Op-Ed: Potential Airline Alliance Shifts on the Horizon

DALLAS — In the dynamic world of commercial aviation, political and economic events play a crucial role in shaping the strategies that airlines must adopt to ensure effective management and profitability. When it comes to airline cooperation, the relationships between carriers have undergone significant changes over the years.

Currently, three major airline alliances dominate the market: Star Alliance, SkyTeam, and Oneworld. Membership in any of these alliances allows member airlines to enhance their global presence in terms of routes, customer service, and onboard experience through codeshare agreements, aircraft utilization, flexibility, and the sharing of facilities.

In this article, we examine different scenarios in which certain airlines belonging to the three major alliances, along with external carriers, may soon switch allegiances as a result of significant industry events.

Scandinavian Airlines Bound for SkyTeam

It has been officially confirmed: Scandinavian Airlines (SK) will leave the Star Alliance as part of the large merger taking place into the Air France-KLM Group.

The airline, which is currently a founding member of the Star Alliance, will be switching to the SkyTeam alliance in the coming months. This change comes as Air France-KLM acquires a 19.9% stake in the carrier, in a deal worth over US$140 million.

This decision will have a significant impact on the aviation landscape in Northern Europe. The world's oldest alliance, the Star Alliance, will lose one of its major contributors to the European summer leisure market, as well as to the North Atlantic and trans-Siberian routes.

On the other hand, the Nordic countries will now have representation in both the SkyTeam alliance, with the airline's code 'SK', and the oneworld alliance, with Finnair (AY).

Bamboo Airways Looks to Join an Alliance

Bamboo Airways (QH), Vietnam's newest low-cost carrier, has expressed its intention to join an airline alliance in 2023. Although no official announcement has been made, Airways has already conducted an analysis of the aviation landscape in Southeast Asia that revolves around the Vietnamese carrier.

Currently, oneworld has relatively limited representation in this region compared to the other two alliances. Oneworld only has two prominent members operating flights in Indochina and its neighboring areas: Malaysian Airlines (MH) and Cathay Pacific (CX).

On the other hand, Star Alliance dominates the market with strong member airlines connecting Asia with the rest of the world, such as Singapore Airlines (SQ), Thai Airways (TG), and Eva Air (BR). Meanwhile, SkyTeam already includes a Vietnamese member, which is the national flag carrier Vietnam Airlines (VN).

Considering CXs gradual recovery of its route network, albeit still affected by the devastating impact of the COVID-19 pandemic, joining Oneworld could be a strategic move for Bamboo Airways (QH) to complement Malaysian operations and expand its influence in the region.

Etihad: Getting Closer to Flying with SkyTeam

Etihad Airways (EY) has a well-known preference for collaborating and establishing partnerships with members of the SkyTeam alliance. Codeshare deals with 10 alliance members and shared loyalty programs with five others support this preference.

Although there is currently no official agreement in place, EY has stated on multiple occasions that they are continuously considering the possibility of joining the SkyTeam alliance. However, its main focus at the moment is on recovering profitability after the pandemic and expanding its own network.

Recently, two significant developments have increased the likelihood of seeing EY aircraft featuring special SkyTeam liveries. Firstly, a comprehensive Memorandum of Understanding (MoU) was signed with Air France-KLM, aiming to strengthen their partnership in areas such as passenger operations, loyalty programs, talent development, and maintenance.

Additionally, a major codeshare agreement was announced with SK, a future member of the SkyTeam alliance. This agreement will enable EY to expand its network by adding 19 new destinations in Northern Europe. In return, SK will gain access to 10 additional served cities in Africa and Asia through EY flights connecting via Abu Dhabi (AUH).

Will Spain Become a Full oneworld Member?

Air Europa (UX) anticipates becoming a fully-owned subsidiary of International Airlines Group (IAG) by the end of 2024, pending approval from the European Union. However, national airlines in Spain are expressing concerns about the potential development of a monopoly in the domestic market, particularly in relation to flights to and from the Canary Islands.

Although UX's decision to leave the SkyTeam alliance and potentially join Oneworld alongside Iberia (IB), another member of IAG, was not officially stated as a condition of the acquisition deal, it should not be disregarded, as similar situations have arisen in previous airline mergers, such as SK joining SkyTeam.

Nevertheless, the inclusion of UX in the oneworld alliance is likely to further complicate the approval process by the EU Commission, which is already imposing significant barriers to the merger. One of the key requirements is for IAG to release a substantial number of UX slots at Madrid-Barajas International Airport (MAD) to ensure a balanced presence of other Spanish airlines at the airport.

Will Emirates Join Star Alliance?

Answering this question is undoubtedly complex. On one hand, the relationship between Emirates (EK) and members of the Star Alliance is highly regarded. As recently as September of this year, the airline announced significant collaborations with United Airlines (UA) and Aegean (A3) for routes to and from the United States.

Aegean, for instance, can now offer codeshare tickets for the long-haul transatlantic flight EK209 between Athens (ATH) and Newark (EWR). In turn, EK has gained the opportunity to expand its network by including various destinations in Mexico through an enhanced partnership with United Airlines (UA) on flights originating from Houston (IAH).

However, EK has historically maintained a strong sense of independence within the industry. Unlike Qatar Airways (QR), which is a fully-fledged member of the oneworld alliance, the UAE flag carrier has not pursued extensive partnerships that extend beyond typical codeshare agreements.

Emirates feels confident in operating and making decisions about its future without relying heavily on collaborations with other airlines.

Is Joining an Alliance the Right Decision?

Being part of an airline alliance is almost always the best opportunity for a carrier to expand worldwide. The benefits of codeshare flights with partner airlines extend beyond enhanced connectivity for customers. They also have the advantage of enjoying the comfort of other members' lounges at airports, providing them with more options during their journeys.

However, being part of an alliance also requires airlines to conform to the group's requirements and standards. This can potentially limit the overall freedom and independence of a member airline, as decisions within the alliance may influence their operations.

For large airlines like EK or EY, joining an airline alliance may not always yield the expected results. It could potentially restrict their ability to make independent decisions and impede their desired growth and development according to their management boards' vision.

What are your thoughts on whether these five airlines should switch sides or join an alliance? Do share your opinions on our social media channels!

Featured image: Ryan Scottini/Airways

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