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The future of airline alliances is better, not bigger

Insight

Recent comments from the CEOs of oneworld and SkyTeam suggest an increasing focus on customer experience, integration and technology rather than network growth or adding new member airlines.

The major airline alliances appear to have moved to a phase of competing on customer services and product development, rather than the number of destinations they can offer.

Airline alliances remain despite constantly changing market conditions

In an interview in IATA's Airlines publication in Jun-2024, oneworld CEO Nathaniel Pieper said that "network utility" and the ability of member airlines to offer a large number of global destinations remains the main factor in the continuing relevance of airline alliances.

However, Mr Pieper noted that "the opportunity to add airlines is waning", limiting the ability to grow the alliance's membership.

He said: "The aim, in the near term at least, is to improve product consistency, ensure we are serving the right destinations for our customers, improve lounges, and so forth. It is in these softer areas where you will see the biggest changes".

Mr Pieper also commented: "We want to focus on that customer experience and ease of connectivity", adding: "The customer must be in control of their journey and experience".

Also interviewed in the publication in Jul-2024, SkyTeam CEO Patrick Roux expressed similar views, stating: "Network expansion was one of the original ideas behind an alliance, but times change".

He said: "At SkyTeam, we don't want to be the biggest alliance, we want to be the most integrated one. Our aim is to create an offer that benefits our customers".

Mr Roux said customers want "recognition" and a seamless experience when travelling with different carriers, describing the integration of member airlines' loyalty programmes and technology, such as mobile apps, as "vital to the experience they receive".

He commented: "Technology is at the core of our strategy to improve the customer experience".

Star Alliance has a similar focus, highlighting on its website its ambition to be "the most digitally advanced global airline alliance" and to offer "seamless" travel and an attractive loyalty proposition.

While it will lose member airline SAS to SkyTeam from Sep-2024, Star expects to maintain connectivity to Scandinavia through 17 of its other carriers.

Star has also emphasised that it will remain the world's largest airline alliance and it will "focus on delivering a superior customer experience".

A customer focus, but doors remain open to new members

While they are focused on improving products and services, when speaking at the IATA AGM in Jun-2024 both Mr Pieper and Mr Roux indicated that their alliances remain open to new membership.

Mr Roux said there is "no limitation" on the size of SkyTeam's member base and the alliance is "open to different models", including possibly adding regional or feeder carriers.

Meanwhile, Mr Pieper said "white spaces" still remain on oneworld's network map and while the alliance will look to fill these gaps through existing members, it is "talking to everyone" about potential membership growth.

In the Airlines interview, Mr Roux concluded by stating that growth "is not about increasing membership for the sake of it", adding: "It is about the customers and what an alliance means to them and the services we can provide".

Many people had started to question the value of airline alliances in their original form. It is clear that they are continuing to evolve and are pivoting to market needs.

This article was written on 05-Aug-2024.