SkyTeam

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.

Delta Air Lines improves China position with better slots from partners China Eastern & Southern

Slots at Chinese airports cannot be openly swapped the way they can at other airports – such as at London Heathrow where slot trading over the past year has occurred between Jet Airways and Etihad, Cathay Pacific and Air New Zealand, Qantas and British Airways, Delta and unnamed partners and perhaps soon Aer Lingus and British Airways. This has become problematic for carriers like Delta, which are given late arrival times and early departures that stymie critical connecting traffic.

But Delta in recent months has been able to leverage its partnerships with fellow SkyTeam carriers China Eastern and China Southern to adjust their slot portfolio to maximise connections, which benefit both parties. Delta has been able to move its Detroit-Beijing/Shanghai Pudong services to arrive in the afternoon and depart in the evening, key times for foreign long-haul carriers. While this improves Delta's position in China – the smallest of the three US carriers present – its ability to tap into new cities appears limited owing to fleet limitations.

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".

Radial Alliances and Virtual Airlines. Reshaping the partnership model in a new world

The constraints of national ownership requirements and a deep rooted preference for protectionism to promote national flag carrier interests have for decades moulded the ungainly shape of an inefficient and largely unsustainable airline industry. It is a model designed for the conditions of post-war 1945, yet it has somehow survived for 70 years with only modest changes.

That it has been perpetuated for so long is the product of the network of bilateral agreements that, like a cobweb produced by hundreds of spiders, is beyond the power of one or two willing parties to change.

The meticulous construction of this unwieldy but impenetrable fabric over decades has effectively meant that individual states cannot change it. The only solution was through multilateral agreement and the few modest attempts at that have invariably resulted in failure.

Taiwan’s TransAsia growth Pt II: responding to LCCs, res system cutover & alliances/partnerships

In the second part of this report, TransAsia weighs how it can expand traffic in Northeast and Southeast Asia but also counter growing foreign LCCs as well as the inevitable local Taiwanese LCC that has yet to form. TransAsia has laid out an undisclosed pathway to guide it depending on what outcomes occur in the Taiwanese market with respect to LCC development.

TransAsia believes it can counter LCCs and competitors in general with the carrier's forthcoming cutover to a new reservation system that will offer it greater agility and be the impetus for the carrier to raise online sales from at least 15% to, perhaps optimistically, over 50% within two years.

TransAsia is also watching the developments with alliances and partnerships and it is interested in having more friends, although the carrier thinks it is early days for it to consider joining a global marketing alliance; this could change if it were invited.