Alliance bosses claimed their organisations have a strong future and are generating financial benefits for their members, at the CAPA aviation summit in Amsterdam.

Star Alliance CEO Mark Schwab said cost savings included consolidated fuel buying at certain airports around the world.

He said that 22 members sharing Heathrow’s new Terminal 2 when it opens in June 2014 meant there were opportunities for cost efficiencies – from lounges to ground handling.

But Aeroflot director Georgio Callegari said joining an alliance has “not delivered the cost benefits that we were promised.”

He said the Russian airline had been able to take advantage of some benefits, but it did not regard alliances as the “end game.” He added: “The synergies that come from strong bilateral relationships provide true value.”

Skyteam CEO Michael Wisbrun described his alliance as a “transformation platform, a major building block”, in which airlines such as China Eastern and China Southern used membership as an accelerator to build successful “hub and spoke” operations.

The panel was asked if “immunised joint ventures” – large airline joint ventures that are protected from antitrust lawsuits – undermined and threatened traditional alliances.

Skyteam’s Wisbrun said it was natural for airlines to cluster around relevant revenues and synergies, and that his alliance was not “black and white or set in stone,” but instead an enabler. “Our role is facilitating the bottom line of JVs, it’s part of us being that platform for transformation,” he said.

Star Alliance boss Schwab said he expected more immunised relationships within alliances, citing the example of Singapore Airlines’ recently expanded agreement with SAS. “I think by and large that level of cooperation is the next step for ‘families’ within Star Alliance,” he said.

Ciro Camargo is head of alliances at Brazilian no-frills carrier Gol, which is not an alliance member but has a codeshare agreement with Delta. “Our experience with Delta has been unique,” he told the summit audience. “We are a low cost, low fare carrier moving to a hybrid model, and like most of our peers we do have scarce, limited alliance-related resources.” he said, citing the system upgrades and frequent flyer programme required to be part of an alliance.

“Being able to focus those scarce resources on a single partner has proved very beneficial,” he said.

Moderator and aviation expert Rigas Doganis asked the panel about the effect of airlines forging bilateral agreements with non-alliance members – such as the Qantas-Emirates and Air France KLM-Etihad relationships.

He asked Callegari to comment on Aeroflot’s large number of codeshare agreements – the Skyteam member has more than 30. Callegari said these relationships were as important as his alliance membership. “When you are growing so fast, and serving somewhere as large as Moscow, there’s no way you can be satisfied with agreements within just one alliance,” he added.

Callegari said it was no coincidence that the Singapore-SAS joint venture was developed after the break-up of SAS and Lufthansa’s agreement. “I think this proves that you stay in a joint venture or an alliance if you get the benefits you expect. If you don’t, you pursue other partnerships – which might be outside your alliance.”

Doganis also asked whether smaller airlines became sidelined in global alliances. Star Alliance’s Schwab replied: “Why do our 10 small members want to be part of our alliance? Because it connects them into a global network and gives them worldwide distribution that wouldn’t be possible to generate on their own. The big carriers push traffic on to them.”

Skyteam’s Wisbrun said that as long as global consolidation was forbidden, alliances would continue to be a vehicle where smaller airlines made the choice to align with bigger ones.

Gol’s Camargo said partnerships offered potential benefits to no-frills carriers that are moving towards a hybrid model.

“It’s very important for an airline like Gol to have access to global corporate accounts. We value the possibility of attracting these high-value customers to our network.”

He said the airline must weigh up the costs and benefits of bilateral agreements and alliance membership.

 

 

Subscribe to the BBT Newsletter

Join the Buying Business Travel newsletter for the latest business travel news.

Thank you for signing up!