OW- Will it ever expand?
 

This is the million dollar (or Euro/Yen) question. Will the alliance ever acquire new members? Does it need to follow Star Alliance's lead in gobbling up new members as it see fit?

I've been following rumor threads for a while and there are plenty of buzz going around without any specific or solid confirmations. Everybody's got their favorite but no one knows the truth.

But why is it that Star Alliance expands twice as fast as OW? Is it because it can or is it because it needs to? Do you think the OW is already strong enough to cover the planet? Is OW so restrictive in their requirements that scares potential partners away?

Just wondering...

OW is a marketing tool for its members. It adds members when those already "in" agree there's an advantage to it.

A moot point and one which probably points to familiar discussions about quality vs. quantity.

I can't begin to imagine how over-subscribed *A lounges and voucher upgrades are since the status matching thing came in.

I don't personally think that Oneworld necessarily needs to expand like the Star Alliance thinks it needs to. Saving my personal distaste towards LX being allowed to join, Oneworld needs an Eastern European airline, they need a presence in China, one in Japan, India, and the Middle East. Each has their challenges, though. Eastern Europe has the obvious problems that LX is going through of being very close and therefore very competitive with existing members. Again, I am very against LX joining but I suppose it's a fact at this point that they eventually will. IMO, it would have been far easier to integrate a LOT or a Malev for a number of reasons. Oneworld (and all other alliances) have been courting both Dragonair and JAL for a very long time and both believe that they dont need an alliance or at least that it's not going to give them any significant benefits. Air India has also indicated this from my understanding. Finally, a middle eastern airline is a matter of time. Emirates is obviously on a tear right now, ordering planes like they are going out of style, but Gulf Air is not far behind. I have additionally heard nothing but good things about Qatar airlines so it wouldnt surprise me if they are being shopped around. I can't see Kuwait Airways or Saudi Arabia Airlines joining an alliance until they loosen up the visa restrictions so people can transit without having to go through a foot of paperwork.

Personally, I am glad that Oneworld isn't expanding like Star. There is a certain benefit that comes with economies of scale but there is also a point where those economies are defeated. There has been a lot of discussion in the past about a "European" airline dropping out. I expect it will be EI which adds very little to the route structure or IB if they get gobbled up by BA. Finnair seems to be continuously expanding which is nice to see.

Dragonair is still participated 25% by Swire/Cathay and they provide management to them, so it seems unlikely they will join a competing alliance, except if Cathay wants/needs/is forced to divest its participation. There are hints however that negotiations are in progress regarding Dragonair shareholders' stakes, and Cathay would take over completely its former subsidiary. This of course will greatly enhance not only OW status in China (Cathay is rumored also to get shares in China Eastern) making Cathay a carrier with both extensive international and Chinese mainland routes, making life difficult for mainland newcomers like AF and LH. However such a possibility in my opinion will mean that Swire would have to dilute their shareholding in Cathay, possibly towards 40%, while CAAC would rise almost to par, and I do not know if this will be accepted lightly.
Cathay has a good network in Europe, thanks to the codeshare agreement with BA, but in my opinion they need to extend their network with stopovers in some destinations, for example getting directly passengers from/to Venice (that is rapidly buiding itself as a gateway to international destinations for being in the center of a stong touristic and manufacturing area in northern Italy)

1) I doubt EI has any plans to quit OW given their desires to continue to expand into key AA cities in the US, ie. DFW, MIA.

2) Give the Air France/KLM merger, further consolidation in Europe is not out of the question. BA and IB have long been rumored.

3) The Cathay/Dragonair tie up above is an exciting new rumor to toss about and would likely be an ideal situation for OW, esp. since there is talk about the upcoming need for consolidation in the Chinese market.

4) In continuing with OW's selection of premium airlines, Emirates would be the obvious choice. However, Emirates has made it clear that it has no plans for an alliance for now and would like to develop a much more comprehensive route structure on it's own. IMHO Emirates ability to develop a hub in New Zealand may play a significant role in it's alliance future and likely would make OW less appealing.

5) I think many will agree that JAL will likely be the next big member of Oneworld, but probably not for another year or two. I should also add that MX will likely be added in the next few years too (that's if AA doesn't buy them first ;) .

6) Africa remains a big question and it's possible that by expanding into the African markets, LX might fill a niche in OW and see this as a profitable market to feed OW traffic into.

7) I used to think TAM would be a good addition to OW; however, it's just a matter of time before LAN increases their presence in the Brazilian market - likely after things get going in Argentina.

Summary, JAL and MX likely next. A Dragonair/CX tie up would be very exciting. Don't hold you breath for any Middle Eastern or African tie-ups any time soon.

blame BA?
 

At first, MA and LO were thrilled to be parters with BA. That quickly soured. LO and MA wanted more long-haul flights, to Asia and NA. BA's attitude was 'don't worry about the long-hauls, just get your people to LHR and leave the flying to us'. SWISS is experiencing the same feelings right now. I can't but feel oneworld would have more members if BA weren't such a bully, much more than LH in * or SkyTeam's AF. EI was afraid not to be oneworld with BA, since it is way too small to fight them for market share. Better to be on their side then against them.

I would very much like to see JL join!

I do not think that LO and MA will be allowed more long haul flight or more leeway now that their referent are respectively LH and AF. Maybe at the moment, but I expect soon that they will more or less nicely asked by the leviathans to act as feeders to FRA and CDG and given rights to secondary longhaul votes. BTW MA will join as "associate" airline ,not a full member, so the decisions will be taken by AF, as is should be, to not offend the delicate French sensitivity with pedestrian concerns about decision taking and issue control

One of the first things AF did when Alitalia "joined" Skyteam was to push out the latter from operating flights from and to VCE and CDG, usually packed by the gills. Of course no one from Bruxelles and neighborhood expressed any concern, instead of the occasion when Alitalia was forced to return state funds later deemed LEGAL by a European Court ruling. As for LH, only days ago a brimming with confidence mr. Mayrhuber outlined plans to get exclusive rights to flights MXP-FCO, one of the most profitable routes in Europe. It does not hurt that, thanks to their participation in AirOne, Air Dolomiti, LH has a commanding lead in Italy also out of scrutiny from European bodies.
It all boils down to what meaning you give to the word "bully". To me it is far worse to lure airlines with sweeteners as "cooperation", "part of the airline network of the world" and other BS lingo, and once secure their joining, proceed to curtail any possbile prospective advantage. I do not say BA is out of blame in all this, but at least they made clear what they expected from a new entrant.

new info on JAL
 

I had lunch yesterday with a JAL manager who is shall we say "in the know". It appears the assertion that JL is not joining oneworld because of incompatible computer systems is not true anymore. My guest however made it very clear that JAL has absolutely no plans to join oneworld, as they see no benefit 'whatsoever' from an alliance. In particular, he noted that the issue is:

cultural -- Japanese are loyal JAL/ANA fliers, because of language and dietary issues, no gains from alliance

premium pax marketing -- more than 90% of premium pax on JL are Japanese. joining oneworld would force JL to share data on their premium customers with BA/AA. JL says it has limited marketing skills abroad, therefore such a deal would benefit only the other oneworld members, not JL.

pricing -- tickets ex Japan are very expensive, alliance would only increase pricing pressure

joint purchasing of aircraft and supplies: JAL has well established purchasing mechanisms and owns a large percentage of it's own suppliers through cross-holdings. although some are unravelling, he doubts any cost savings can be achieved from alliance membership. as for airliners: most of the deals are political US-JP deals and not at the airline's discretion

although personally a fan of alliances, he thinks they are not living up to their promise and "would not be surprised if other formats of cooperation were to surplant the current alliance model in the future".

hope that puts oneworld expansion in perspective. zannen desu yo :(

1w
 

EI out, SN brussels in.

JL will stay on the side, no need to join.

China Eastern in at the same time as Star get a Chinese link.

More expansion of BA in Africa (1) to rival Virgin Nigeria the new start up (2) associated with SN Brussels coming in.

Nothing in India, AI is elsewhere, Jet Blue is LH and too bloody difficult to do anything else. More Europe to Indias as announced recently.

Canada anyone?

I don't believe EI will leave OW (after reading the Goldman Sachs report on privatization process for EI).

And even though they're currently dancing with everybody at the prom, I believe AS will drop the penny one of these days to fill in for AA on the west coast. That would also bring in much of the mountain west, western Canada, and western Mexico. AS is virtually in as it is, all that's missing is participation in things like RTW eligibility.

Making an AS of 1W
 

Let's hope AS do the decent thing and join up. ANC runs all year round, more flights to and from Seattle and Jerry A Laska is not cut off from 1W. Result all round if that were to be the case!

Actually after seeing the Air Diaster documentary on the MD80 AS flight. I will NOT fly AS unless there is absolutely no other alternative.

Apparently (according to the documnetary) AS has cut back is maintenance so much that it made the plane crash! (Rudder problem).


Please no substandard airlines in Oneworld!
(ie. No AI)

It is a bit disappointing that JL is not joining Oneworld. The explanation according to a poster above is absolute rubbish. Look at NH and Star Alliance. They co-exist well with each other.