Oneworld Expansion Not Expected
 

Mexicana and S7 Airlines completes oneworld. With the addition of Mexicana later this year and Russia's S7 Airlines in 2010, oneworld largely will be complete, Arpey said. The alliance sees little opportunity for further expansion without diluting the revenue and traffic base of existing members. It said interline revenue rose 10% in 2008 to $2.4 billion as 8 million passengers transferred between members' flights. Turnover from alliance fares and sales activity increased 25% to $850 million. The alliance said members lost a combined $1.7 billion last year…. re: Air Transport World

So we're leaving a big hole in China and India? Bad move... :(

Personally, I don't see the situation in China as that bad. CX and KA do provide some level of service. India has Jet Airways partnership with AA.

What about Africa? Comair has a very limited route network, South Africa and MRU. Then you have those five BA destinations which sort of count as Europe. But really nothing intra-continent.

BRASIL too!

Canada
New Zealand
India
China
most of Africa
Western Europe (apart from Spain)

That would leave out all Chinese domestic connections out of PEK and PVG plus all traffic between China and Korea. Not a wise move considering where the growth is.

Where does the original quote come from? Is this real?

Amen to that. No OW connections between ICN-PEK, ICN-PVG, or various domestic flights within China itself is a disasterous move that can cripple OW in the future. By lacking Brazil, India and China (three big countries with huge populations and with large domestic potential), OW cannot compete in the 21st century.

Also one needs to consider the reality that is taking place right now in Asia. NRT is fastly losing ground to ICN as an East Asian hub, HKG is starting to slack against the new financial hub Shanghai. PEK's economical and political influence is growing exponentially in that region. Fifty years down the road, it's going to be India and Mumbai that will overtake China and Shanghai as the most populous country/city in the world.

OW should seriously take a second look at their alliance in geo-political and geo-economical terms on a worldwide scale and fifty years down the road. Which countries are going to be the key players in the 21st century? Any economics guru will say BRICs: Brazil, Russia, India, and China. Yay, so we got S7 for Russia. That's 1 down, 3 to go.

If Lan had its say in the matter, it would already be in Brazil. I think it's only a matter of time. Besides CX and KA, JL has a decent number of flights to China. India and China cannot and will not be left out. Arpey (if you take him for the truth) only said that the alliance will be "largely" complete. He did not say it was totally complete. Fifty years. Oneworld has only been around for 10 and people are already calling for its demise. I can only imagine the naysayers in 50 years.

Direct? It's a bit silly to count connections via Japan or HK - if you do that then OW has pretty much has the world covered.

I posted a thread a while ago asking what makes an alliance strong - at least from the airline's perspective (after all if it is not good for the airline the alliance eventually will cease to exist) - I had always thought that OW did the right thing by limiting the number of partners thereby maximizing the benefits for each carrier in terms of through traffic from the other alliance airlines. Reading the latest news from OW on the OW website it appears that this is exactly the situation, which means that limiting the number of airlines means greater benefits for those that are in the alliance. For instance - if I wanted to get from NYC to KUL using OW - realistically I will either fly JL or CX all the way, or possibly AA to NRT and then JL - but basically JL or CX will benefit from me wanting to get to KUL. With *A the pax wanting to get from NYC to KUL has so many options - SQ/TG/OZ/NH/CA. I acknowledge that the larger alliance means more travellers but I still think too many airlines starts to defeat the objective. Having said all that I do agree that OW needs a presence in China and India and Africa and I hope that LA manages to get a foothold in Brazil. But keep the expansion really focused and limited and keep the alliance strong.

that is fine so long as the alliance you are with actually flies where you want to go . My understanding is that after all the officially pending members are added to the alliances OW will fly to 'nearly' 750 airports in 'almost' 150 countries ( as per the OW press release announcing S7s membership ) while Star will fly to 'over' 1000 airports in 176 countries ( as per the *A press release announcing A3s membership ) if I had regular business in a destination that is not served by a particular alliance that is going to affect my decision-making for most/all my travel - I admit that each alliance has gaps in coverage , but it would seem that OW will have more gaps / less coverage than the other two alliances ( I dont have the figures for Skyteam but last time I checked they covered around 900 destinations as well - obviously they may lose some with the loss of CO and CM and gain some with the addition of VN but when the reckoning is done they are still likely to come out ahead of OW )

Huh? More options are good. If there is only 1 or 2 flights and these have no availability for awards or reasonable fares when you want to go, then the so called strong alliance isn't much good. Worse still many places are not served at all, and even more routes have service - not much use having service to both origin and destination if flying between them requires routing via other places thousands of miles off course (eg ICN-NRT-PEK).

I think there is merit in limiting the alliance to a few higher standard partners. It looks as if *A is begining to break up with the announcement of different levels of membership, while ST is really just AF/DL at this stage.

I think *A has become a little too big for its britches. It will soon have European airlines based in Austria, England, Poland, Germany, Denmark/Norway/Sweden, Spain, Portugal, Switzerland, Slovenia, Croatia, Finland, Greece, and Belgium plus Turkey and Egypt. Not to mention three US based airlines and six Asian airlines. When will it end? I foresee it collapsing under its own weight due to too much intra-alliance competion.

I think the issue of what passengers would ideally want and what is good for the airlines is different. I hear everyones comments about not being able to get from ICN to PVG etc - but the existence of alliances will only continue if it is in their interest. And frankly right now it is too early to tell - the years ahead will determine whether *A has taken the right track in taking on every airline it can find or whether OW has taken the right track in a smaller network that potentially offer more benefit to its members - it will be interesting to see what happens.

[QUOTE=wijibintheair;11894384]...a smaller network that potentially offer more benefit to its members ...QUOTE]

I wonder what those additional benefits might be you get on OW compared to *A/ST. Maybe the nicer lounges.

I prefer something that is between the two. A remote-but-popular destination should be served by two OW carriers from different geographical locations.

MLE is only served by BA out of LGW. Sure the Europeans may have a ball, but pretty lackluster out of US West Coast and East Asia. PPT is another - LA serves out of it's SCL-IPC-PPT route, but the only other carrier is TN-QF codeshare to AKL and SYD.

And sure it's always nice to hear a new member such as S7 joining OW, but it's flight options from East Asia to the Russian Far East is lackluster at best. A 685 mi direct flight from NRT-VVO isn't available, the only way one can do this flight is to fly a painful 5476 mi NRT-ICN-OVB-VVO journey. The same with Khabarovsk and Yuzhno-Sakhalinsk.

As for ICN-NRT-PEK, an addition of a mainland Chinese carrier would definitely take care of that issue.

Well, for me and most others residing and/or working in Asia, the ICN - PVG/PEK routes are about a hundred times more important than any US domestic connection. And a lot more lucrative for the airlines as well.

So let's strenghten the alliance by cutting non-profitable US domestic flights and replacing AA with a major Chinese carrier if it has to be. ;) Joking of course, but just wanted to remind where airlines actually still make money.

OW tends to be a Euro-centric alliance. 4 carriers in Europe, but only 2 to cover the whole East Asia region.

OW's presence in Asia is severely outshadowed by *A and ST from the lack of direct flights that links the three capitals of E. Asia + Shanghai:

O Tokyo to/from Seoul covered by NRT-ICN and HND-GMP (JL)
O Tokyo to/from Beijing covered by NRT-PEK (JL)
O Tokyo to/from Shanghai covered by NRT-PVG and HND-SHA (JL)
X Beijing to/from Shanghai - N/A no domestic intra-Chinese OW carrier
X Beijing to/from Seoul - N/A no Chinese OW carrier and the 2 Korean carriers already taken by *A and ST
X Seoul to/from Shanghai - N/A no Chinese OW carrier and the 2 Korean carriers already taken by *A and ST


They key market that OW is lacking is:

1. The strong growth of SHA which will eventually replace HKG as the East Asian financial center
2. The ambitions plans of ICN whose goals are to overtake NRT as the main hub of East Asia (lower landing costs, more runways, and less stringent curfews).
3. S. Korean conglomerate business travelers using mainly *A and ST flights to visit their company factories in mainland China.


And, I would definitely use OW more if AA starts flying to ICN direct from the mainland US instead of changing planes at NRT. With the US military presence in S. Korea and potential to grab government fares, a huge Korean-American population living in various cities across the states, I can't imagine why AA hasn't looked much to fly there.

Well, that depends. Given China is forcing FM and MU to merge, it's impossible for both FM-MU and CA to be in *A. One of them has to join OW anyway.

Says who? Both ST and *A already has two US carriers (technically the former will merge into one giant though), and *A is actively courting 9W into their alliance even though they already have Air India.

[QUOTE=kebosabi;11900394]Says who? Both ST and *A already has two US carriers (technically the former will merge into one giant though), and *A is actively courting 9W into their alliance even though they already have Air India.[/QUOTE

about FM/MU merger it's not difficult to see politic play at the maximum possible level, and both * and ST have heavily played connection, especially the former through the German government. I am expecting the new merged airline will fold in no time to *A, in conformance to Cologne desires to hamper ST expansion.
for 9W/*A negotiations it doesn't hurt that 9W CEO is a former LH stooge, and as usual such types always tend to congregate around the old mothership.

:confused:

Are you for real?

*A is far more Euro centric and if anything, I would say Europe is one of OW's biggest weak spots as there is no strong central Euro carrier within the alliance (MA is definitely not strong!). Both ST and *A have better Euro coverage. [Had BA being more generous to LX, and LX joined OW this would have obviously changed but time has now moved on].

In respect to Asia, OW is arguably better than ST although *A is obviously king in this region.

[QUOTE=DownUnderFlyer;11895220]The "members" of these alliances are airlines.

If they see alliances as a source of profitable pax, they will incentivize it. But look at OW: BA & QF are well known for the high rewards for premium cabin and the low rewards for cheap tix. Since they are the leading members of OW, it's not surprising that it follows their philosophy.

Still think that about the only possible quality candidate in Central Europe would be Air Berlin. Maybe sponsored by S7 and in Russian ownership?

Or then co-operate with DB and other railway operators and offer passengers codeshares on trains.

Given current green politics, this could be a fabulous idea.

Being a regular China traveler with a lot of inter-china domestic traveling, with the merger of FM and MU, and if MU moves to *A, I am pretty much forced to switch to *A, after having been a faithful CX traveler for many years.

AA already does this for DB and SNCF
http://www.aa.com/aa/i18nForward.do?...tsche_bahn.jsp
http://www.aa.com/aa/i18nForward.do?...tners/SNCF.jsp

I was surprised by the S7 announcement. It seems that Air Berlin is logically and strategically a much better fit for the alliance than S7.

It will be interesting to see where AB goes. It's highly unlikely to join *A, so either it stays independent or it goes to OW or ST. I'm hoping for OW, especially if MA goes under...

Seems like there is more threat of BA going under than MA at the moment :)

Per FlightGlobal / Air Transport Intelligence news:

OW Managing partner John McCulloch says: "Oneworld is ramping up its cost reduction activity. Like other alliances, we have focussed more on joint revenue than cutting costs and our ambition is to do much more on that."

The claim is that there has already been $310 million in savings through joint procurement.

AA CEO and OW chairman Gerard Arpey reportedly said that there are few opportunities remaining without diluting the alliance's model, but OW is "paying attention to developments" in both South America and mainland China.

Concerning the anti-trust application, Arpey says: "The circumstances today are dramatically different to last time we applied. If facts matter, we are very optimistic we will receive approval on both sides of the Atlantic."

He said the application has received 3,500 letters of support and "only a handful" of objections. The US ruling is expected October, while the ruling from Europe is expected by December. BA CEO Willie Walsh said: "We have advised the European Commission that we would like them to go forward and present their statement of objections as quickly as possible, preferably by July. We will respond quickly." Iberia CEO Fernando Conte added: "[The clearance] is a must, not only for us, but for our customers."