Opinion Aviation Airline alliances? Emirates forges its own flight path Bilateral agreements can be easier to manage and more tightly targeted By John Grant May 25, 2023, 2:04 PM Emirates Emirates opts for bilateral deals rather than joining one of the big alliances In the last few months Dubai national carrier Emirates has announced a major strategic partnership with United Airlines, a member of the Star Alliance. And now FlyDubai has revealed a series of codeshares with Air Canada, another Star Alliance member. Ask most airline CEOs within the major alliance programmes – Star Alliance, Skyteam and Oneworld – which airline they would like to see within their line-up and Emirates would probably be top of the list. Equally, ask Emirates what benefits joining an alliance would add to its business and it would probably say “not a lot”. Emirates and Etihad buddy up for symbolic clout How the battle for the Gulf’s skies has intensified Emirates and United Airlines set to announce codeshare pact With a well-defined strategy, Emirates realises that its greatest revenue opportunity lies by working outside an alliance structure with partners from all three groups as and when suits. If that means Qantas (Oneworld) in Australia or United Airlines (Star Alliance) in North America then so be it. Why airlines join alliances The three major alliances collectively operate around 43 percent of all capacity through their various members and networks. These alliances bring like-minded carriers together, creating apparently seamless product offerings and connectivity across networks and providing customers with greater choice. The three alliances are broadly similar in shape and size and all have cornerstone members in each of the major world markets. For instance, Star Alliance has Singapore Airlines in South East Asia, Lufthansa in Europe, United Airlines in the US and Air China. Global alliances, summer 2023 Global alliancesStar AllianceOneWorld AllianceSkyteam AllianceNumber of airline members261519Number of countries served192175169Number of destinations served1,2899981,058Share of global capacity17%12%14%Daily flights15,32411,15611,983OAG Schedules Analyser The primary airline alliances have been around for over 20 years and there’s been little movement across alliances or new members added in recent years. However, this may be about to change in light of airlines such as Emirates forging formal or informal arrangements around the alliance edges. The alliance advantage means that an airline can build market presence in a region or specific country alongside a series of partners that subsequently allow for a greater share of the market to be captured. Within the Middle East, airlines across all three major alliances operate with some local carriers. Taking the OneWorld alliance as an example, 11 members have some degree of capacity and presence in the region, but three – Qatar Airways, Royal Jordanian and British Airways – dominate with a 93 percent share. Global alliances in the Middle East, summer 2023 Middle East market activityStar AllianceOneWorld AllianceSkyteam AllianceNumber of airlines operating171114Percentage of all members65%73%73%Largest three airlines– Turkish Airlines– Egyptair– Air India– Qatar Airways– Royal Jordanian– British Airways– Saudi Arabian Airline– Middle East Airlines– KLMPercentage share of the three largest70%93%92%Percentage share of all Middle East capacity, summer 202312%23%19%OAG Schedules Analyser The alliance conundrum The fact that there has been little churn in airline alliances highlights their complexity. Coordinating the product items, scheduling, frequent flyer earning and pricing between a multitude of airlines, all ultimately with their own agenda and strategies, is a thankless task. It can result in lots of additional costs being added to any airline operation. And this is why several airlines are now developing commercial relationships outside of alliance structures – even with competing alliance airlines. Overlay the fact that each of the current alliances probably cover all of the major markets through their existing structures, then adding new members would seem a waste of time. More straightforward bilateral agreements could be more effective, easier to manage and, of course, more tightly targeted. John Grant is partner at UK consultancy Midas Aviation