holmedown

The following was posted on CNN today

http://edition.cnn.com/2004/TRAVEL/0...eut/index.html

note next to last paragraph :

"The airline, which has not yet made a profit two years after it started to fly, on Monday named former Lufthansa man Christoph Franz as its new chief executive, sparking talk that he might turn the airline towards the Star Alliance"

martin33

given that LX's problems and delays joining oneworld seem to involve sharing customers with BA, it's hard to credit they'd have fewer problems along those lines with LH and Star.

but anything is possible. Brancatelli predicts today that two airlines will abandon oneworld in '04...

leroy11

Hello martin33 -

Just curious if you have a link to the article about two airlines leaving oneworld? Thanks!

Scion

What a joke? So, now that he's gone pay-per view, I suppose we'll be getting more tidbits like this. Afterall, he's got to do something to keep them coming back. Or, everyone could end up abandoning him.

Two carriers leaving oneworld. Ok, I'll bite, who could they possibly be?

Swiss, they are not part of oneworld. So, they wouldn't be abandoning anything.

BA - they are now codesharing with AA, sharing their club facilities with AA at Gatwick, and continue to have an equity investment in QF. Here to stay.

QF - their expansion at LAX has been possible in part because of their move to AA's terminal 4 where both jointly operate a club facility. They get great feed from AA at LAX, so much so that they've been more or less able to add frequencies on its core routes almost at will while its competitors in the market stagnate. Here to stay.

Iberia - They've started implementing their joint services agreement with BA. That agreement calls for revenue sharing. Both have talked about officially merging with the other should the competitive environment in Europe call for that. Coexists with AA at Miami, just like everyone more or less has learned to do because if you can't beat them join them. Here to stay.

LAN - Talking about "if you can't beat them join them," we have LAN. LAN long ago made its deal with the devil (AA). Together the two chased Continental and United out of the Santiago market. Abandoning oneworld would basically expose LAN to more competition than it has now. Plus, that's not LAN's priority at the moment. They are busy establishing LAN subsidiaries throughout Latin America. They've been able to do that in part because they have not had to worry about incursions into their homebase and their international hub (Miami). Here to stay.

Cathay Pacific - Just last year they began codesharing with AA. That codeshare relationship is making it possible for Cathay to run two daily flights from LAX. As a result, it is highly unlikely that United will ever return to the LAX-HKG market. Cathay can fill its flights with connecting traffic on both ends. United can't. Because of the new air services agreement with Australia, Cathay and QF can now codeshare. This becomes more important than ever because of the entry of Virgin Atlantic into the Australia-HK-LHR market. For the longest time, Cathay and QF have been fierce competitors in the region, but this now gives them a common enemy around which to forge closer ties. Here to stay.


FinnAir - They codeshare with AA and share facilities at JFK. I haven't been following the latest news, but there were plans to add transatlantic flights to Miami where AA would give another big assist. FinnAir is the most specialized carrier in oneworld. They've carved out for themselves a very small niche market, flying from the US to Helsinki and from there onto Northern Eastern Europe, Russia, and even China. Their relationship with AA has so far allowed them to keep US competitors out of their core market, US-Helsinki.

Aer Lingus - Like Finnair, they've carved out for themselves a niche market, albeit bigger. In the last two years, they've undergone an amazing transformation into a domestic LCC, while remaining a full-service transatlantic carrier. Their transformation into a domestic LCC has given them tremendous opportunities for growth in Europe. Oneworld is really the only alliance where that growth wouldn't become a problem. BA has concentrated more and more on serving high-frequency business routes, so it doesn't perceive Aer Lingus as a threat. Iberia continues to expand into markets where it is more or less immune from LCC competition. So, what Aer Lingus is doing hasn't been perceived as a threat by either. Put Aer Lingus in any other of the alliances and one suddenly has a problem. They couldn't coexist with KLM - Amsterdam is virtually the low fare transatlantic hub. They couldn't coexist with all the middling low fare carriers in Star Alliance, BMI and SAS. They have a place in oneworld. Their codeshare relationship with AA is also going strong. Aer Lingus is looking to expand into the US market. Potential new markets could be opened up with an assist by AA. So, here to stay.

So, who does Joe think will leave oneworld?

Who knew? But, it looks like Joe was capable all this time of making the same inane statements as all the airline CEO's he's been wont to lambaste. Joe, I for one always knew you had it in you.

bedelman

Scion, that was a great post. No need to pay money to read Joe's site when we have FT and our own experts!

mAAine_flyer

Yeah, great post Scion. I wonder about your analysis of EI, though. Their positioning themselves as an LCC is fraught with difficulties -- for one, they simply don't have the cost base to compete with others in this (very competitive) market, e.g. with FR. Nor do they have a route structure that suits that type of customer base (they fly predominantly between 'business' cities, rather than 'second home' vacation destinations -- okay, I'm generalizing here but you get the idea...). Also, does an LCC have a home in an alliance of full-service carriers? Remember, the passengers that AA (or other ow carriers) feeds to EI might be a little shocked with the no-frills service on their connecting flights. Other developments that raise my suspicions (1) EI has eviscerated its DUB-Scotland schedule, effectively ending EI's longstanding position as a major player in the scottish transatlantic market; (2) most RoI-UK routes no longer carry BA codeshares (see the discussion over on the BA board). All of this leads me to think that EI might be a candidate for severing ow ties.

I was interested to read your comments about the strengthening ties between CX and QF. I've always thought that AA and CX (and BA and CX) have a kind of halfhearted relationship that I took to mean Cathay was probably not long for ow, either. But I might re-evaluate that opinion now.

JonNYC

martin33

there's really nothing more to it than that-- a two-sentence conclusion to his column in the Monday Letter: ... Expect a shakeup at Oneworld. At least one airline, perhaps two, are sure to leave. ...

Personally, I don't see two ow members getting a better deal in another alliance, or standing alone. Star would force them to give up their precious fractional mileage crediting schemes. SkyTeam is turning into the alliance from the Island of Misfit Toys-- not the upmarket image most ow members covet.

EI and AY are the two least-bound members, I agree, but where are they going to do better? They'd also be two of the least-missed even if they did jump ship.

JDiver

<snipped> for redundancy