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A FOURTH MUSKETEER IN THE SKIES?
By Joe Brancatelli
February 1, 2012 -- This has been a tough few weeks for the three airline alliances, the quasi-oligopolist consortia that controls perhaps 60 percent of the world's passenger traffic.

Some of the pain points:

• European Union antitrust regulators announced Friday that they were investigating a key part of the SkyTeam Alliance fronted by Delta Air Lines and Air France-KLM. The world's second-largest group of airlines may be forced to divest some takeoff and landing slots, a solution that the EU imposed in 2010 on key members of Oneworld, the third-largest alliance.
• The Star Alliance, which carries almost as many passengers as SkyTeam and Oneworld combined, suffered a blow over the weekend when Spanair, its Catalonia-based component, abruptly stopped flying.
• Oneworld took another hit on Monday when its Hungarian partner, the government-owned flag carrier Malev, admitted that it ran out of cash. Oneworld was rocked late in November when American Airlines, its largest member, flew into Chapter 11 bankruptcy.

How much does any of this affect those of us who travel on business? Frankly, not much at all, which says a lot about the alliances themselves.

When originally envisioned about 25 years ago, alliances and codeshares (the practice of putting one airline's two-letter computer code on a flight operated by another carrier) were supposed to make our lives easier. Airline executives floated visions of flights and ground experiences that were seamless from one carrier to another. They promised alliances and codeshares would make life on the road more productive, less stressful, and far less confusing.

But airline alliances (and their legal underpinnings, antitrust immunities that allow supposed competitors to operate as virtual monopolies) have never actually been about the travelers. "Whoever told you alliances were about you was lying," one executive at an international airline told me 15 years ago. "They're about us. They help us cut our cost, restrain capacity, and, I hope, get fares up."

All this said, I have a humble suggestion that might make things a little better for us: a fourth global airline alliance. Not because I believe a new alliance would magically, mystically improve our lot. But simply because I always think more competition is better. If we have gotten out of the business of having individual airlines compete for customers, perhaps we can have more alliances fighting for our business. It would be better than nothing.

Before I make my case, a very brief backgrounder on how we got where we are with just three global behemoths in control of about 1.4 billion travelers a year.

Exactly 20 years ago, British Airways and US Air announced what was then a groundbreaking deal: BA would invest in US Air, and the two would cooperate on flights and align their service. International BA flights would feed flyers to US Air's domestic network and vice versa. The airlines would mesh operations, share airport lounges and frequent-flyer services, and act almost as one combined carrier. Not long after, Northwest Airlines and KLM announced a similar form of cooperation.

Those two deals, and many others, always ended up being eyewash from the passenger's point of view. The airlines took all the benefits—lower operating costs, shared resources, coordinated marketing—and never delivered on their promise of seamless customer service. Even simple things like connecting flights leaving from the same terminals at a common airport were elusive.

Skip forward about a decade and the three existing alliances as we now know them had been created. United Airlines, Air Canada, and Lufthansa formed the backbone of Star. Delta, Air France, and Korean Air were the foundation of SkyTeam. And American Airlines, British Airways, Cathay Pacific of Hong Kong, and Qantas of Australia formed the heart of Oneworld. Allied carriers came and went (Aer Lingus was once in Oneworld, but dropped out, and Continental switched from SkyTeam to Star, which led to its eventual merger with United). Some went out of business (Canadian Airlines, a founder of Oneworld, and Varig of Brazil, an early Star Alliance partner). Others merged with each other (Air France and KLM of the Netherlands, British Airways and Iberia of Spain, and Lufthansa of Germany picked off Austrian Airlines and Swiss International) .

But as the alliances grew—Star, for example, now has 26 carriers that operate about 21,000 daily flights—they continued to focus more on their needs than ours. They promised plenty, of course, but delivered little. Any frequent flyer can tell you tales of denied entry to shared alliance lounges and dishonored cross-carrier frequent-flyer program perks. And alliance carriers seem to delight in giving you the bureaucratic shuffle when you have to change a multicarrier itinerary or your luggage has gone missing.

Or how about this timely example: When Spanair collapsed over the weekend, the Star Alliance website sloughed stranded Star passengers to the Spanair site. Yet for hours after it stopped flying, Spanair.com was offline. When it returned, it had this blunt message for Star flyers: "If you have purchased a ticket with Spanair that is operated by another airline member of Star Alliance, we can not guarantee that your flight is protected. However, for clarification we suggest you contact the operating airline."

So what gives me any hope that building a fourth airline alliance would actually make our lives better? As I said before, it's simply a matter of competition. More competition is better than less competition. And a Fourth Musketeer in the skies could only be good news.

A fourth alliance wouldn't be all that hard to build, either. You could start with the three airlines that carry the Virgin name: Virgin Atlantic of Britain, Virgin Australia, and Virgin America. Despite the bombast of their front man, Sir Richard Branson, all three carriers are independent and desperately in need of allies. They simply aren't large enough to compete on their own.

For more heft in North America, Westjet of Canada might be lured into a theoretical fourth alliance. And while it has prospered by forging parallel bonds with airlines in various alliances, Seattle-hubbed Alaska Airlines might realize that it is time for them to buddy up globally.

Internationally, SAS, the fine Scandinavian carrier and a founder of the Star Alliance, might be lured to a new consortium. Lufthansa carries the big Star stick in Europe, and SAS is all too often an afterthought. Malaysia Airlines and AirBerlin are scheduled to join Oneworld, but they'll be junior partners there. Both could do better if a fourth alliance were created. Ireland's Aer Lingus, which desperately needs to distinguish itself from its über-budget island rival Ryanair, may be ready to jump back into the alliance game.

And then there are the three Arab/Persian Gulf carriers that are currently making big moves on the world stage: Emirates of Dubai, Etihad of Abu Dhabi, and Doha-based Qatar Airways. Despite their marketing bombast and the oil-fueled resources that give them the ability to offer lavish, in-flight service and the newest aircraft, they have a major problem. They can only survive if they continue to push connecting traffic through their respective hub airports. And three hubs within 300 miles of each other in the otherwise traffic-light Middle East can't survive independently forever. At least one of the three might see the wisdom of joining a new alliance, especially a consortium that offers a founding stake and an unprecedented high profile for an Arab airline.

Finally, you could look to what an El Al executive recently called candidates for an "alliance of the miserables": airlines that, for political or other reasons, have not yet been welcomed by Star, Oneworld, or SkyTeam. They include El Al and airlines you may not yet know—AeroSvit of the Ukraine, for example, or Nigeria-based Arik Air—but which might be able to plug a new alliance's route map.

What would I want from this Fourth Musketeer? Not much, really, because I have too often been disappointed. But it would be nice to know that an alliance offered loyal frequent travelers access to their lounges a somewhat seamless frequent-flyer program, convenient connections from one carrier to another, and alliance-wide assistance when something goes wrong.

You know, the kind of stuff airline alliances were talking about 20 years ago when they started.

The Fine Print…
To show you exactly how far short the existing alliances fall in the passenger-service arena, consider SkyTeam's big announcement two weeks ago: A dozen years after its founding, SkyTeam is finally getting around to creating a brand for its cross-airline elite-level and premium-class service. The so-called SkyPriority arrangement is meant to "align all [SkyTeam airlines] to a common and consistent service" in matters such as check-in processes, baggage handling, and boarding privileges.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.

THE FINE PRINT This column is Copyright © 2012 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2012 by Joe Brancatelli. All rights reserved.