Industry Comment
Airline alliances and service delivery
Alliances have become an important avenue of expansion for airlines. Rob Britton discusses how alliance relationships affect service planning and delivery
It’s worthwhile to begin with a refresher on why alliances are formed. Like so much in the airline business, regulations play a major role. Two
kinds of laws create the imperative to ally. First, to grow by simply buying a foreign airline is usually impossible, because most nations prohibit foreign capital from taking a majority interest in their airlines. A vestige of a less stable world in the last century, these restrictions are virtually unique to airlines. Second, the treaty-like bilateral agreements between nations that enable aviation may prohibit airline A from offering service with its own aircraft, but may permit Airline A to sell seats on an airline of the other nation, and vice- versa – this is code-sharing. Beyond these legal ‘workarounds’, alliances confer commercial benefits, such as increased revenue and profit, and the ability to expand with less capital and risk compared to operating one’s own aircraft. If all this sounds airline-, and not customer-
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driven, you’re right. Alliances do not primarily exist to benefit passengers. But recognising that essential fact does not mean that alliance partners need not consider customer service or passenger interest as they proceed. The optimum alliance is one that delivers financial benefit to each airline partner while paying close attention to the several service imperatives. First, alliance partners often have very different business models and service profiles. This creates inherent conflict, but the key to effective management is 1) not to deny this reality, and 2) to be honest in communications and service delivery to passengers. Although governments mandate some of this, it’s better not to manage just to the minimums that the law requires, but to be much more forthright in disclosure of who is actually operating the flight and what they will deliver at the airport and on board. And, more important, allies should commit, over a sensible time frame, to converge their service standards, especially in Business and First.
A second related point is that agreed service standards must be maintained. A decade ago,
in their effort to reduce staggering losses, US alliance partners angered passengers by charging for services that were formerly complimentary, while their foreign ally continued to offer them gratis. Just silly. The fact is, there was no financially-meaningful up side, and a lot of downside.
Third, airline alliances must make things simpler. The bewildering rules that govern alliance passengers’ admittance to lounges is a perfect example, and there are many more. From direct experience, I know that airline middle managers spend countless hours trying to create these policies, which typically are the result of stubbornness and misplaced pride by one of the parties.
No-one faults airlines for trying to grow revenues in the face of escalating costs, but alliance partners need to view the passenger experience across their two airlines from the customers’ eyes. If they did, they would stop using words like ‘seamless’ and everyone would be happier. Or at least less frustrated.
rob.britton@
airlearn.net
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