Alliances

History

The first alliance of airlines was concluded in 1930 when Pan American Grace Airways and parent company Pan American World Airways agreed to combine routes to Latin America. The first larger Union was formed in 1989 when Northwest Airways and KLM Royal Dutch Airlines agree to share the registration code on a large scale. Huge step was taken in 1992 when the Netherlands signed the first agreement for the "Open Skies" with the United States, despite objections from the European Union bodies. This gave both countries unrestricted landing rights to the territory of the other country. Normal landing rights for the territory of a Party shall provide each other for a number of flights per week to a certain destination. Any corrections to the contractual rights may be done only after negotiations between governments rather than between participating airlines. The United States were so pleased by the independent position of the Netherlands from EU authorities, that they provided the alliance between Northwest Airways and KLM with antitrust immunity. Other unions it took years to overcome transnational barriers. Some are still struggling to overcome them.

The possibility of an airline to join an alliance is often limited by laws and regulations. It also depends on approval by the authorities. Antitrust laws play a big role here.
The rights to overfly and land on another territory cannot be owned by the airlines themselves. They are property of the state where the company is registered. If the airline loses its national identity as a result of a major merger with a foreign company, existing agreements may be declared invalid or nihil by a country that generally opposes the merger. In 2010, the Swiss airline Swiss Air lost their rights after being bought by Lufthansa.

Positive and negative sides of the Alliance:

Positive aspects are:

• An expanded network of destinations:
This is done by a joint operating agreements (so-called. code share). Many airline unions have begun or consist of a network of code-shared destinations (or destinations of joint operation).

• Reducing costs as a result of joint activity:
o Sharing of offices
o Sharing of facilities maintenance
o Operational facilities such as catering or computer systems.
o Joint operational staff, such as ground handling, check-in, boarding, etc.
o Joint investments and purchases, by which additional discounts based on volume may be negotiated.

• Benefits for passengers can be, for example:

=  lower prices due to lower operating costs.
=  more frequencies on a route (more hours of departure).
= More destinations in a given geographical area.
  = Shorter travel times, resulting from optimized transfer times.
= More facilities for passengers because of the sharing of business lounges, recreation rooms, special rooms, etc.

= Faster recovery of miles from one account via several different carriers joining the alliance.
= Cheaper tickets for trips round the world.

Alliances can have negative consequences for passengers, such as:
• Higher prices resulting from elimination of competition on a particular route.
• Reduced total frequency of flights on a route as a result of their optimization. This is especially true for frequencies between two so-called Hubs (major airports). Example of this are flights between Detroit (hub of Delta Air) and Amsterdam (KLM hub).

Alliance - a modern form of rivalry between airlines
Currently constituted are three major alliance - Star Alliance (Lufthansa with a leader), Oneworld (leader British Airways) and SkyTeam (leaders with Air France-KLM). These alliances, together serve more than 62% of the world passenger.

Star Alliance is the first contemporary Alliance, founded in 1997, forcing rival airlines to form in 1999, Oneworld and SkyTeam in 2000. Richard Branson, chairman of Virgin Group, announced its intention to form a fourth alliance between Virgin branded airlines. (Virgin Atlantic, Virgin America and Virgin Blue Holdings)

In 2005, SkyTeam launched a program for associate members. The purpose was to integrate into the alliances market some airlines on the bases of the existing agreements for joint operation with them.
This is the case with Continental, which is a member of the loyalty program of SkyTeam without being a member of the alliance. Currently, SkyTeam has more than 10 associate members.

The past two years have brought major reshuffles in the Alliances. Continental left SkyTeam and joined Star Alliance. So did United Airlines. Merger between Continental and United Airlines is expected soon.

Widening and strengthening are the links between Delta Airlines and KLM, and between North-West Airlines and Air France. Alliances
Membership and market data for the largest airline alliances (as of January 2012) [3] [4] [5]

	Star Alliance 27 members Founded 1997	SkyTeam 15 members Founded 2000	Oneworld 12 members Founded 1999	Rest of Industry (selected major non-aligned carriers)
Passengers per year	603.8 million	474 million	303 million	Unavailable
Countries	185	173	147	Unavailable
Destinations	1185	916	766	Unavailable
Revenue Billion US$ (€)	156.8 (145)	97.9 (90)	89.875 (85)	Unavailable
Market share	29.3%	24.6%	23.2%	Unavailable
Participants¹	Members (JP) Adria Airways 2004 (A3) Aegean Airlines 2010 (AC) Air Canada founder (CA) Air China 2007 (NZ) Air New Zealand 1999 (NH) ANA 1999 (OZ) Asiana Airlines 2003 (OS) Austrian Airlines 2000 (KF) Blue1 2004 (BD) BMI 2000 (SN) Brussels Airlines 2009 (OU) Croatia Airlines 2004 (MS) EgyptAir 2008 (ET) Ethiopian Airlines 2011 (LO) LOT Polish Airlines 2003 (LH) Lufthansa founder (SK) SAS founder (SQ) Singapore Airlines 2000 (SA) South African Airways 2006 (JK) Spanair 2003 (LX) Swiss International Air Lines 2006 (JJ) TAM Airlines 2010 (TP) TAP Portugal 2005 (TG) Thai Airways International founder (TK) Turkish Airlines 2008 (UA) United Airlines founder (US) US Airways 2004 Future Members (AV) Avianca 2012 (TA) TACA 2012 (CM) Copa Airlines 2012 (ZH) Shenzhen Airlines 2012 Former Members (AN) Ansett Airlines 1999–2001, defunct (CO) Continental Airlines 2009–2011, merged with United Airlines (MX) Mexicana 2000–2004, joined Oneworld 2009 (RG) Varig founder, 1997–2007, ejected (FM) Shanghai Airlines 2007–2010, merged with China Eastern and joined SkyTeam in 2011	Members (SU) Aeroflot 2006 (AM) Aeroméxico founder (UX) Air Europa 2007 (AF) Air France founder (AZ) Alitalia 2001–2009 as Alitalia-Linee Aeree Italiane, rejoined 2009 (CI) China Airlines 2011 (MU) China Eastern Airlines 2011 (CZ) China Southern Airlines 2007 (OK) Czech Airlines 2001 (DL) Delta Air Lines founder (KQ) Kenya Airways 2007 (KL) KLM 2004 (KE) Korean Air founder (RO) TAROM 2010 (VN) Vietnam Airlines 2010 Future Members (AR) Aerolineas Argentinas 2012 (GA) Garuda Indonesia 2012 (ME) Middle East Airlines 2012 (SV) Saudi Arabian Airlines 2012 (MF) Xiamen Airlines 2012 Former Members (CO) Continental Airlines 2004–2009, joined Star Alliance 2009 (CM) Copa Airlines 2007–2009, will join Star Alliance 2012 (NW) Northwest 2004–2009, merged with Delta	Members (AA) American Airlines founder (BA) British Airways founder (CX) Cathay Pacific founder (AY) Finnair 1999 (IB) Iberia 1999 (JL) Japan Airlines 2007 (LA) LAN 2000 (MA) Malév 2007 (MX) Mexicana 2009 (ceased operations in 2010 but still a member) (QF) Qantas founder (RJ) Royal Jordanian 2007 (S7) S7 Airlines 2010 Future Members (AB) Air Berlin 2012 (IT) Kingfisher Airlines 2012 (MH) Malaysia Airlines 2012 Former Members (EI) Aer Lingus 2000–2007, left voluntarily (CP) Canadian Airlines founder, 1999–2000, acquired by Air Canada	Americas (FL) AirTran Airways (AS) Alaska Airlines (CU) Cubana (F9) Frontier (G3) Gol Transportes Aéreos (HA) Hawaiian Airlines (B6) JetBlue (WN) Southwest (VX) Virgin America (WS) Westjet (NK) Spirit Airlines Europe / C.I.S (EI) Aer Lingus (VV) Aerosvit (KM) Air Malta (CY) Cyprus Airways (FI) Icelandair (JU) Jat Airways (DY) Norwegian Air Shuttle (DY) Olympic Air (FV) Rossiya (UN) Transaero (DY) Uzbekistan Airways (VS) Virgin Atlantic Africa & Middle East (AH) Air Algérie (W3) Arik Air (LY) El Al (EK) Emirates (EY) Etihad Airways (GF) Gulf Air (IR) Iran Air (QR) Qatar Airways (AT) Royal Air Maroc (TU) Tunisair Asia (AI) Air India (BG) Biman Bangladesh Airlines (BR) EVA Airways (HU) Hainan Airlines (9W) Jet Airways (PK) Pakistan International Airlines (PR) Philippine Airlines (UL) SriLankan Airlines
Network Capacity
Within North America	23%	28%	15%	34%
Within South America	1%	2%	14%	83%
Within Europe	20%	16%	11%	53%
Within Middle East	2%	0%	3%	95%
Within Africa	23%	10%	4%	63%
Within Asia	35%	11%	9%	45%
Within Oceania	11%	0%	32%	57%
Between N. America and Europe	27%	34%	21%	18%
Between N. America and S. America	9%	29%	40%	22%
Between Europe and S. America	20%	28%	22%	30%
Between N. America and Asia	41%	29%	10%	20%
Between Europe and Asia	36%	22%	19%	23%
Quality
Average Star Rating	3.29	3.19	3.73	2.87
5-Star Airlines	40%	0%	20%	40%
4-Star Airlines	29.03%	12.9%	12.9%	45.17%
3-Star Airlines	13.93%	9.01%	4.91%	72.15%
2-Star Airlines	0%	0%	0%	100%
1-Star Airlines	0%	0%	0%	100%
0-Star Airlines	0%	0%	1,06%	98,94%

Airline Alliance Market Share By Network Capacity 2007