teemuflyer

This is my hope. Having anyone with such dominate share and pricing power is usually not the best for the consumer. I guess we'll all have too see.

But yeah, bad for AA an OW overall.

FlyerTalker688786

From what DL CEO said about SkyTeam last week, I have a feeling that DL will abandon SkyTeam but remain in the alliance in the name only. The future DL alliance will be concentrated with DL in the centre, AF/KL, VS and WS in the first tier, MU, VA, KE and LA in the second tier. You can forget about other SkyTeam members in the corporation with DL. As DL sees it does not see any benefits from SkyTeam. So the end situation would be there would be a DL alliance that includes DL affiliate airlines and core SkyTeam members, and there would be a SkyTeam alliance that would be led by AF/KL, MU and KE. SkyTeam would live on but the landscape would be changed. I fear airlines like MEA, Garuda and Saudia would find it difficult to interact with a seemly arrogant DL.

This essentially is happening in oneworld and Star Alliances too. There are core members that sees no benefits of smaller members. You see UA/NH/LH getting so close that SK/TP finds it difficult to get in the cluster. Similarly the value of RJ and UL to an extend MH finds the bigger boys like QF and AA not care about them at all.

I have to say I am a firm believer that alliance will getting stronger in future. But it is interesting to watch what form alliance would take in 10 years time. What AA and UA do in coming years would be interesting.

andersonCooper

Consistent with media report: https://thepointsguy.com/news/latam-...oneworld-exit/, as well as DL CEO's recent comment.

Just curious, why do you believe alliance will get stronger, and what do you think AA/QF/BA/IB could do in this regard?

dls25

LATAM doesn't have a business cabin on narrowbodies either.

I don't think AA is particularly concerned about JFK/LAX - GYE/LIM/SCL pax. AA/LA didn't have a JV so it would be more profitable to have those pax travel on AA metal via MIA/DFW instead of the codeshare.

worldwidedreamer

I personally think that airline alliances will continue to include more airlines through secondary memberships similar to the OneWorld Connect contemplated by AS or JuneYao as a Star Alliance Connecting partner.

The bell-weather will be if/when a deal is announced between Swire/Cathay Pacific/Air China. It would be quite reasonable for Cathay to have serious gripes with OneWorld after it accepted China Southern, and then there is the issue of Hong Kong. If Cathay switches to Star it will be great news for alliances in general; it it chooses to leave OneWorld for bilateral relationships with say Air China + Air Canada + Eva + United + Thai it would be a bad sign for alliances..

Also, Star Alliance recently announced it would not offer a third elite tier. My perspective is that alliances started out as small groups of global enterprises, and the larger airlines find themselves preferring bilateral relationships.

andersonCooper

The first paragraph is interesting input, though the CX/CA thing has been discussed too many times on CX forum. I don't see merits of further speculation and *A has yet to be impacted in this particular case.

rasheed

I like the idea of alliances too, but I think the marketplace has changed to really make these unlikely to survive. A couple of thoughts. One, the currency differences have become significant. It is easier to compare and pick a program to accrue miles more accurately because they are not very similar. Especially the revenue nature of the US carriers made this pickup in speed - especially for top tier fliers. Also, I think at some point in the past, people would book any flight via their "home carrier" website, I just don't think that is true and codesharing seems so outdated (especially when there are price differentials).

The currency itself has also become an issue. The credit card companies are tossing a ton of miles into the pool of the carriers, but there is no such thing as a OW/SA/ST mile. This was always the design, but if some of the individual carriers are just becoming stronger, there seems less of a need to have the alliance.

Finally, powerful carriers like EK still continue to go at it alone, but align with individual carriers (such as QF, AS, B6, etc.). This just creates weird competition issues no matter how you look at it. The alliance was supposed to give some sort of competitive protection (even if not stated, but in concept), that isn't happening. This is probably good conversation for its own thread, but I am not surprised to see the stronger alliance carriers create partnerships outside of their own alliances.

In summary, the LATAM SkyTeam join/not join aspect is a non-issue for Delta, but further the LATAM departure from OneWorld hurts those alliance carriers because it creates a destination vacuum.

FlyerTalker688786

There is a rumour going around the block that despite DLs stance on ME3, DL is trying to get EK to be its preferable partner. This rumour can be seen in few recent posts on flyertalk and A. Net. I personally think this is rumour only and couldn't be true at all. But with the sudden LATAM tie up, if DL and EK pull the stunt, it would be a great slap on face on AA and Dougie.

Other than that I thank you for your great post and thoughtful analysis.

hirohito888

But why can't AA partner with local carriers in each country? They don't need any inter-latin american flying if they have all the major destinations covered. There's no benefit to AA to have a partner carrier flying SCL-GRU or GIG-LIM, when their primary traffic is US-Latin America. They already have a good network out of DFW/MIA to cover connecting passengers from West and East Coast US.

Maybe AA will just have to contend on losing passengers flying to ANF or POA. Kind of like how DL can't get every Japanese-bound passenger to CTS or HIJ.

FlyerTalker688786

To answer your question, my personal belief is that alliance will evolve with time. Someone will argue alliance is living the past and will become irrelevant. To some extend recent development seems to point to that direction. But, I would say the recent development only indicates one of the way alliance could evolve with the time. Whether it is strategic investment or JV, alliance will get stronger when core members deepen the ties and forge unbreakable JV or investment within. What we saw DL and MU invest in AFKL, and DL and AFKL invests in VS, are prime example how alliance can get stronger through these methods. Yes VS is not in Sky Team. But alliance has to evolve to allow airlines without membership participate through other means by ownership.

Airlines join alliance because they see the value of alliance. Alliance recruit airlines as they see the candidates provide value to the alliance.

So if airlines like EI or VS does not see any value in joining the team or the alliance, as the cost outweigh the benefits, I think it is natural for alliance not to offer membership.

DL realised this, thus we do not see West jet nor VS in any hurry to join Sky Team. A bilateral agreement with airlines in the sky team like AFKL, MU and others can support the virtual alliance of multilateral alliance. In the end, what West Jet and VS can bring to MEA, Garuda or Saudia?

Skyteam might get weaker as DL decided to impose its dominance outside the structure of the alliance. But a stronger multilateral alliance among DL, AFKL, MU, KE and few others actually make the airlines within more competitive. Skyteam has largely evolved with AF and KL's choice of partner through historical ties, like KL's involvement to bring CZ and GA onboard, or AF's effort to bring MEA and VN into the alliance. They do not bring anything to DL nor the alliance rather than opportunities. It fits in AFKL's narrative but not DL's.

So alliance has to evolve. Oneworld and Star are trialing tier system. Core members of alliance realise more corporation within are needed. So we will see alliance continue to evolve, members that does not contribute to alliance needs to be able to exit, members that provide maximum benefits to member airlines will continue make the alliance stronger. Specifically I think the choice for Oneworld is more integration among AA and IAG, more fostering of relationship between AA, IAG and JAL to safeguard the Japanese market. QF is a difficult story to tell. I think what QF sees itself as a outsider of the alliance but it does not have the dominant position of DL. If any airline would break away from Oneworld, it is not CX not QR, but QF. I think QF sees itself an irreplaceable asset so it can make demands while partnering with many airlines outside alliance. It does not really need anyone else due to the market condition downunder.

Alliance will grow stronger in an evolved form. It will depends on the core members to make it happen. At least in star, there is UALHNH working together, creating a small group within star. So star alliance is safe and will continue to integrate within among core members. Oneworld would rely on the breakaway of unwilling members and addition of willing hands, as well as the acceptance of QR by AA, which I think would be vital for Oneworld in coming years.

LINDEGR

Last I read, DL was buying a share of Alitalia from the Italian government. Has that changed?

GrayAnderson

Strictly speculation, but where does this put American's Miami hub in the long term? I know that was being run as a gateway to Latin America, but how much of that was partnership traffic vs their own O/D?

Also, I think this exposes a real danger of the current "partnership" system that airlines have been relying on.

carlosdca

Most (if not all) the destinations that LATAM serves from MIA, AA does too.

Why would AA be affected?
LATAM provides connecting traffic to smaller cities in South America from LIM/SCL/GRU. Pax going to those smaller cities are the ones that AA may loose but I don't think that amounts to a lot.

rowingman

Not surprising in the least, given that Delta will have a seat on LATAM's Board of Directors. I don't see how they could continue. I will miss LAN, but whatever.

And no, Miami is not going to disappear as a hub. If anything AA will compete head to head on Latin routes (although they remain troublingly cheap and unprofitable for all carriers).

bchandler02

Think they were aligned at least as codeshare partners back in the day. I remember flying them GRU/POA back in the day after an AA flight to GRU