“While one can love an irresponsible friend or a person with character flaws, alliances are built on respect, the responsibilities which arise out of that and knowing that together we can be stronger.”
Since no one airline can fly to every destination, airlines have to form alliances with other carriers to facilitate the connection of passengers and their baggage between different airlines. That way, passengers and their luggage can travel relatively seamlessly between any two places on the Earth.
The three most common airline alliances are Star Alliance, Oneworld, and SkyTeam.
Delta (Sky Team), American (Oneworld), and United (Star Alliance) are each integral members of one of these alliances. As you will see elsewhere in this course, being part of these alliances is an essential reason to join a Frequent Flyer program.
What the Benefits of Airline Alliances?
These alliances are highly beneficial for airlines. They allow an airline to:
- Easily fill seats by selling tickets on each other’s airplanes; and
- Share the costs for:
- airline maintenance,
- baggage transfers
- sales offices,
- maintenance facilities,
- computer systems,
- staff including ground crews and check-in counter agents,
- bulk purchases
- Provide considerable consumer benefits, including:
- Allowing airline to charge consumers lower prices due to reducing operational costs;
- Shortening travel times as a result of ease of transfers;
- Enabling airline to give customers access to more airport lounges and frequent flyer benefits;
- Making it easy to offer round-the-world tickets.
The Negative Consumer Effects of Airline Alliances
Even with all these benefits, it is difficult to say that consumers benefit overall from these alliances. Here are some ways they hurt consumers:
- Alliances limit competition. Airlines that do not join an alliance (usually small, budget carriers) have difficulties filling their flights and operating their planes. Plus, airlines can merge with other members of the alliance relatively easily. (They already share considerable parts of their operation).
- Airlines can consolidate services on specific routes. Instead of having two members of the same alliance flying the same route, airlines often consolidate flights. Combining routes eliminates competition and results in higher ticket costs. It also limits the number of flights available to consumers on a given route.
The Future of Airline Alliances
Laws and regulations may restrict the ability of an airline to join an alliance. Many times airlines need to seek approval by authorities before they can join an alliance.
However, these alliances have expanded markedly in recent years, partially based on the rise of open-air agreements between governments. Open Skies Agreements, according to the United State’s Department of State, are:
¨Bilateral agreements that the U.S. government negotiates with other countries to provide rights for airlines to offer international passenger and cargo services. They are pro-consumer, pro-competition, and pro-growth. They expand international passenger and cargo flights by eliminating government interference in commercial airline decisions about routes, capacity, and pricing,..¨