Global airline groupings will be around for many years, says oneworld boss, as leading alliance celebrates its fifth birthday23 October 2003
Global alliances will be a feature of the airline industry for many years to come, even though consolidation among today's carriers is inevitable, says the boss of oneworld™, the most international of the carrier groupings.
Speaking at the Aviation Club of the UK in London today, marking oneworld's fifth birthday, oneworld Managing Partner John McCulloch gave two primary reasons why airline alliances will be in evidence long into the future:
- Consumers like them.
- They offer even the biggest airlines opportunities to generate greater value for their customers and shareholders than any individual carrier can achieve on its own.
He stated: "Competition in this industry is shifting up a gear. Increasingly we are seeing competition between alliances rather than strictly between individual airlines.
"The market likes alliances. Despite the recent growth in the no-frills sector, passengers appreciate being able to reach more places, more easily, on one through ticket, to earn and burn frequent flyer miles while doing so and, if eligible, have a network of lounges to use. Corporate customers and travel buyers are attracted to the advantages alliance fares offer.
"Airline chief executives welcome the cost savings, enhanced revenues, and opportunities to explore further consolidation that successful alliances like oneworld present."
Consolidation of the world airline industry was inevitable: "The question has long been when, and how, not if – and it is more likely to take place on the framework of existing alliances than not.
"However, it won't come about overnight, and in the meantime there remain many more things airlines, even big, consolidated airlines, will be able to do by working together as part of an alliance - more value we will be able to create for shareholders, and, if we do our job right, more services and benefits to provide our myriad of customers."
oneworld was unveiled in London in September 1998 and started offering services and benefits in February 1999. The four founding partners - American Airlines, British Airways, Cathay Pacific and Qantas – have since been joined by four more. Finnair and Iberia were the first recruits in September 1999, followed by Aer Lingus and LanChile in June 2000. Swiss International Air Lines will join them as a fully fledged member of the grouping during the early part of next year.
The alliance had deliberately contained its membership "to a manageable and cohesive grouping of high quality, focused carriers" rather than "adding new members for the sake of it", a strategy which had providing the grouping with "a real advantage in building meaningful value for customers and shareholders".
He explained: "When it comes to airline alliances, we believe it's the quality of what you have, and what you do with it, that really counts. We are highly selective when it comes to new recruits. We will only invite on board carriers who match our demanding quality standards, and who can add real value to our customers and to our existing partners."
This did not mean that oneworld would not add more new members: "We will, over time, and we continue to talk with potential recruits who meet our exacting requirements."
In its first five years oneworld has:
- Helped its member airlines generate value totaling billions of US dollars from their various relationships under the oneworld umbrella, through enhanced revenues and cost savings from initiatives like joint purchasing and sharing facilities on the ground – US$2 billion in the past three years alone, since the central oneworld Management Company was established.
- Built on its lead as the most international airline alliance, serving more territories – 136 currently – than any of its competitors.
- Introduced more alliance fare and sales products than all of the competition combined – an unrivalled choice of 11 types of tickets, offering an unmatched choice of value and flexibility for captains of industry or backpackers, whether they want to fly all around the world or just visit one continent. These products earn hundreds of millions of US dollars a year for the alliance's partners.
- Deepened bilateral links between its member airlines, and spread their benefits more widely across the alliance, from an initial two pairs of partners code-sharing to today 20 of the potential 28 pairings, most recently American Airlines with British Airways, making it easier for passengers to transfer between oneworld airline networks.
- Established a reputation for leadership in delivering excellence in customer service and innovation, with oneworld still the only global alliance to commit to introduce e-ticket interlining fully between its member airlines, with the alliance on track to have all members cut over by the end of next year.
- Expanded its share of the total output of the world air transport industry to some 18 per cent.
- Combined facilities at around 25 key airports around the world, with the latest shared unit, a joint transfer desk, opening this week at London Heathrow's Terminal 3.
In those five years, its member airlines have together:
- Carried 1.05 billion passengers – equivalent to one in every six men, women and children living on this planet today.
- Operated almost 14 million flights, with a oneworld airline flight taking off or arriving today every five seconds on average.
- Flown more than 12 billion miles (some 20 billion kilometers) – equivalent to around 75 round trips to the Sun – with a combined fleet today of 1,996 aircraft.
- Generated revenues of around US$250 billion. Said John McCulloch: "With a turnover of that scale, if we as oneworld can improve the efficiency of our member airlines by just point one of one per cent - that's US$50 million a year added to their collective bottomline."