oneworld

Why Emirates and friends will soon reshape American aviation

Shortly after Emirates Airline announced its remarkable breakthrough partnership with Qantas in Sep-2012, Emirates CEO Tim Clark said he had also been talking to American Airlines for some time and publicly expressed hopes that the two would also establish a close relationship. This was despite the fact that American already had an extensive codeshare relationship with Etihad; and the third Gulf carrier, Qatar Airways, has since been invited to join the oneworld alliance – which American leads.

The Gulf airlines, and particularly Emirates, have had a devastating impact on European long-haul hub carriers. The impact will be different for US airlines, but despite the different geography, it will be much bigger than most expect. For one thing they will cut across the developed boundaries of the global alliances.

Saudia faces new competitive threats in 2013 as Saudi Arabia loosens the regulatory reins

The Saudi Arabian General Authority of Civil Aviation (GACA) has confirmed that Qatar Airways and Gulf Air will launch domestic operations in the country before the end of 2013. The granting of the licences to two foreign carriers to operate domestic service is an unparalleled move of openness in the Middle East. It will start a new era for travel within the country.

The opening of the Saudi Arabian market presents a new challenge to national airline Saudia. However, after several years of facing competition from domestic carriers and a thorough modernisation ahead of its entry into SkyTeam in 2012, as well as the extended international reach that alliance membership offers it, the carrier is in a better position now to meet the latest threat.

Qatar Airways set to join oneworld by late 2013

Qatar Airways CEO Akbar Al Baker announced earlier this month the carrier intends to join the oneworld alliance by Oct-2013, only 12 months after it announced that it had been selected for membership. The 2012 announcement that the airline planned to join the alliance system sent ripples of reaction through the aviation landscape of the Middle East, as well as globally, helping to bring about a major commercial reshaping.

Joining oneworld will usher in a new era for Qatar Airways. After years of setting its own path and growth trajectory, the airline has decided to hitch itself to the alliance system, albeit to the most loosely based of the international airline groupings. Its membership is being sponsored by British Airways. The airline’s membership in oneworld will see it coordinate flights, schedules and systems with other member airlines, including Iberia, Qantas, Royal Jordanian, Cathay Pacific, Malaysian Airlines, LAN and Japan Airlines.

Airlines in Transition part 2: Where are smaller airlines in the new partnership world?

In our first article based on CAPA’s recent Airlines in Transition conference, we looked at the evolution of airline alliances. In general, this theme is relevant only to the larger carriers with significant long-haul networks, but 86% of the airlines in CAPA’s database are not full members of a branded global alliance (BGA). In this second report from the conference, we ask where this leaves smaller and non-aligned airlines?

There are a number of benefits and issues that alliance members associate with their membership of a BGA. However, CAPA’s panel of smaller and non-aligned carriers believe that they can address these factors better and more flexibly by remaining outside the BGAs. These issues are mainly connected to expanding and securing the available revenue pool through wider access to markets, brand loyalty and distribution.

CAPA Airlines in Transition report, Part 1: The natural history of airline alliances

From the first US Open Skies agreement with the Netherlands in 1992, and the subsequent granting of antitrust immunity to the KLM-Northwest joint venture in 1993, the evolution of airline alliances has been rapid and far reaching. Bilateral codeshares, immunised JVs, multilateral branded global alliances, the Etihad equity alliance: why are there so many models? In the first of a series of reports based on CAPA’s recent Airlines in Transition conference in Dublin, we examine the history and evolution of airline alliances and partnerships.

After decades of strict regulation of international traffic rights post WWII, which controlled destinations, capacity, frequencies and prices, a campaign for more liberal air services agreements (ASA) between nations began to gather pace in the US from 1977. In the words of Jeffrey Shane, General Counsel, IATA and a former senior US aviation regulator, any attempt to modify an ASA was characterised by a "highly calibrated, tit-for-tat mode of negotiation".

airberlin: in need of a cap that fits after another underlying loss

Air Berlin PLC returned to a net profit in 2012 for the first time since 2007. However, if the one-off proceeds of the disposal to Etihad of 70% of its topbonus FFP are excluded, the operating result would have been a loss of EUR114 million. This is a narrower figure than 2011’s shocking EUR247 million loss, helped by airberlin’s entry into oneworld and its deepening strategic partnership with Etihad.

Wolfgang Prock-Schauer, CEO since Jan-2013 after only joining the company in Oct-2012, rightly assesses that “we have not yet reached our goal – namely sustainable profitability”.

airberlin's cost structure is quite low versus European legacy carriers, but not LCCs, but its revenue base is too close to LCC levels. Thus the airline must simultaneously reduce costs and grow revenues. Further capacity cuts and another efficiency programme are under way, but much will depend on the further successful development of its relationship with oneworld and, in particular, Etihad.

After years of trying on every cap – charter carrier, LCC, full-service carrier, short-haul, long-haul, M&A predator and prey – airberlin needs to find one that fits.