“Seek out strategic alliances; they are essential to growth and provide resistance to more significant competition.“
Travel Alliances: An Introduction
This blog was written before the COVID Pandemic. The COVID epidemics played havoc on the travel business. In 2022, Fifty Plus Nomad decided to focus on traveling and living in Mexico and language learning posts. We will only update these long-term travel-related posts on a time-permitting basis. We would appreciate your comments and updates on these posts.
Since no one airline can fly to every destination, airlines have to form travel alliances with other carriers to facilitate passengers’ connections and baggage between different airlines. That way, passengers and their luggage can travel relatively seamlessly between any two places on Earth.
Star Alliance, Oneworld, and SkyTeam are the three most common airline travel alliances.
Delta (Sky Team), American (Oneworld), and United (Star Alliance) are each integral members of their respective alliances.
Being part of an alliance is an important reason to join a Frequent Flyer program. Alliances allow passengers to claim mileage from one airline to fly on another. Skilled travel hackers can use these alliances to their advantage. In 2015, for example, I used mileage credit from my flight on Fiji Airways from Los Angeles to Sydney to pay for a flight on Alaska Airlines from Los Angeles to Puerto Vallarta. (Both Fiji Airlines and Alaska Airlines were part of the Oneworld alliance).
What Are the Benefits of Airline Travel Alliances?
These alliances are highly beneficial for airlines. They allow an airline to:
- Quickly 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 airlines to charge consumers lower prices due to reducing operational costs;
- Shortening travel times as a result of ease of transfers;
- Enabling airlines 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 Travel Alliances
Even with all these benefits, it is difficult to say that consumers benefit overall. 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 relatively easily. (They already share considerable parts of their operation).
- Airlines can consolidate services on specific routes. Instead of having two members flying the same route, airlines often reduce 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 Travel Alliances
Laws and regulations may restrict the ability of an airline to join an alliance. Airlines often need to seek approval from authorities before entering an alliance.
However, more airlines have joined in alliance with each other in recent years, partially based on the rise of open-air agreements between governments. Open Skies Agreements, according to the United States 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,..¨
Want More Information About Travel Alliances?
Check out this post from WikiVoyage.
Additional Long-Term Travel Posts from Fifty Plus Nomad