Is the Star Alliance an abandoned model?

FRANKFURT – Few industrial sectors are as globally fragmented as aviation. Global airline alliances are an answer to many problems. The oldest with Lufthansa in the front row is now 25 years old. But old ties are cracking – alliances are threatened from within by joint ventures.

Carsten Spohr is still convinced of the advantages of the “Star Alliance” airline alliance. “From a customer perspective, no airline in the world can provide this kind of global coverage,” said the boss of Lufthansa, a key alliance partner with US carrier United for 25 years.

The Star Alliance, founded by five airlines in Frankfurt on May 14, 1997, currently has 26 partners working together in more than 50 international hubs. Airlines all benefit from partner networks, whose flights they can market as if they were their own.

Uniform baggage and lounge access rules, common IT solutions, counters and the mutual credit of frequent flyer programs are other aspects of the cooperation. The alliance is controlled from Frankfurt and Singapore.

The many partners around the world provide Lufthansa not only with a global network, but also with additional passengers on the many long-haul routes that depart from the hubs in Frankfurt, Munich or Zurich.

Without the customers of the Polish LOT, the Scandinavian SAS or Air India, the flight plan would have to be considerably reduced and a certain number of connections cancelled. “We would never be as big as we are if we didn’t have Star Alliance power and unpower,” Spohr clearly states. In order to fill a jumbo from Frankfurt to Los Angeles, it must be “fed” with guests from up to 50 smaller departure airports.

ITA in Star Alliance

In the future, even more Italian guests will be on board Lufthansa Group planes if the takeover of Alitalia’s successor ITA, which is planned together with shipping company MSC, goes through. Access to Star Alliance is still an important issue in talks with the Italian state as owner, Spohr says.

Until now, ITA belonged to SkyTeam, dominated by Delta and Air France/KLM. The third global alliance is Oneworld of American and British Airways. The industrial logic that led to the formation of the alliance is still valid.

competition instead of partnership

“The days of airline alliances are actually over, but they are still not dissolved,” says Gerald Wissel of consultancy Airborne. He believes that essential services such as codeshare (jointly marketed flights) could be provided more easily than cumbersome coalition processes.

Moreover, the partners are by no means all green: “In alliances, everyone cooks their own soup more and more. For customers, they bring little additional benefit, while companies increasingly compete within alliances.

This applies, for example, to the internal relationship between Lufthansa and Turkish Airlines, whose hubs increasingly compete for the same customers.

On the most economically important routes, Lufthansa has intensified its cooperation with individual alliance partners and founded joint ventures. These common accounting units form the closest possible form of cooperation in the industry, which is based on national flight rights.

If the largest providers in a flight area join forces, they can more strongly determine flight times and, ultimately, prices. For customers, this means higher prices, but at the same time access to onward connecting flights from the respective partners.

Before Corona, Lufthansa generated more than 70% of its long-haul revenues in transatlantic joint ventures (United/Air Canada) and to Asia (Air China, All Nippon Airways, Singapore Airlines). However, they do not make the “Star Alliance” superfluous, says Lufthansa boss Spohr. It is not an or/or.

© dpa-AFX | Illustration: Airbus | 05/14/2022 06:55

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