least a bit better because many of their destinations beyond ATH are not served by the LH group). TK connections over IST compete to the middle east and India with LH connections over FRA and MUC, so likewise you don't see UA or LH do TK any favors.
 
keitherson
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 7:19 am

A lot of airlines are really being short-sighted in thinking that an alliance is useless because it doesn't generate them money like joint ventures do.

Alliances offer fliers a more consistent product as well as excellent branding, especially for travelers flying outside the codeshare network. When Star Alliance opens a lounge, elites from all the *A airlines know who can access it. They know what amenities to generally expect.

Contrast that to an Etihad elite. They would be lost in the amount of partnerships that Etihad is involved in, all with varying amenities. Fly Royal Air Maroc, you get absolutely nothing. Fly Alitalia, you get many benefits.

The airlines are generally not maximizing alliances to their full potential right now. They ought to be pooling in all their resources to open shared lounges, dedicated check-in counter, and so forth.. Instead of building separate facilities, hiring staff for each individual airline, each one with different platforms, and so forth.

Just because airlines can't/don't properly manage alliances does not mean they are bad. Joint ventures haven't resulted in anything particularly co-operative or fancy either, just monopolistic pricing that the airlines want. ($$$)
Last edited by keitherson on Wed Jan 11, 2017 7:26 am, edited 1 time in total.
 
keitherson
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 7:26 am

drdisque wrote:
Even take it from a Star Member like United's position. They get a ton out of the A++ JV with AC and the LH group of airlines (LH, LX, OS, soon to be SN) and their J+ JV with ANA. However, the forced alliance with Asiana actually is a competitor to J++ since they are forced to pro-rate a ticket sold on OZ metal while a ticket sold on UA/NH metal all stays in the JV. This is why even though they could sell a lot of tickets if they offered more service on UA metal to ICN, they don't as it would just compete with their own connections in NRT and HND. The same is true but to a lesser degree with TAP (since TAP is a much smaller carrier with few real connections beyond LIS) or Aegean (Aegean is at least a bit better because many of their destinations beyond ATH are not served by the LH group). TK connections over IST compete to the middle east and India with LH connections over FRA and MUC, so likewise you don't see UA or LH do TK any favors.


If alliances are going to start being about $$$, then they should start kicking out members that are competitors and make an alliance actually mean something.

I want to see A++ and J+ open lounges together, share check-in staff, customer service lines, be able to e-ticket on each others ticket stock, and so forth. But no. All these JV's don't do anything but just provide them $$$ and they don't care about anything else. AA still won't upgrade you if you book a flight with BA marketed flights that's AA operated. BA won't upgrade you if you book a flight that's not booked directly with BA.

It's not an alliance problem. It's an airline problem.
 
peterinlisbon
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 7:28 am

For me, as a passenger, I don't care about alliances. What I care about is, if there are two different airlines involved, that they interline my baggage and take care of me in the case of a missed connection. These days, even if you have tickets with two carriers in the same alliance, they can refuse to interline baggage.

In general, I think it's silly to be "loyal" to a particular company or a particular alliance. It's better to fly with whatever airline is the most convenient or that has the best price at the time. Unless someone else is paying, of course, in which case frequent flyer schemes are sort of like a bribe to encourage people to rip off their employer by choosing a more expensive ticket and dividing the benefit between themselves and the airline.
 
keitherson
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 7:30 am

peterinlisbon wrote:
For me, as a passenger, I don't care about alliances. What I care about is, if there are two different airlines involved, that they interline my baggage and take care of me in the case of a missed connection. These days, even if you have tickets with two carriers in the same alliance, they can refuse to interline baggage.

In general, I think it's silly to be "loyal" to a particular company or a particular alliance. It's better to fly with whatever airline is the most convenient or that has the best price at the time. Unless someone else is paying, of course, in which case frequent flyer schemes are sort of like a bribe to encourage people to rip off their employer by choosing a more expensive ticket and dividing the benefit between themselves and the airline.

So why don't airlines just get rid of frequent flyer programs completely then?

And since people only fly what's most convenient or has the best price, let's encourage every airline to become like Ryanair. That sounds great! You're an ideal passenger!
 
Andy33
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 8:14 am

keitherson wrote:
AA still won't upgrade you if you book a flight with BA marketed flights that's AA operated. BA won't upgrade you if you book a flight that's not booked directly with BA.


BA won't necessarily upgrade you if you do book directly with them either. There's no such thing as a complimentary upgrade solely because of frequent flyer status on BA or other European airlines. If upgrades are needed to free up seats because a cabin is overbooked, they will be offered to elites first whether they booked directly or not. No overbooking, no upgrade.
BA do offer relatively cheap paid for upgrades through the Manage My Booking option on their website from time to time. If you don't go into Manage My Booking you won't see the offer, so you need to obtain the BA PNR from whoever you booked with so you can check periodically.
Finally there's upgrades paid for with miles. Here you do need to have booked directly with BA, that's true.
 
Armodeen
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 8:26 am

IAG are buying up their own group of airlines, perhaps in future they will form their own 'alliance partnership' in a similar vein to the Etihad super friends. Maybe they will add another airline first.
 
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Channex757
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 8:27 am

Alliances do have their uses, but just like the European Union it's becoming clear that tight reins on members don't work.

Having alliances can help with seamless routing of cargo and passengers, as well as frequent flyer benefits, but as airlines like Qantas have shown there is money to be made or saved in making links elsewhere. Perhaps the repurposing of alliances as travel agents might be a way to proceed. Instead of a fairly limited link on their website, someone like Oneworld could offer customers a more detailed travel agent offering with its alliance members and even tagging on legs with other carriers where alliance members don't cover a route.

Whatever shakes out, I think Willie and Sir Tim have it right. Alliances won't be collapsing or exploding; instead they will evolve into something less tight and more productive. The main catalyst for this today is the increasing involvement of the ME3 in interline agreements.
 
Planesmart
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 11:36 am

Wise words from the current CEO's of a future mega JV, and Sir Tim's possible successor.
 
YIMBY
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Re: BA, EK chiefs doubt the future of airline alliances

Wed Jan 11, 2017 10:25 pm

downdata wrote:
YIMBY wrote:
Alliances matter depending on the regularisation. The rules can be changed.

They may matter the most to the frequent travellers with their bonus programmes. In my opinion, those programmes are anticompetitive - often even corruptive - and should be prohibited by law.


Yes well the same could be said about any loyalty program including, say, starbucks. Outlawing all of them is simply not possible to begin with.


Of course it is possible. Just make the law in the respective parliament. I do not believe that loyalty programs are constitutionally protected anywhere. International commerce may complicate, so it should probably be EU/US-wide regulation to be efficient, but national restrictions already hit local distortions. It is enough to regulate the carrier/supermarket/etc that is locally in a dominant market position, not every starbucks for which there are thousands of competitors. Even today loyalty programs are regulated in some part of the world (domestic flights in Norway, ... ?)

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