Global Airline Alliances Offer Real Benefits for International Travelers
[Part 2 of a 3-part series on global airline alliances]

But Domestic-Only Flyers Should Seek Value Elsewhere.

July 12, 2000 - In the first in this series of alliance articles (ff061300.htm), we introduced the five major airline alliances and identified the financial and marketing advantages driving the airlines toward forming global alliances. As to the more important question--What's in it for the consumer?--we summarized the purported benefits as follows:

In what follows, we look more closely at the promises made by the alliance promoters.

The Promise

Here's the come-on from a joint Northwest-KLM print ad extolling the benefits of their partnership:

Headline: "Thanks to our partnerships, we can take anyone anywhere."

Body copy: "With Northwest Airlines and KLM Royal Dutch Airlines on your team, your business can cover the globe like never before. Together with our global travel partners, Northwest Airlines and KLM serve more than 750 cities in nearly 120 countries on 6 continents. And with more than 3,400 worldwide departures every day, we've got flight selection and flexibility covered too. Your travelers can also earn WorldPerks miles on all partnered flights while enjoying access to all WorldClubs and affiliated lounges worldwide."

Many consumers would choke on the sheer quantity of claims being made, and be left wondering, "Yes, but what's in it for me?"

What's in it for Me?

Perhaps the best way to tease out the consumer benefits of alliances is to take a hypothetical trip, using the airlines of a single alliance. For the sake of the demonstration, we'll use Star Alliance carriers, since Star has the most extensive roster or airline partners.

Let's assume that this is a business trip, originating in the U.S. (Los Angeles), making stops in Chicago, Europe (London) and Asia (Tokyo), returning to the U.S.

Coverage

First, note that it's no great challenge to make the desired trip using Star carriers exclusively.

For the Transatlantic sector, I can fly UA nonstop Chicago-London. Or I could choose to fly Lufthansa (via Frankfurt) or SAS (via Stockholm) or Austrian (via Vienna). Or use United to backtrack and connect to Air New Zealand's LAX-London flight. From London, I could choose to fly on ANA nonstop to Tokyo Narita, or use one of the European partners via their home-country hubs. Or fly London-Auckland-Tokyo on Air New Zealand. Or London-Bangkok-Tokyo on Thai. And for the Tokyo-LAX leg, both United and ANA have daily nonstops. As does Singgapore Airlines. And Thai has 4-times weekly service.

Pricing

While this is a business trip, and therefore less price-driven than a typical leisure trip would be, price always has to be considered. If you meet the conditions (minimum three stops, 7-day advance purchase), you can take advantage of an around-the-world fare using Star partners. The special fares vary according to the number of miles actually flown, as follows (not including taxes):

< 29,000 miles -- $3100 economy class, $5670 business class
29,001 - 34,000 miles -- $3570 economy, $6530 business
34,001 - 39,000 miles -- $4190 economy, $7660 business

Our sample itinerary comes in at less than 20,000 miles, so the ticket prices would be in the first tier. By comparison, our sample trip, with a 14-day advance purchase, autoprices in Worldspan at $5016 for economy and $8829 for business (although an economy class ticket could easily be found for less).

Scheduling

Because our hypothetical itinerary probably wouldn't require any same-day connections between different airlines, the benefits of coordinated scheduling won't be apparent. Imagine, however, that we chose to fly London-Stockholm on Lufthansa, and Stockholm-Tokyo on SAS. Odds are that Lufthansa and SAS would have coordinated their schedules to make the Stockholm connection an efficient one. What's more, the Lufthansa and SAS gates would likely be located in the same terminal, rather than a shuttle-bus-across-the-tarmac ride away.

Lounge Access

According to Star: "Altogether, more than 250 airport lounges around the world are open to eligible Star Alliance Gold members and international First and Business Class travellers."

What's especially nice about this arrangement is that if I'm Star Alliance Gold (which I would be automatically if I've reached Premier Exec level in United, Air Canada Aeroplan Elite, Lufthansa Senator, or mid- to upper-elite status in any of the other Star airline frequent flyer programs), I am thereby entitled to use airport lounges throughout the Star network, even when holding an economy-class ticket.

Frequent Flyer Miles

Since it is a contractual requirement that any airline joining the Star Alliance have reciprocal frequent flyer program links with every other Star airline, it goes without saying that if I'm a Mileage Plus member, for example, I will earn Mileage Plus miles for all flights on my Star-only itinerary.

What elevates the Star partners above other partners in a frequent flyer program is that miles earned on any Star airline count toward elite status. So, again assuming I'm a member of United's Mileage Plus program, every mile flown on any of the 15 Star carriers takes me a mile closer to achieving Premier, Premier Executive or 1K status. (By contrast, I can earn miles for flights on Delta--a Mileage Plus partner, but not a member of the Star Alliance--but those miles would not count toward elite status.)

Trip Report

So, at the end of this imagined round-the-world trip, am I better off for having allowed my choice of airlines to be driven by alliance considerations?

I have gotten a very aggressively priced fare, traveled on world-class airlines, enjoyed convenient connections, relaxed before my flights in the relative peace of remote lounges, and earned a bushel-full of miles which will help me elevate my status in my preferred frequent flyer program.

The above are substantive benefits. Taken individually, they will be of greater or lesser value depending on your travel goals and priorities. But there's no denying that the Star partners have created a compelling package of customer benefits (but see below).

Who Benefits?

You have probably noticed that the benefits offered by alliances accrue almost exclusively to international passengers. And in fact, on the Star website (http://www.star-alliance.com/), you will find the following: "The Star Alliance network was formed to better meet the needs of frequent international travellers."

So if you're a domestic-only flyer, you are better served by ignoring the advertising hype currently surrounding the alliances. Instead, focus on the old standby considerations: price, schedule, frequent flyer miles, safety, service, etc.

In the next and final installment of this series of alliance-oriented articles, we will consider the possible effects of the mergers and acquisitions currently being discussed among U.S. and European airlines.