Have you noticed recent media stories about the battle between American Airlines and Delta Airlines? They're battling for control of Japan Airlines (JAL). That airline is in financial trouble. American and Delta both want controlling financial interest in JAL so they can control its code share agreements. Code shares let different airlines share resources. There are three major code share alliances in the world: oneworld, Star Alliance and SkyTeam. What does all this mean to you? Read on!
There’s a school of thought in the airline industry right now that makes an interesting prediction: in the not too distant future you won’t buy a ticket from an airline, you’ll buy it from an airline alliance. Example: instead of buying a ticket on American Airlines, you’ll buy a ticket from the oneworld Alliance, of which American is part. What is an airline alliance? It’s a group of airlines, from around the globe, which share resources—things like operational employees, ticket counters and sales staff. What’s going on here—why might this seismic change take place? Consider what the airlines have faced in this decade:
- September 11, 2001
- Runaway oil prices
- Declining and static economies
These challenges have made it difficult for Airlines to sell seats at a price that makes money, yet doesn’t drive away customers. Here are some of the things airlines have done to cope:
- Mergers. Mergers eliminate competition and, theoretically, provide greater efficiencies.
- Cut jobs: pilots, flight attendants, and mechanics.
- Cut back or eliminated routes.
- Analyzed all aspects of their operations: how can they make things more efficient?
Against this backdrop the world is shrinking. 25 percent of all air travel in the United States is directly related to international travel. Or, to put it another way, a quarter of all air travelers in the United States are flying in or out of the country. That’s according to aviation analyst Michael Boyd. Keep in mind that the airline alliances are global. So with international travel increasing, the alliances make even more sense. If a U.S. airline shares resources with a foreign airline, both airlines benefit. Airline customers benefit too:
- Greater airline efficiencies theoretically mean lower cost for customers (we can hope!).
- Sharing of frequent flyer miles between alliance airlines.
- International trips easier to plan and schedule.
- Airline airport lounges shared between alliance airlines.
To learn more about the major alliances visit these web sites: