Air transport, where are the alliances? [Par Jean-Louis Baroux]

Not so long ago, it was the only strategic subject of air transport. The carriers were supposed to come together and we’ll see what we see. It was the Holy Grail of marketing, a way of conquering new markets while defending one’s territory.

Jean-Louis Baroux, President of World Connect by APG

After several failed attempts like Alcazar started by Jan Carlzon from SAS or SAirgroup led by Philippe Brugisser, three groups will finally emerge: Star Alliance, OneWorld and Skyteam. They still exist today and assemble an impressive fleet of nearly 12,000 aircraft carrying 1.928 billion passengers, all with around sixty companies. This should have a very severe impact on the development of global air traffic. However, from the outside, this is not the case, even if their viability is not in doubt.

Basically, the three main groups have neutralized each other over time and it is hard to see what kind of competitive advantage they have gained over each other. They are certainly interesting for capturing the clientele of very large companies for which any alliance can cover all their needs. And the addition of “miles” earned by traveling all member companies and consumables with each of them remains a significant argument for keeping customers within the alliance.

However, their composition is not fixed. Belonging to an alliance has never prevented mergers of companies belonging to different families. The latest example offers the transfer of SAS from Star Alliance to Skyteam after Air France bought a stake in the Scandinavian carrier. Code Shares, on the other hand, are generally concluded outside the framework of alliances.

So are alliances still useful to their members? We have recently seen Emirates, which never wanted to participate in this strategy, enter into a major “lcode share” deal with Qantas, which, although it belongs to Oneworld, does not hesitate to partner with one of the main competitors of its airline family. Agreements between carriers seamlessly cross alliance borders. However, it should be remembered that although very significant in terms of weight in air traffic, the 60 member companies of the alliance ultimately transport only 40% of the passengers.

So, on closer inspection, alliances are unable to prevent each of their members from entering into commercial contracts with any other company, which is contrary to the defense of their perimeter, or from coming to the aid of a family member in difficulty. What’s left? The famous “miles” to which the carriers lend a lot of money, but which in the end are only used up to 40%, and this is a great luck for companies that are not in a position to secure all the “miles” on their accounts. which were also distributed by certain lounges at major airports.

It is interesting that more than 20 years after the formation of the last Skyteam alliance in 2000, we do not see any other grouping of carriers, while regular air transport has as many as 1,200 carriers. Why did this phenomenon stop at the beginning of the 21st century? Of course, in addition to the full members of each group, there are a number of “affiliated” companies, which undoubtedly benefit from the alleged benefits of the merger, but these companies are essentially subsidiaries of the major carriers.

Basically, the only real and powerful alliance left is still IATA, which rejects this qualification, but which provides the vast majority of scheduled airlines with the means of distribution and the necessary coordination necessary for the success of this sector of activity. The generalization of “miles” whose value must still be recognized has spread to all sectors of activity since American Express became one of the major players.

A company’s membership in an alliance is often discreet. Certainly, some planes are painted in mainly Star Alliance colors, and for the rest, except for announcements on board and small markings on the fuselage, carriers continue to favor highlighting their own identity and that of their family. which they still decided to belong to.