Airline alliance

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An airline alliance is an agreement between two or more airlines to cooperate on a substantial level. The three largest passenger alliances are the Star Alliance, SkyTeam and Oneworld. Alliances also form between cargo airlines, such as that of WOW Alliance, SkyTeam Cargo and ANA/UPS Alliance. Alliances provide a network of connectivity and convenience for international passengers and international packages. Alliances also provide convenient marketing branding to facilitate travelers making inter-airline codeshare connections within countries. This branding goes as far as to even include unified aircraft liveries among member airlines.

Contents

Rationale

Benefits can consist of:

  • An extended and optimised network: this is often realised through code sharing agreements. Many alliances started as only a code sharing network.
  • Cost reduction from sharing of:
    • Sales offices
    • Maintenance facilities
    • Operational facilities, e.g. catering or computer systems.
    • Operational staff, e.g. ground handling personnel, at check-in and boarding desks.
    • Investments and purchases, e.g. in order to negotiate extra volume discounts.
  • Traveler benefits can include:
    • Lower prices due to lowered operational costs for a given route.
    • More departure times to choose from on a given route.
    • More destinations within easy reach.
    • Shorter travel times as a result of optimised transfers.
    • A wider range of airport lounges shared with alliance members
    • Faster mileage rewards by earning miles for a single account on several different carriers.
    • Round-the-world tickets, enabling travelers to fly over the world for a relatively low price.

Airline alliances may also create disadvantages for the traveler, such as:

  • Higher prices when all competition is erased on a certain route.
  • Less frequent flights: for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5(3+2) times a day on the same route. This might be especially true between hub cities for each airline. e.g., flights between Detroit (a Delta Air Lines fortress hub) and Amsterdam (a KLM fortress hub).

Issues

The ability of an airline to join an alliance is often restricted by laws and regulations or subject to approval by authorities. Antitrust laws play a large role.

Landing rights may not be owned by the airlines themselves but by the nation in which their head office resides. If an airline loses its national identity by merging to a large extent with a foreign company, existing agreements may be declared void by a country which objects to the merger. In 2010 Swiss lost overflight rights after being bought by Lufthansa [1].

History

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