Need help understanding what makes a strong alliance
 

Hi All,

I'm pretty new to all this airline chatter and wonder if anyone can explain to me what makes a "strong alliance" from the airline's point of view - rather than the traveller's. I had thought it was a combination between combined purchasing power of the alliance and the streamling of timetables etc to co-ordinate more efficiently and allow each airline to feed off the other over a global network. In this fact I had thought that OW was great in the sense that it has a good geographical spread (with a few exceptions), but not crowded so that each airline would have max benefit of other alliance members in its region.
But now with *A aiming for a membership of 50 I don't know if my thinking is right at all. They already have 8 full European members, 3 regional European members and another 2 European members going through the entry process. And even the possibility of VS joining. AI going through the motions and talk of 9W also joining which would tie up the Indian market. In South America with JJ, TA, AR, AV and CM seemingly heading that route....my theory of not having too many members in an alliance because it would dilute the benefit of referal pax seems not to hold true.
OW will have MX and S7 joining and the possibility of HU, MU and WS (although the latter 2 seem to be embroiled in some tug of war between OW and ST) - will 13 or 15 ailrines be a good or a bad thing against an alliance of 50?
I'm confused - any comments to help me on my way much appreciated!

I know you wanted an answer from the airlines' perspectives, but unfortunately they don't post here so I will have to give you my perspective.

It really doesn't matter how many airlines are part of an alliance. I choose the alliance that offers the best product, at the best price, whose airlines serve the destinations where I wish to travel. For example I planned a RTW trip back in May for 2010. *A RTW product would work, but I would have to reduce the mileage of my RTW trip and it would have cost about $15,900 (including taxes) for a 39000 mile First Class ticket. I went with a OW 3 continent RTW ticket ex-ICN for $6600. The only problem was, that the main destination for which I was planning the trip was for a Live Aboard in the Maldives, and OW doesn't fly there, so I included a stopover in SIN and did a business class r/t ticket on SIN using UA miles. I could have purchased a r/t SIN-MLE business class ticket on SQ for about $1800 and still come out way ahead of the *A price.

Now since June 1 price increase of OW RTW prices and with CO coming on board with *A, if and when I plan a trip that includes Micronesia and Africa then I will probably book it on *A (CirPac referenced later). When I return to Australia and South America then I will probably go with OW. Now that is if the prices are competitive, otherwise I will mix and match like I did with the upcoming 2010 RTW trip.

Even with OW recent RTW price increases, they still come out way ahead of *A in terms of RTW ticket prices IMO. However, because of the substantial increase in OW Circle Pacific prices back on July 1 2008, I believe *A has better Circle Pacific prices the last time I checked which was the latter part of last year.

How many airlines an alliance has only matters if the airline is worth flying, has decent first class for the long haul flights (CX, EK, GF, QR and SQ come to mind) and decent business class for the shorter flights. So if an alliance has 50 airlines, the only ones that matter are the ones I need to fly for my travels (examples: CO to Micronesia or QF around Australia).

Oh and FWIW, all 3 alliances are strong IMO. Each one has its strengths and weaknesses.

Hey [B]aaupgrade[B] thanks for your comments. I too have my choices and personal reasons for chosing the one alliance over the other - just wondering if anyone knew from an airline perspective what made an alliance worthwhile for the airlines involved. My miles are all with OW and I suppose I get concerned when I see the growth in *A of a collapse down the line in OW if it does not compete :)
BTW - have you been to the Maldive before - they are just amazing

No, I have not been to the Maldives. I am looking forward to it.

FWIW, I always recommend not having all your eggs in one basket and at least have a backup. I fly AA and earn AAdvantage miles that way, and I have a UA MP Visa and earn UA MP Miles that way. What airline I choose as my preferred airlines depends on many factors. I live in the DC Metro area so from a convenience standpoint, UA would work better for direct flights. BUT, getting upgrades on UA is very tough, whereas my success rate at getting upgrades on AA as a Plat and EXP (alternating years) has been 100%. I don't like flying in the back of the bus, so that is top priority for me. Between upgrades and AA YUP fares, which are much more affordable than UA, the choice for me is AA. From my experience the hub airline will always be more expensive on YUP fares than the non-hub airlines. So if you live neat DFW, you will probably find YUP fares on other airlines will be much lower than on AA. Since most of my travel is personal leisure travel, the cost is an overriding factor in determining who I will fly, and when doing so how much it costs to fly in the front of the bus whether that be dollars, miles, or a combination thereof.

While I hold no status on any *A airline, I do have a stash of UA miles to use on their flights if needed. FWIW, I have never been compelled to use ST or its partners other than Continental. It is nice that they are moving to *A as I will be more prone to use them and collect miles on UA. I have found that CO miles are next to impossible to use for any desirable destination.

Now for others, flying direct flights may be more important, or being part of an alliance that has the most airlines, or perhaps their company dictates what airline they use. The bottom line is each of us has our own reasons why we use a particular airline, and just because reasons work for one person doesn't mean they will work for someone else. In other words, YMMV.

According to the BA board, BA have announced thrice weekly flights from LGW to MLE, therefore bringing OW service to MLE.

Dave

I'll have to keep that in mind next time, HOWEVER... I spoke with the RTW desk and MLE is part of Asia. On a ONE ticket you can't return to LGW but have to continue on to a destination within Asia which is impossible without a surface segment (or vice versa if traveling west bound).

True, but MLE-CMB for example is fairly easy. You do lose one of the 16 segments though.

Yes, MLE-CMB is fairly simple unless CX drops CMB again.

For my upcoming trip in March 2010 I purposely did not go the CMB route. Instead I chose to fly OW to SIN and then do SQ r/t to MLE. The main reasons were due to CX not operating flights to CMB and few years ago due to unrest, and the recent rise in unrest in Sri Lanka. That led me to the conclusion that, when planning this far out, to go with what I perceive as a the more stable option. The added benefit to my choice of routing is that I have never been to SIN and as a result am looking forward to spending some time there. Also since my AONE3 is starting in Asia, SIN is a much more desirable stopover (1 of the 2 allowed) than CMB. BA MLE-LGW was not a known option to me when I booked this back on April 9. That routing would also be a waste of a AONE3 ticket, and might consider one to purchase a DONE3 instead.

FWIW, I can't see VS joining *A anytime soon despite SQ's 49% shareholding in the carrier (which they have had for almost a decade). VS is Branson's baby and I can't see LH wanting to properly involve themselves with VS unless LH were able to dominate the carrier and push for full integration with BD which is where real cost synergies could take place.

Full integration between VS and BD is unlikely to be realistic however, unless LH owned the lion's share and as Branson is unlikely to ever want to give up control, it is just not likely to happen. Branson seems to treat VS in a very different way to all his other businesses and with most of them, he is happy to sell them off and make money through providing marketing rights. VS however is one enterprise he is never really ever likely to make huge sums of cash from yet he continues to hold onto this asset which suggests his attachment to the airline is at a more emotional level.

More codeshares between BD/VS and perhaps LH are a definite possibility, but I doubt much more than a cursory FF partnership is likely to happen at this stage. With this in mind, I strongly suspect that when LH get the rest of BD which will lead to the the rationalisation of BD's DC programme into LH's M&M will possibly lead to M&M accepting VS as a mileage earning partner (without status earning of course). Pure conjecture of course, but I feel a likely scenario. :)

Finally in respect to what constitutes a strong alliance, I have always felt Star is the most integrated of all the alliances and OneWorld the least integrated largely because OneWorld features more carriers who generally quite large in their own right (AA, BA, QF, CX & JL) compared to Star where LH and UA dominate the rest of the group and LH's gobbling up of it's small Euro *A partners.

SkyTeam also seems a little more integrated although this is likely more due to the fact that AF and KL are integrated, and they in turn have a minority stake in DL/NW (KL used to have a stake in NW and I believe AF also owned a small holding in DL although I am not sure how of the resulting percentages now that the consolidation of the carriers various carriers has taken place). KL also is a big shareholder in KQ so this should also be considered. As with Star, AF and DL really do dominate the rest of the alliance as they are so much bigger than the rest of their peers which really makes OneWorld the odd one out of the big three alliances.

OneWorld also don't have any ownership ties between alliance members with the exception of BA and IB (although at one stage BA did own 25% of QF). Even the IB and BA tie in seems to have resulted fairly little integration and I would suggest that the QF/BA JSA on the Roo route seems to result in arguably a more tangible partnership than the IB/BA JSA on flights between the UK and Spain. Obviously the IB/BA partnership will change quite dramatically should the two decide to continue their intended merger.

I think it's more likely that the Virgin Group airlines (VS, VA, VX, DJ, VK and maybe D7) will create their own alliance rather then join any other.