See below the list of current and pending members of the Alliances.
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On 8-Sep-2016 LOT Polish Airlines announced its "2020 profitable growth strategy". This involves a goal to achieve "sustainable viability", after a restructuring programme which returned LOT to operating profit in 2014 after six loss-making years. Its privatisation may even be back on the agenda.
LOT currently ranks behind LCCs Ryanair and Wizz Air by share of traffic in Poland, which offers superior traffic growth potential versus Europe as a whole. The airline aims to increase passenger numbers from 4.3 million in 2015 to 10 million in 2020, growing its fleet from 43 to 70 aircraft. LOT's expansion will focus on long haul, particularly North America and Asia, where it currently has only five routes and where competition is considerably lower than on short/medium haul. Initial plans include the launch of Warsaw-Seoul this winter and a return to Warsaw-New York Newark next summer.
According to data from LOT, its restructuring has left it with a fairly efficient cost base by legacy airline standards and this will be important in competing with LCCs (but there is still a cost gap with LCCs). LOT's growth will focus on long haul but will need short-haul European feed – and partnerships. Although LOT no longer appears to be considering leaving the Star Alliance, it remains excluded from American and Asian JVs. Further, those JVs preclude members from working with LOT. Partnership growth will be as critical as it will be challenging.
The Western Europe-North East Asia corridor has gained attention as the centrepiece of Finnair's expansion strategy. But just over 500 miles away in Moscow Aeroflot is quietly pursuing a role carrying transfer traffic between the regions. Although Aeroflot's spread of Asian destinations is not as extensive as Finnair's or those of the Gulf airlines, Aeroflot has favourable geography and lower costs. It is not subject to Russian overflight rights and associated costs. Finnair carries the tenth largest number of O&D passengers between Western Europe and Northeast Asia, while Aeroflot is 13th. After Emirates, Aeroflot is the second largest airline transporting passengers between the regions, but is based in neither.
A member of SkyTeam, Aeroflot is not part of the joint ventures (trans-Atlantic and Europe-Asia) that define the alliance's inner circle. Its long haul transfer strategy is focused on Western Europe-Asia. This strategy allows it some independence from SkyTeam but may also aggravate the alliance's established members, much the way that Turkish has irked Lufthansa and United. Aeroflot's connecting traffic, although still an overall small proportion of its international traffic, has grown faster than local traffic.
Korean LCC Eastar Jet has become the fifth member of the U-FLY LCC Alliance, established in Jan-2016. Eastar Jet also becomes the first member not affiliated with the HNA Group or based in Greater China. Eastar Jet's membership comes after its larger competitor Jeju Air became a founding member of the competing LCC Value Alliance in May-2016.
For now both alliances are more like commercial partnerships, where new technology (Air Black Box, compatible with IATA's New Distribution Capability) enables the member airlines to cross-sell not just seats, but also the critical components of varied ancillary revenue. Both alliances have small costs – and thus low risk – while the U-FLY Alliance is unique in being a platform for the ever-expansive HNA Group to foster synergies among companies.
Although it is Korea's smallest major LCC, Eastar Jet has the largest LCC operation into mainland China. Eastar expects to benefit from potential cooperation through U-FLY; it will allow it to reach more inland and western Chinese points that are too far or thin for its network, but are where U-FLY's three mainland members are based.
Malaysia Airlines is stepping up its focus on partnerships as part of an initiative to generate more codeshare and alliance traffic. The airline’s new regional focus makes it an attractive partner, but it also needs to extract more from partnerships to restore profitability and growth.
Malaysia Airlines implemented a landmark partnership with Emirates in early 2016 and has been a member of oneworld since early 2013. But the airline is not yet fully exploiting the Emirates relationship or its membership in oneworld.
Malaysia Airlines is establishing a new team to better manage its relationship with Emirates and drive more codeshare traffic. Within oneworld the airline is planning to promote its fares and regional connectivity more effectively. Malaysia Airlines is the only Southeast Asian member of oneworld.
The decision to merge by Avianca and Grupo TACA in 2009 is what kickstarted consolidation in Latin America. The merger of the two companies, now operating as Avianca Holdings, arguably triggered the combination of LAN and TAM to create LATAM – the region’s most powerful grouping of airlines.
As Avianca and TACA and LAN and TAM were integrating their respective operations, other South American airlines garnered investment from foreign airlines – SkyTeam partners Air France-KLM and Delta invested in the independent Gol, and United and HNA Group took stakes in Azul.
Now Avianca is seeking a strategic investing partner, and many airlines are reportedly interested in obtaining a stake in the company. The investment will allow Avianca to weather difficult near term economic conditions and remain on equal footing with its competitors, while the company’s suitor obtains strategic positioning in one of most important growth markets – Latin America – for the next decade and beyond.
Asia’s LCC sector is further evolving by embracing partnerships and a new loose form of alliances. The newly established Value Alliance and the smaller China-based U-FLY Alliance – launched in early 2016 using the same technology platform – represent a new competitive response to Asia’s leading LCC groups.
Partnerships are critical for unlocking a new phase of growth in the relatively crowded and increasingly competitive Asian market. This is particularly important for independent LCCs that are outside the region’s three major groups – AirAsia, Jetstar and Lion. Value and U-FLY members combined account for approximately 19% of LCC capacity in Asia Pacific; this compares with 16% for AirAsia/AirAsia X, 11% for Lion and 9% for Jetstar.
Of the 53 LCCs based in Asia Pacific, nine are members of the Value Alliance and four are members of U-FLY. AirAsia/AirAsia X has eight affiliates or subsidiaries with a ninth to be launched by the end of 2016. The Lion Group consists of three LCCs and includes Asia’s second largest (along with two full service airlines), while the Jetstar Group has four subsidiaries or affiliates.