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Formed in 1997. The Star Alliance (SAL) is the world's 1st and largest airline alliance. Its name and emblem represent the 5 founding airlines: Air Canada (ACN), Lufthansa (DLH), Scandinavian Airlines System (SAS), Thai Airways International (TII), and United Airlines (UAL). The (SAL) has since grown considerably and now has 21 full and 3 regional members, with another 4 expected to become full members by 2009. The (SAL) is headquartered in Frankfurt am Main, Germany.
Code share flights between these airlines are, for the most part, seamless. This tight cooperation led to suspicions of anti-competitive behavior, and the (SAL) alliance was investigated by the European Union (EU) as a virtual merger of its members. Indeed, some speculated that if government regulations were relaxed, the members would merge into a single corporation, although no evidence has yet materialized. Prior to the (SAL), Northwest Airlines (NWA) and (KLM) were operating together as the forerunners of the modern airline alliance system since 1993, although there had been even earlier pairings and groupings of airlines for decades on a less formal level. The creation of the (SAL) was a milestone in airline history, because of its size. It sparked the formation of rivals, notably SkyTeam (STM) and Oneworld (ONW) alliances.
The (SAL) developed the "regional" concept in 2004, which helped the (SAL) penetrate individual markets with the regional participation of smaller carriers. Regional (SAL) members have to be sponsored by an existing full (SAL) member.
January 2004: The Star Alliance (SAL) signed a 5-year Information Technology (IT) accord with (BEA) Systems Inc, San Jose, California, an application infrastructure software firm. The contract gives Star's 15 members "the opportunity to introduce (BEA)'s innovative application platform suite at a cost no single airline would be able to negotiate" said Michael Stagl Star (SAL) (CIO). United Airlines (UAL), Lufthansa (DLH), & Singapore Airlines (SIA), as well as the (SAL) alliance itself, have developed ticketing, baggage handling, and loyalty software applications on the (BEA) WebLogic platform in recent years. Under the new agreement, (BEA) WebLogic Server and (BEA) WebLogic Integration have become Star (SAL)'s preferred application server and integration software.
September 2006: The Star Alliance (SAL) has the following members:
Adria Airlines (ADR)*--------DEC-2004-------1,019------1-------167---
Air Canada (ACN)-------------MAY-2007----75,290-----30-----8,422---
Air New Zealand (ANZ)------MAR-1999----25,568-----12-----2,512----
All Nippon Airways (ANA)---OCT-1999----58,949-----50----12,040----
Asiana Airlines (AAR)--------MAR-2003----19,255-----12-----3,003----
Austrian Airlines (AUL)------MAR-2000----22,894-----10-----3,078----
Croatia Airlines (CRH)*--------DEC-2004-----1,200------2----22,371----
(LOT) Polish Airlines----------OCT-2003-----6,284------4-----8,225----
Scandinavian Airlines (SAS)---MAY-1997----26,487-----24-----3,034----
Singapore Airlines (SIA)-----APR-2000------82,742-----17-----1,225----
South African (SAA)------------APR-2006----24,300------7-----3,034----
Swiss International (CSR)----APR-2006----20,469-----10-----2,860----
Thai Airways (TII)--------------MAY-1997----49,930-----18-----4,056---
United Airlines (UAL)----------MAY-1997---183,262-----67----17,379----
US Airways (AMW)/(USA)-----MAY-2004----62,582-----40----10,610----
Air China (BEJ)------------------------------------52,453-----28---4,681
Shanghai Airlines (SHA)--------------------------8,780------7-----976
December 2006: The Star Alliance (SAL) expelled Varig (VAR) from its ranks just 2 weeks after (CEO) Jaan Albrecht told reporters at a briefing in Istanbul that the restructuring Brazilian carrier was a member in "good standing." The (SAL) alliance said the decision was "prompted" by a reduction in flying and services by Varig (VAR), whose status changed, when its new owner was awarded its own air operating certificate (AOC) earlier this month under the name "VRG Linhas Aereas." "In order to deliver the Star Alliance (SAL) benefits, products and services to customers around the globe on a consistent basis, our member carriers work to certain standards and processes," Albrecht said. "Unfortunately, the 'old' Varig (VAR) will no longer operate as a network airline and will therefore have to give up its membership in the alliance."
Varig (VAR) officially will leave Star (SAL) on January 31. The alliance will be the only one of the 3 major airline groupings to lack a member based in Latin America, although Albrecht said it "continues to offer the most intercontinental flights serving more cities in Brazil than any other alliance, and will continue to expand its services in this important and growing aviation market." 6 Star (SAL) carriers offer some 270 weekly international flights from 6 Brazilian airports.
May 2007: On the occasion of its 10th anniversary, which was celebrated this week in Copenhagen, the Star Alliance (SAL) endeavored to take some control over the increasingly volatile discussion concerning commercial aviation's impact on the environment, announcing a transport and marketing partnership with leading conservation organizations while acknowledging that more forceful and unified communication is needed to defend the industry's position. In an address to member airline executives, industry leaders and media assembled in the Danish capital, (SAS) Group CEO, Mats Jansson said the environment is the "single most important question for aviation to deal with right now in order to achieve sustainable growth." While the alliance reaffirmed its support for new airframe and engine technology and its demand for improved infrastructure, the newly announced Biosphere Connections tie-up with (UNESCO)'s "Man and the Biosphere" Program gives the airline group both the opportunity to play its part in environmental protection and greater legitimacy when calling for more reasonable analysis of aviation's adverse impact. Under the agreement, that includes the World Conservation Union, World Heritage sites and the Ramsar Convention On Wetlands, Star "will assist field workers . . . with transport to relevant meetings, conferences and events" and promote conservation and sustainable use "throughout [its] extensive communications distribution systems," including inflight and Web-based media.
Lufthansa (DLH) CEO, Wolfgang Mayrhuber said he was glad to see the alliance take a proactive role. "I'm very happy, actually, that this discussion is getting so ridiculous in some areas, that we now have the one-time chance to grab it and really come down with facts and figures and opportunities, that we would like to use in the future," he said. Reminding listeners that 3 km of runway can take one around the world but 3 km of highway "takes you 3 km," Mayrhuber lauded the global airline fleet's improving fuel efficiency and said, "It's even more important that those who steer this discussion, not only the media but those who want to be elected next year, [to] ask what is reasonable to be done but also ask themselves, 'Why are they polluting the air with legal constraints?'."
Star (SAL) CEO, Jaan Albrecht joined the call for improved Air Traffic Control (ATC) and ground infrastructure, liberalization and an end to "additional taxes and fees," insisting that commercial aviation "is doing far more than others . . . to strive for environmental sustainability," and that all are challenged "to put the intense efforts of the whole aviation industry into the right perspective compared to the overall size of the matter."
TAM (TPR) and United Airlines (UAL) signed a Memo of Understanding (MOU) to "develop an agreement that enables the airlines to offer codeshare flights." The proposed agreement will include reciprocal frequent-flier programs. TAM (TPR) President, Marco Antonio Bologna said the accord will give TAM (TPR) passengers access to (UAL)'s USA network, adding, "We anticipate that this partnership will result in more traffic and more revenue for TAM (TPR)." (UAL) Executive VP & Chief Revenue Officer, John Tague said, "Our complementary route networks will deliver many codeshare and frequent-flier benefits to our customers. The agreement will enable us to improve our service to customers while supporting our strategy of international growth." Implementation of the (MOU) will require execution of formal agreements and is dependent upon approval from relevant government agencies in Brazil and the USA. TAM (TPR) earlier this month announced a codeshare agreement with (LAN) on flights within South America.
(TAM) signed a Memo of Understanding (MOU) with Lufthansa (DLH) to explore "possible close cooperation," that will include "the implementation of codesharing on domestic and international routes" as a first step. The deal marks the third codeshare agreement inked by the Brazilian airline with a Star Alliance (SAL) carrier in the past month. Star (SAL) lost its only Latin American partner last year, when it expelled Varig (VAR) and, while there has been no known offer to TAM (TPR), the airline's recent string of codeshare deals with (TAP) Portugal, United Airlines (UAL), and now (DLH) likely will raise speculation that it is targeting Star (SAL) membership.
TAM (TPR) also this month reached a codeshare deal with Oneworld (ONW) member (LAN), but that agreement covers services only within South America.
The carrier said the (DLH) deal could go beyond codesharing, to include reciprocal loyalty program benefits and shared airport lounges. "We are happy to find a trusted and professional partner in TAM (TPR) in the growing Brazilian market," (DLH) VP Alliances, Strategies & Subsidiaries, Gotz Ahmelmann said. Added TAM (TPR) President, Marco Antonio Bologna: "We are going to explore possible synergies between the two companies' networks, and in doing so, we can offer new choices for flights in both Brazil and Germany."
(DLH) and Swiss (CSR) currently offer a combined 20 weekly flights to Sao Paulo Guarulhos from Frankfurt, Munich and Zurich. Bologna said this month that TAM (TPR) will continue to pursue bilateral codeshare agreements, but does not currently have plans to join an alliance.
Star Alliance (SAL) partners (ANA) and Asiana Airlines (AAR) announced a cross-shareholding agreement, that will strengthen their strategic partnership, which includes a codeshare deal announced in February covering 154 flights on 18 routes between Korea and Japan. The deal, first mooted in December, involves each carrier taking a $12 million stake in the other, an extension of the codeshare arrangement to cover (ANA)'s Tokyo Narita - Honolulu service beginning July 1, and the creation of a major triangulation route among Seoul Gimpo, Tokyo Haneda and Shanghai Honqiao. The pair also will look into cooperating to reduce costs and improve services at 19 overseas airports served by both, including sharing of spare parts and support during "operational irregularities." Joint purchasing of fuel and joint training will be involved.
June 2007: Austrian Airlines (AUL) announced it is moving to the Star Alliance (SAL) Common Information Technology (IT) Platform (CITP) for its inventory and check-in systems. The (CITP) is hosted by Amadeus for participating Star member (SAL) carriers and is based on the Altea customer solutions suite. Austrian (AUL) joins Lufthansa (DLH) and United (UAL), as well as regional member carriers Adria Airways (ADH) and Croatia Airlines (CRH) in choosing to migrate to the new platform, expected to occur by mid-2009.
While China Eastern Airlines (CEA) is on the verge of selling a 25% stake to Singapore Airlines (SIA), Shanghai Airlines (SHA) appears to be interested finding its own foreign investor.
(ANA) President & CEO, Mineo Yamamoto revealed that the Japanese carrier is considering a cross-shareholding arrangement with its future Star Alliance (SAL) partner. Yamamoto said in Tokyo that an arrangement with Shanghai Airlines (SHA) would be similar to the agreement reached with Asiana Airlines (AAR) last month, under which each carrier took a $12 million stake in the other.
Shanghai Airlines (SHA) Secretary of the Board, Xu Junmin said the carrier has yet to receive the proposal from (ANA), while noting that it does have "cooperative relations with (ANA) on codeshare."
Meanwhile, Air China (BEJ) also has contacted Shanghai Airlines (SHA) about a deeper cooperation. With principal hubs in Beijing and Chengdu, (BEJ) has sought greater penetration in the Shanghai market. Shanghai Airlines (SHA) President, Zhou Chi has insisted that his carrier should "go its own way," despite the interest from potential suitors. (BEJ) will join Shanghai (SHA) and (ANA) in the Star Alliance (SAL) by year end.
China's traditionally isolationist flag carriers are taking the initiative to ally with foreign counterparts in order to take advantage of increasing liberalization and maintain their competitive position. Among the three principal carriers, China Eastern Airlines (CEA) is the only one uncommitted to a global alliance, preferring to seal its partnership with Singapore Airlines (SIA) first. (CEA) President, Li Fenghua said that (SIA)'s investment does not tie his carrier to the Star Alliance (SAL), nor does the fact that Oneworld (ONW) has yet to secure a Chinese member, render that alliance the only option. "We are leaving all the options open, as the point is to identify which airline alliance is the most suitable for us to boost growth," he said.
Meanwhile, Air China (BEJ) and China Southern Airlines (GUN) are restructuring various departments to meet requirements established by Star Alliance (SAL) and SkyTeam (SKT), respectively. (BEJ) expects to join the Star Alliance (SAL) formally in December. "Our top priority is to join the Star Alliance (SAL), as we will be able to optimize our network through deeper cooperation with other Star Alliance (SAL) members to earn profit," Managing Director International Affairs & Cooperation, Lou Yongfeng said at the recent (IATA) (ITA) Annual General Meeting (AGM) in Vancouver. Lou said boosting airport infrastructure is key to meeting the Star Alliance (SAL) standards. To that end, (BEJ) convened a conference in Sichuan Province at which leaders from 33 domestic airports committed to supporting the carrier's effort.
China Southern Airlines (GUN) expects to join SkyTeam (SKT) this year as well, which domestic industry analysts predict will help shore up the carrier's thin international network. Chinese airlines also are keen to cooperate on cargo operations. Domestic carriers' share of the international cargo market plummeted from 65.6% in 1995 to the current 23.8%, and they are looking for foreign partnerships more frequently in order to reverse that trend. For example, Air China (BEJ) expects to launch a Shanghai-based cargo carrier with Cathay Pacific Airways (CAT) this year, while (GUN) has confirmed it is talking with Air France (AFA)/(KLM) about a cargo joint venture.
With China's big three committed to finding support abroad, industry analysts are indicating that smaller domestic carriers may be unable to compete unless they take similar steps.
Lufthansa (DLH) and EgyptAir (EGP) announced a codeshare agreement that they said will be part of a close cooperation between the two and that will boost rumors that the African carrier is being courted by the Star Alliance (SAL). A source close to the tie-up confirmed that there have been discussions about EgyptAir (EGP)'s potential membership.
July 2007: Egyptair (EGP) is in talks to join the Star Alliance (SAL) and is expected to be revealed as a new member in mid-October.
The carrier has upgraded its computer systems, which form a cornerstone of alliance co-operation, and has signed codeshares with Star Alliance (SAL) members bmi (BMA), Lufthansa (DLH), and (TAP) Portugal. Bmi (BMA) CEO, Nigel Turner said at a recent briefing: "Egyptair (EGP), we know, is hopefully joining Star Alliance (SAL) in the very near future and that will be a great addition." Star (SAL) subsequently announced plans to hold a press conference in Cairo in mid-October to announce a "membership development". If the airline is accepted into the alliance as expected, full integration normally takes between a year and 18 months. Egyptair (EGP) would be Star's first member from an Arab country and the second in Africa after South African Airways (SAA).
The Star Alliance (SAL)'s Alternative Content Access Platform (ACAP) initiative, launched two years ago with the aims of harnessing modern technology and reducing distribution costs for alliance members, is dormant. The Star Alliance (SAL) signed letters of intent with G2 Switchworks, ITA Software, and Lufthansa Systems, to develop the (ACAP) project. But the alliance said recent changes in the distribution landscape "have delayed the implementation process of alternative distribution solutions."
Among those changes are new long-term agreements signed by airlines and Global Distribution Systems (GDS) companies that provide lower rates to the carriers. In addition, the alliance said, Lufthansa (DLH) Systems incorporated (ACAP) functionality in its new Future Airline Core Environment reservations system, while ITA Software is focusing on building a new reservations system for Air Canada (ACN).
"From an alliance perspective, the (ACAP) initiative has helped our member carriers to negotiate more favorable deals with the (GDS)s, while at the same time the (GDS)s are starting to use more modern technology," the alliance said in a statement. "Still, (ACAP)s are nevertheless an integral part of Star Alliance (SAL)'s distribution strategy, and we continue to look at working with them in markets outside North America."
Lufthansa (DLH) signed a Memo of Understanding (MOU) with Moscow Domodedovo (DME) operator East Line Group (ESL) to transfer its 61 weekly flights to the Russian capital to (DME) from Sheremetyevo (SVO), beginning with the summer 2008 schedule. (DLH) is the largest foreign airline at (SVO), but next year will head south to (DME), where it will become the airport's seventh Star Alliance (SAL)carrier. The move represents another blow for (SVO), which lost Austrian Airlines (AUL) the prior month.
In conjunction with the airport announcement, (DLH) announced a partnership with Russian airline conglomerate AiRUnion (ZXD)/(DOD)/(OMK)/(SMR) under which the companies would start next summer with "the reciprocal sale of tickets" and eventually move into codesharing and linked loyalty programs. AiRUnion (ZXD)/(DOD)/(OMK)/(SMR) struck a similar accord with Austrian (AUL), when (AUL) switched to (DME), which along with its new pact with (DLH) may signal the Russian entity's interest in joining Star (SAL). Alliance CEO, Jaan Albrecht said last December that the group was interested in recruiting a Russian member.
(DLH) will join Star (SAL) partners (AUL), Swiss International Air Lines (CSR), bmi (BMA), Spanair (SPP), Singapore Airlines (SIA), and Thai Airways (TII) at (DME). Its current Moscow operation comprises five-times-daily service to Frankfurt, thrice-daily flights to Munich, a daily to Dusseldorf, four-times-weekly flights to Hamburg and a weekly to Berlin that will increase to twice-weekly in September.
Domodedovo (DME) Director Business Development & International Relations, Daniel Burkard said that if (SAS) Scandinavian Airlines and (LOT) Polish Airlines - - the remaining Star carriers at (SVO) - - switch to (DME), "and if Star Alliance (SAL) wishes to do so, we can offer them a dedicated terminal. Our new Terminal 2 will go into operation by 2010." The facility will be designed to connect passengers within 25 minutes, he said, adding that (DME) has enough capacity to handle the additional (DLH) flights easily. While Aeroflot (ARO) and its SkyTeam (SKT) partners account for around 82% of (SVO)'s 12 million annual passengers, (DME) is handling approximately 16 million per year and is expecting a +20% annual increase, Burkard said.
Moscow Domodedovo (DME) Director Sergey Rudakov said the airport landscape in the Russian capital, which features three international gateways, is on the verge of significant change. The day after Lufthansa (DLH) announced it would join six Star Alliance (SAL) partners by shifting its operations south from Sheremetyevo (SVO) to (DME), Rudakov said that (DME) is working to bring all Oneworld (ONW) airlines to the airport as well. "We believe that is possible," he said. British Airways (BAB), Royal Jordanian (RJA) and Iberia (IBE) currently operate from (DME), while Cathay Pacific Airways (CAT), Japan Airlines (JAL), and Finnair (FIN) are at (SVO).
Rudakov said (DLH)'s shift, and its new partnership with AiRUnion (ZXD)/(DOD)/(OMK)/(SMR), will make it the dominant foreign carrier in Russia and will effect "a big change in Moscow." (DLH) will be (DME)'s 28th foreign airline. He claimed there will be enough business for (SVO) and Vnukovo (VKO) as well: "In the next three years, Moscow airports can expect to generate up to +15 million new passengers." Roughly 80% of Russian passengers come from Moscow, he said, and angling for airline alliances and customers wanting to transfer easily, will be a key component of future airport competition.
Currently, (SVO) processes around 14 million passengers annually, (VKO) has 7 million, and (DME) expects +21% year-over-year passenger growth to 18 million. "By 2015, we estimate 40 million passengers. Then we could be one of the top five airports in Europe," he said.
The airport has invested $240 million of its own money in improvements over the past three years, but Rudakov said that "to keep our position, we need [third-party] investment." At the same time, he has no interest in investing in other airports. "Why should we spend money in, let's say, Vladivostok, where we can add maybe 100,000 extra passengers, when with same money we can get 2 million more guests at (DME)," he asked. Part of that investment has gone toward increased cargo handling capacity. (DME) will build a cargo village and will shortly welcome a new twice-weekly Asiana Airlines (AAR) 747F service from Seoul.
United Airlines (UAL) reached a codeshare agreement with Star Alliance (SAL) partner, Croatia Airlines (CRH). (UAL) said that subject to USA government approval, it "will begin offering codeshare flights" to Zagreb, Split and Dubrovnik, while Croatia (CRH) customers will have access to Washington Dulles, San Francisco, Los Angeles and Chicago O'Hare.
Air China (BEJ) and British Airways (BAB) introduced interline e-ticketing this month. (BEJ) said it has similar agreements with 13 other carriers including United Airlines (UAL), Singapore Airlines (SIA), Northwest Airlines (NWA), and Cathay Pacific Airways (CAT). It aims to have approximately 30 partners by year end, including Japan Airlines (JAL), Continental Airlines (CAL), and its future Star Alliance (SAL) partners.
September 2007: Lufthansa (DLH) Systems (LHS) said it is dropping all further development of its Future Airline Core Environment (FACE) passenger management platform. The company cited "commercial reasons" for the decision. (FACE) was intended to support the core processes of passenger airlines, such as schedule distribution, reservations, inventory, ticketing and departure control. The next-generation system was touted as more flexible and more cost-efficient than traditional reservations systems. Lufthansa Systems (LHS) did not elaborate on the commercial reasons for its decision, but the move came on the heels of Cathay Pacific Airways (CAT)'s announcement that it planned to migrate to the Amadeus Alt'a passenger services platform. Amadeus also won the contract to build the Star Alliance (SAL)'s common reservations platform, which will be based on Alt'a. Lufthansa Airlines (DLH), the sister company of Lufthansa Systems (LHS), is a Star Alliance (SAL) member. Lufthansa Systems (LHS) said the three airlines that had signed on to be (FACE) customers - - Qatar Airways (QTA), BMI (BMA), and Garuda Indonesia Airline (GIA) - - still have valid contracts for its existing MultiHost system that can be expanded with Revenue Integrity, Self Service Devices, e-ticketing Hub and other modules. "We had planned to offer (FACE) to airlines as a passenger system that is based on new technology. In the development of this highly complex product, we had to rely to a large extent on products and services of different suppliers," the company said. "Since the project's launch more than two years ago, progress of the development work has been monitored constantly. After the latest review of the project's progress, and the quality of components delivered by external suppliers in particular, we could no longer assume that we would be able to provide our customers with a product that would meet their requirements within a reasonable time frame and at reasonable costs." Among (FACE)'s "external suppliers" was Unisys, whose AirCore product was slated to be "the heart" of (FACE). AirCore, built on Unisys' "3D Visible Enterprise" technology, provides transactional history and preferences from which future transactions can benefit. AirCore produces a passenger name record, but the file also includes a full view of the customer relationship, not just a specific transaction. Earlier this year, Lufthansa Systems (LHS) said it was investing €40 million in (FACE).
Indian Civil Aviation Minister, Praful Patel informed the Lok Sabha (lower house of parliament) that the merged Air-India (AIN)/(IND)'s board voted to join the Star Alliance (SAL), according to the "United News of India" news service and "The Economic Times." With alliances becoming increasingly interested in the growing Indian market, the combination of Air-India (AIN) and Indian Airlines (IND) appeared to be the big prize. Patel told parliament that the board intended to begin discussions with (AIN)/(IND) management on initiating the joining process, according to the reports. No other details were revealed, and neither the airline nor the alliance (SAL) issued a statement.
October 2007: Barcelona International Airport's new Sur terminal will be used by 42 airlines, including Oneworld (ONW) members and "associates" Clickair (CLK) plus Air Nostrum, and Star Alliance (SAL) members plus affiliates Air Comet (APZ) and Aerolineas Argentinas (ARG), Spanish airports operator (Aena) announced. Vueling Airlines (VUZ) also will operate from the new terminal. SkyTeam (SKT) carriers, which requested to operate out of T Sur, instead will have exclusive use of the existing Terminal A, while other low-cost operators and airlines without intercontinental flights, will operate out of the B and C terminals.
The Star Alliance (SAL) said US Airways (AMW)/(USA) has relocated to the new South Terminal at Miami International (MIA), beginning the process that will see all five Star member carriers at (MIA) operating from the same terminal. The Star (SAL) area is located in the new Concourse "J" and has 50 shared ticketing and check-in counters.
Officials from the Star Alliance (SAL) and EgyptAir (EGP) were in Cairo to announce that the world's largest airline grouping is expanding yet again, this time to North Africa, and to tout the progress of Cairo International Airport (CAI)'s new Terminal 3, which will host Star (SAL) carriers when it opens next year. EgyptAir (EGP), which operates 48 airplanes to 60 destinations in 44 countries, will become Star (SAL)'s 21st member, when it joins "within the next 18 months." Air China (BEJ), Shanghai Airlines (SHA), and Turkish Airlines (THY) also are preparing to join.
Star (SAL) CEO, Jaan Albrecht said, "Egypt is one of the most important aviation markets in Africa, with a large potential for both business and leisure travel," while EgyptAir (EGP) Chairman & CEO, Atef Abdel Hamid said the country has "a strategic location, which offers a good link between Africa, the Middle East and Europe to the rest of the world." The carrier will add nine new airports to the Star (SAL) network.
(CAI) is making a significant investment in its effort to become a key link in the alliance's operation. The airport has been cooperating with Fraport (FRA) on construction of the new terminal since 2005. The $393 million facility will host EgyptAir (EGP) and other Star (SAL) carriers that use the airport, currently comprising Austrian Airlines (AUL), bmi (BMA), Lufthansa (DLH), Singapore Airlines (SIA), Swiss International Air Lines (CSR), and (THY). T3 will offer 54 airplane stands and 22 gates, some of which will be connected by airbridges. It will have a capacity of 11 million passengers annually and will accommodate the A380. (CAI) COO, Dirk Schusdziara said that "80% of all flights from T3 will be operated by Star Alliance (SAL) carriers" when it goes operational in the 2008 third quarter. "All working processes are running excellently and on time," he said. In addition, a third runway costing $80 million and measuring 4,000 m, is under construction and should be ready in 2009. A new Air Traffic Control (ATC) tower also is planned. "We see no capacity problems at all for (CAI) in the future," Schusdziara said, adding that the airport's strategy will be to serve as a regional hub for flights of 4 hours. (CAI) handled 10.7 million passengers in 2006, and estimates it will handle more than >12 million this year. Airplane movements should rise by +10% from 600,000 in 2006.
Air-India (AIN) Chairman, V Thulasidas said that the carrier remains in negotiations with the Star Alliance (SAL), but has not reached a final decision to join, "The Economic Times" reported. "We can announce our alliance only after a formal agreement is reached," he told the paper.
November 2007: Bmi (BMA) launched a reciprocal codeshare agreement with EgyptAir (EGP) on flights between London Heathrow (LHR) and Cairo, effectively doubling the number of weekly nonstop services available to 14. The agreement follows on from the launch by bmi (BMA) on November 4 of a daily (LHR) - Cairo service, and the formal invitation of EgyptAir (EGP) into the Star Alliance (SAL).
Star Alliance (SAL) CEO Jaan Albrecht said in Frankfurt, that the importance of offering global alliance products and the shrinking number of carriers targeted as potential members, will play a critical part in shaping the group's strategy going forward. He said Star (SAL) will have to balance its desire to continue as the world's largest airline grouping with its effort to develop pan-alliance products, which the continuing addition of new members may complicate. "That's why we can't estimate how many new airlines will join us," he said. "We have to respect 20 different airline strategies," Management Board Chairman, Peter Malanik noted.
Two-thirds of the world's airline passengers currently travel with Star (SAL), Oneworld (ONW), or SkyTeam (STM), Albrecht said, and the number of carriers that could benefit an alliance - - if they were willing to join - - is shrinking. "Worldwide, 45 of the 300 (IATA) (ITA) carriers are in a global alliance," he said, adding he feels an additional 17, such as Southwest Airlines (SWA), Emirates (EAD), or Virgin Atlantic Airways (VAA), are large enough to join. "Nevertheless, we have to move forward," he said. "Ten years ago there were no alliance products. Now we have to manage them."
He cited joint purchasing as an example. Star (SAL) already has established joint fuel purchasing at 11 airports, and is working on joint orders of items like seats and brakes for the 787. Such programs will help alliances maintain their relevance, even as consolidation looms. Should a carrier like Lufthansa (DLH) acquire Alitalia (ALI) or Iberia (IBE), alliances still will have their place. "Maybe there will be changes in the regional carrier segment, but in the long term, alliances will exist further," Albrecht said. He currently is looking for new members in South America and India. Air China (BEJ) and Shanghai Airlines (SHA) will join Star (SAL) on December 12, and EgyptAir (EGP) and Turkish Airlines (THY) will come onboard next year.
December 2007: The Star Alliance (SAL) will decide before year end which Indian carrier it intends to invite into the partnership, CEO, Jaan Albrecht said in Shanghai, on the eve of the official joining ceremony of Shanghai Airlines (SHA) and Air China (BEJ). Star (SAL) will hold a Chief Executive (CEO) Board meeting in Beijing, and India is one of the items on the agenda. While the Indian press is reporting that Air-India (AIN)'s membership is all but inevitable, Albrecht said, "We have been talking to two carriers in India for awhile. We will discuss [the matter] and most likely decide with which carrier we will commence membership talks." He did not confirm the (AIN) rumors. Jet Airways (JPL) CEO, Wolfgang Prock-Schauer previously confirmed that it is "too early" to join an alliance. Star (SAL) has identified India, Russia and Latin America as "white spots" under its expansion strategy. Latin America was covered in its network until Varig (VAR)'s demise.
Later, In line with its strategy to fill in the so-called "white spots" in a network that now spans 897 destinations in 160 countries, the Star Alliance (SAL) Board of Chief Executives (CEO) voted to accept the application of Air-India (AIN) to become a member. "India has long been on the radar of the Star Alliance (SAL). After all, it is one of the world's fastest-growing economies and aviation markets. Having now come to an agreement with Air-India (AIN) makes us the first airline alliance to secure a member in India," United Airlines (UAL) Chairman & CEO, Glenn Tilton, who chaired the meeting, said in Beijing. Lufthansa (DLH) will be Air-India (AIN)'s mentor; it also was mentor to Air China (BEJ), which joined the alliance this week along with Shanghai Airlines (SHA).
For Air-India (AIN) Chairman & Managing Director, Vasudevan Thulasidas, joining Star (SAL) is "kind of natural," as (AIN) has been cooperating with numerous Star (SAL) members for several years. He confirmed that the airline stopped talking with other alliances months ago, and opted for Star (SAL), because it "is the largest alliance and it will bring us the best value for the growing network we have and the worldwide connectivity we wish to have." He noted that the invitation "rounds up a first phase of plans for the buildup" of (AIN), which encompasses the merger with Indian Airlines (IND) and its large Boeing (TBC) order. Thulasidas said he expects Air-India (AIN) to complete the joining process in 12 to 15 months, and expects Information Technology (IT) integration to be the most difficult of the 57 requirements to fulfill. The airline is in the process of renewing its systems. "We are analyzing offers for the moment. The merger with Indian Airlines (IND) raised the need to change and upgrade several (IT) systems, including (DCS)," he said. "We included the connectivity with Star (SAL) members' (IT) and integration of programs such as frequent-flier programs in our request for proposals." In the coming months, (AIN) hopes to conclude or expand codeshare agreements with several Star (SAL) carriers.
Shanghai Airlines (SHA) and (BEJ) officially joined Star (SAL), 18 months after being invited, in a ceremony in Beijing. Albrecht described the joining as a "milestone," that will lift the number of full members to 19. "Both airlines have fulfilled all 57 minimum requirements," he noted, admitting the integration process has been challenging. "It is the first time we conducted a parallel integration of two carriers," he explained. "There were also cultural differences. China was untapped territory for us. There were some language barriers, and we had to learn a very different way of doing business. Equally, our Chinese partners had to learn to do business with 17 different nationalities." The most difficult component of the integration centered on China's use of its own Global Distribution System (GDS), "Travel Sky." Albrecht stressed he is "confident" the carriers will be able to provide seamless service in the Star (SAL) network, "otherwise we would not have integrated them." He also revealed that Star (SAL) will implement its Move Under One Roof concept next spring when Shanghai Airlines (SHA) and Star (SAL) members flying to PVG will move to the new Terminal 2 while (BEJ) and Star (SAL) carriers operating to (PEK) will move to the new Terminal 3 there.
Under the motto "Sharing Unbounded Space," Air China (BEJ) and Shanghai Airlines (SHA) formally joined the Star Alliance (SAL) at a ceremony held in the vast new Terminal 3 at Beijing Capital International Airport. With eight Star (SAL) member airplanes lined up in front of the imposing building and the Chief Executives (CEO)s of all 19 member carriers, as well future members Turkish Airlines (THY) and EgyptAir (EGP) present, Star (SAL), its new members, and Chinese civil aviation authorities spared no effort to make the event memorable. "This is an historical moment. The world's fastest growing and largest airline alliance, the Star Alliance (SAL), has arrived in the world's fastest growing and largest country, China. By becoming a member of the Star Alliance (SAL), China's premier airline, Air China (BEJ), is set to undergo many years of strategic cooperation with a large group of the world's leading airlines," (BEJ) Chairman, Li Jiaxiang said proudly.
Air China (BEJ) is the country's flag carrier and operates a fleet of 212 airplanes on a network spanning 26 countries from its hubs in Beijing and Chengdu. It was listed on the Hong Kong Stock Exchange and London Stock Exchange in December 2004. Its smaller, Shanghai-based counterpart (SHA), operates 59 airplanes on more than 140 domestic, international and regional routes. (SHA) plans to expand its fleet by up to 100 airplanes by 2010. In 2004, (SHA) became the first Chinese airline to achieve International Operational Safety Audit (IOSA) certification. "By joining the Star Alliance (SAL), we believe Shanghai Airlines (SHA) has a brighter future ahead of it," Chairman, Zhou Chi said, adding the carrier will "serve as a bridge between China and the world via its Shanghai hub."
With the addition of the pair, Star (SAL) now has 19 member carriers operating 17,000 daily flights to 897 destinations in 160 countries. On domestic routes alone, Air China (BEJ) and Shanghai Airlines (SHA) have added more than >40 new destinations to the partnership. "China is one the fastest growing aviation markets in the world and with Air China (BEJ) and Shanghai Airlines (SHA) now formally Star Alliance (SAL) member airlines, we offer an unrivalled network of flight connections to, from, and within this market for international travelers," Star (SAL) CEO, Jaan Albrecht said. In order to provide better interconnectivity between international flights and domestic destinations in China, (BEJ), (SHA) and other members, serving China are working on cementing a dual-hub strategy at Beijing and Shanghai Pudong.
January 2008: The Star Alliance (SAL) appointed Air France (AFA) Commercial Director Europe & North Africa, Christopher Korenke as VP-Commercial, effective February 1.
EgyptAir (EGP) will undertake an enormous effort in an attempt to join the (SAL) this year, giving the grouping a boost as it attempts to counter the influence of Emirates (EAD) in that part of the world. "We are trying very hard to be a member by the fourth quarter of 2008," Chairman & CEO, Sherif Saad Eldin Galal said. One of the biggest projects remaining is an upgrade of (EGP)'s Information Technology (IT) infrastructure. (EGP) already has linked its loyalty program with Lufthansa (DLH)'s. "Carriers like bmi (BMA), Swiss (CSR), and Singapore Airlines (SIA) should follow by the end of January, and all the other members by the end of June," General Manager Marketing, Salah Hashem said.
With this fall's opening of Cairo's new Terminal 3, a dedicated (SAL) facility, (EGP) transfer business should increase from 10% of its passengers, to 20% in the first year of operation, and 40% within three years. Cairo's position as a Middle East hub is designed to strengthen the (SAL) against expanding carriers throughout the region like Emirates (EAD) and Qatar Airways (QTA). "They don't have the right mass of a market like Egypt has," Galal said of the larger Middle Eastern and Gulf carriers. "And in fact, they don't want to join an alliance, which leaves them with just 20% of the world passenger market." He did admit that (EGP) has lost some business to Emirates (EAD) and other regional rivals, "but I believe, together with the (SAL), we will beat them."
Hashem said the airline is looking at opening four new African destinations by summer 2009, to give (SAL) partners "more variety" and will add frequencies on many Middle East routes. The first of six ordered 777-300ERs will be delivered in February 2010. It also will add 11 new A330s. Flights to Beijing and Guangzhou will be operated nonstop, rather than via Bangkok, and it is considering serving Shanghai and a second USA destination (after New York (JFK)) such as Chicago O'Hare or Washington Dulles.
VP Commercial, Sherif El Maghloub said that expansion will be successful only if Cairo is better recognized as a hub. (EGP) "has a problem with our publicity," he admitted, and it will ramp up its marketing effort this year. It carried 6.5 million passengers in 2007, up +16% year-over-year, and expects a +10% increase in 2008.
The (SAL) was voted "Best Airline Alliance" in the Skytrax 2007 World Airline Awards.
The (SAL), which celebrated its 10th anniversary in 2007, received the Air Transport World (ATW) magazine's "Market Leadership Award." This is the first time (ATW) has recognized a global airline alliance. The (SAL) continues to attract major carriers to its roster, and has set the standard in branding, product development, and constructing a seamless travel experience for passengers.
February 2008: Consolidation speculation is rampant in the world's biggest air transport market, but the widespread talk about possible USA airline tie-ups generally breezes past or altogether ignores the multitude of obstacles faced by carriers attempting to form complicated combinations. In June 2007, US Airways (AMW)/(USA)'s failed $10.2 billion hostile takeover bid for Delta Air Lines (DAL) highlighted the myriad issues associated with attempted airline mergers - - and that proposal didn't even reach the point where the USA Dept of Justice (DOJ) was forced to render a judgment. The current speculation centers on (DAL)'s reported talks with Northwest Airlines (NWA) and, if such a tie-up were to be formed, a subsequent follow-up deal between Continental Airlines (CAL) and United Airlines (UAL). "That scenario seems less likely than popular perception," (AMW)/(USA) Chairman & CEO , Doug Parker recently argued. "Delta (DAL) and Northwest (NWA) getting together makes lots of sense [based on their route networks], but taking Continental (CAL) out of the [SkyTeam] Alliance (STM) doesn't make sense . . . There's more behind all these transactions than just looking at two route maps. It's a lot more complicated than that." (DAL), (NWA), and (CAL) are all SkyTeam (STM) members, and a merged (DAL)-(NWA) obviously would be a SkyTeam carrier (STM). But presumably, (UAL) is not leaving the Star Alliance (SAL), of which it is a founding member, and therefore (CAL)'s Newark and Houston hubs would become part of Star (SAL) under the (DAL)-(NWA)/(CAL)-(UAL) consolidation scenario. "Why would you go through all the trouble [of a merger] to lose [Newark and Houston] from the alliance?" asks Parker, wondering aloud whether non-USA SkyTeam (STM) members would be ready to embrace a merger that could cost them (CAL)'s network.
(NWA) currently holds a "golden share" in (CAL), that allows it to block the latter from entering into a merger. But once (NWA) enters into a merger agreement, (CAL) has the right to buy back the golden share for a mere $100 and would be free to pursue its own merger deal (even if (NWA)'s merger ultimately was rejected). "If the golden share would become redeemable, that would change our circumstances," (CAL) Chairman & CEO, Larry Kellner said. While (CAL) is content with "our position relative to the industry today," Kellner said, it "won't hesitate to act" if the industry landscape changes and rivals combine to form a mega-airline. "We do pay attention to [our] relative size," he said. "Size is important in a network business." In terms of traffic, (CAL) ranked fourth among USA airlines in 2007 at 84.31 billion (RPM)s, trailing American Airlines (AAL) (138.45 billion (RPMs), (DAL) (122.07 billion (RPM)s, including regional operations), and (UAL) (117.4 billion (RPM)s). However, it had the most balanced network in terms of international and domestic services and the best service reputation among network carriers.
USA airline executives continue to argue that the industry is too fragmented and that six legacy carriers will be unable to grow capacity and keep costs down absent consolidation. "I cannot see any logic in [that argument] whatsoever," Avitas Senior VP, Adam Pilarski, a longtime industry observer, said. "If you can't grow capacity with six, I don't see how going from six to three changes it in any way. Six becoming three doesn't create more Americans that want to fly." And the problems associated with mergers would create operational difficulties, that could push passengers to Low Cost Carrier (LCC)s and new entrants, Pilarski contends: "I don't see any synergies that get translated into cost savings or revenue enhancement. Yes, a few consultants, a few banks, a few executives will make money off of mergers, but the negatives for the industry are obvious. You are trying to merge two different cultures, which never works well. You are talking about airlines that may belong to two different alliances, that have very different fleets, different operating systems . . . How do you integrate the pilot (FC) lists? There are a lot of headaches that could cost you a lot in productivity. I'm fairly confident that [mergers] will be problematic."
While (AAL) Executive VP Finance & Planning & CFO, Tom Horton believes that consolidation could "lead to greater efficiency," he acknowledges that "there are a lot of challenges to consolidation in our industry." Of course, any merger agreement will face scrutiny from the (DOJ) and members of Congress, several of whom already have vowed to fight consolidation on the grounds that it will result in lost jobs and diminished service. While USA airline officials appear to believe that the (DOJ) is more likely to approve a merger than in 2001, when it blocked (UAL)'s proposed acquisition of then-USAir (USA), the fact that a new President (and a new attorney general) will take office next January may be driving the latest round of talks. "Since there is going to be a change in administration, there will be some delay" in clearing a merger unless an agreement is submitted by the end of this month, Parker says, predicting that any later submission likely would get caught up in the changeover. But he adds that such approval would still come: "It's more of a timing issue. Irrespective of the administration, the arguments for consolidation are so compelling that I'm not overly concerned that the next administration is going to be against mergers." Other factors affecting potential mergers are the ongoing decline of USA airline stock prices and the credit crunch. Airline shareholders are unlikely to be enticed by the prospect of "cashing out" underperforming stocks in a merger, though Parker insists that they would be interested in moving their shares "to a stronger airline." And the state of credit markets means a carrier will have more difficulty raising money to finance an "acquisition" of another carrier. "It doesn't change the likelihood of mergers, just the structure," Parker says. "The structure will move from debt financing to equity financing" and merger agreements will be "equity-equity transactions."
March 2008: Turkish Airlines (THY) and Air New Zealand (ANZ) linked loyalty programs ahead of (THY)'s induction into the Star Alliance (SAL).
Air China (BEJ) will launch four-times-weekly, Shanghai - Milan Malpensa on March 30, aboard an A340. (BEJ) has revived plans to serve the North Korean capital, Pyongyang. The official "Xinhua" news agency says (SAL) member (BEJ) will launch thrice-weekly services to the North Korean capital on 31 March. 737s will be used for the flights from its Beijing base. (BEJ) said in November that it planned to start serving Pyongyang in January , but it later delayed the start, citing operational reasons. (BEJ) will be the only foreign airline serving the reclusive state of North Korea.
(BEJ) is eyeing Shanghai Airlines (SAL) and plans to deepen cooperation with its (SAL) partner following the formal rejection of its bid for Shanghai-based China Eastern Airlines (CEA) last month. Sun Yu, (BEJ)'s head of planning, revealed that the carrier keeps "close contact" with (SHA) and plans to expand their collaboration. "But whether we can reach an agreement with (SHA) is up to the Shanghai municipal government," the airline's controlling stakeholder. Sun said (BEJ) has started talks with authorities but did not reveal the extent or aim of the negotiations. It has been speculated that (BEJ) may make an outright bid for (SHA) as the Beijing-based carrier's acting chairman, Kong Dong, noted earlier that (BEJ) is committed to enhancing its market position in Shanghai and would look for another domestic partner if (CEA) rejected its advances. But (SHA) Board Secretary, Xu Junmin rejected that possibility and said it will "go its own way" for the time being.
In response, (BEJ) Board Secretary, Huang Bin said, "As member airlines of Star Alliance (SAL), (BEJ) and (SHA) can deepen cooperation in many respects, such as Maintenance Repair & Overhaul (MRO) and airplane purchasing. But as far as I am concerned, it doesn't [necessarily] involve a stake purchase." He added, "Shanghai is an indispensably important hub for Air China (BEJ)" and said 80% of its international routes start there. As part of (BEJ)'s "Shanghai strategy," Sun said it will launch a branch company there soon. It held a 12% market share with 31 airplanes at the close of 2007, while (CEA) and (SHA) accounted for 35% and 15% respectively.
(SAL) carriers Air Canada (ACN), Air China (BEJ), (ANA), Asiana Airlines (AAR), Austrian Airlines (AUL), (LOT) Polish Airlines, Lufthansa (DLH), (SAS) Scandinavian Airlines, Shanghai Airlines (SHA), Singapore Airlines (SIA), Thai Airways (TII), Turkish Airlines (THY), and United Airlines (UAL) each completed the transfer of their operations to Beijing International's Terminal 3. The move was part of the collocation plan developed as a result of (BEJ) and (SHA) joining the alliance last year. A similar collocation will be completed at Shanghai Pudong on April 29.
The USA Department of Transportation (DOT) and the European Commission (EC) announced a "joint research project" to determine the impact of airline alliances on competition and the potential impact of transatlantic "open skies." The bodies will interview airlines, travel agents, analysts and consumer groups, in addition to performing data analysis. A report will be published in mid-2009.
April 2008: Air France (AFA)-(KLM) said it was "pleased" by the Delta Air Lines (DAL)/Northwest Airlines (NWA) merger announcement and that it looked forward to combining with the new carrier "in the form of a joint venture offering a network with extremely attractive multiple hubs." (AFA)-(KLM) said it had offered short-term financial aid to the airlines as part of the transatlantic alliance granted antitrust immunity last week, but said that "considering the strong liquidity position of the combined airlines," it is "totally satisfied with the new framework which strengthens our North Atlantic partnership without the need for financial aid on our part."
Although not part of the SkyTeam (STM) tie-up, Continental Airlines (CAL) "will always be welcome to remain in (STM) and enjoy all of the benefits of the alliance" if it chooses to remain independent, (NWA) CEO, Doug Steenland said. A merger with United Airlines (UAL) likely would send (CAL) to the Star Alliance (SAL).
Turkish Airlines (THY) became the 20th member of the (SAL) in ceremonies in Istanbul, culminating a 16-month process that began in December 2006, when the airline signed a protocol agreement to join the grouping. "With (THY), we have gained a new member carrier with a strong home market which is also one of the fastest growing economies in the world," (SAL) CEO, Jaan Albrecht said. (THY) brings 31 unique destinations to the alliance, mainly in Turkey, Central Asia, and the Middle East, he said. Including (THY), (SAL) members operate 18,000 daily flights serving 965 airports in 162 countries. "Joining the alliance is an important step for the airline's future," (THY) President & CEO, Temel Kotil said. Membership will enable the carrier, which turns 75 this year, to become a much more active player in the global airline industry, he told assembled guests and media. Earlier, he said that (THY) intends to focus primarily on international connecting traffic, building Istanbul as a hub for east-west, as well as north-south traffic. "We believe long-haul should be connected to short-haul," Kotil explained, citing traffic flows from China to Africa and down to the Middle East. (THY) serves three cities in China, 16 in the Middle East, and 10 in Africa. It carried 19.7 million passengers last year, up +23.5% over 2006, with a load factor of 73% LF, and expects to carry 23.5 million in 2008. "The demand is there. All we need is the supply," he said, adding that (THY) needs to operate larger airplanes and is considering both the 777 and the A380.
Although it will not ignore the fast-growing domestic market where, he noted, "our share is going down," Kotil said the airline does not have big ambitions and will concentrate on capturing flow traffic into its international network. Earlier, he revealed further plans for a low-fare airline unit, Anatolia Jet (ANJ), that will operate domestically, at least initially.
The (SAL) expects to make an announcement regarding a new Latin American partner this year, CEO, Jaan Albrecht said on the occasion of (THY)'s joining in Istanbul. He acknowledged that it is "no secret" (SAL) is talking to TAM (TPR) and that a number of members already have bilateral partnerships with the Brazilian carrier. The (SAL) has had no presence in the region since the collapse and dismissal of Varig (VAR). Mexicana (CMA) withdrew in 2004.
AiRUnion (ZXD)/(DOD)/(SMR)/(OMK) and Sibaviatrans COO, Gustav Baldauf said it is making every effort to get its own Air Operators Certificate (AOC) by June. "We have finalized plans to increase productivity and efficiency. The final agreement and approval just depends now on the owners of AiRUnion, the Russian government, and [CEO] Boris and [President] Alexander Abramovich," he said. A decision is expected this month. One critical step is to stem losses at the five constituent airlines. "Our plans include creating a breakeven for 2008. We have to stop bleeding. Every change we make, creates immediate positive cash flow," Baldauf said.
He cited as an example the fact that an Il-62 requires four tons more fuel per 1 hour of flight than a 757, with each ton costing approximately $1,000. Increasing fuel efficiency will be a major component of AiRUnion's financial revival. It currently operates a mainly Russian-built fleet of 90 airplanes that does include four 757-200s, four 767-200s/-300s and six 737 Classics. It is continuing trying to balance its operation to account for both demand and efficiency. "From 29 Tu-154s, there are just 13 operating. We plan to increase this level to 20 airplanes," Baldauf said, admitting that some airplanes remain on the ground for lengthy periods. "We want to bring up annual flying hours of some airplanes from 1,000 to 4,500." By year end, the fleet should be down to 60, as the group phases out older Russian types and adds 737s and 767s. An ideal future fleet could include 20 long-haul and 40 single-aisle Western-built airplanes.
When AiRUnion secures its own (AOC), it will begin to merge "the good parts" from each of the five carriers, Baldauf said. "This includes Western airplane types, infrastructure or staff. Nevertheless, the present number of 7,000 [employees] could be cut down substantially. We may keep one (AOC) for a second carrier for feeder operations." Complexity should be reduced by downsizing the number of hubs from five to two, leaving Domodedovo (Domodedovo Airlines) (DOD) and Krasnoyarsk (KrasAir (ZXD)/Sibaviatrans).
The group currently holds a 12% domestic market share, which accounts for 90% of its business. It is ranked third behind S7 Airlines (SBR) and Aeroflot (ARO). "Domestic service, which sees up to a +15% annual passenger growth rate, is important for every Russian carrier," the COO said. He believes an 80%/20% domestic/international split would be ideal. The plan also includes a schedule to join the Star Alliance (SAL), where Lufthansa (DLH) and Austrian Airlines (AUL) are its mentors. "If we have our own (AOC), and have implemented (IATA) (ITA) Operational Safety Audit (IOSA) safety standards, etc, in about three years time AiRUnion would be ready to join the (SAL)," Baldauf revealed.
Amadeus completed (DLH)'s migration to its (SAL) Common Information Technology (IT) Platform inventory management module. The migration covered inventory control, 700,000 flight schedules, and 40 existing applications. The system is based on Amadeus's Altea Inventory technology. Amadeus said (TAP) Portugal selected its Star Alliance (SAL) Common Information Technology (IT) Platform, featuring reservations, inventory, ticketing, and check-in capabilities. Migration is expected to be completed by 2010.
May 2008: Lufthansa (DLH) would support a merger between Star Alliance (SAL) partners United Airlines (UAL) and US Airways (AMW)/(USA), (DLH) Chairman & CEO, Wolfgang Mayrhuber said in Washington on the 11th anniversary of the founding of the alliance.
"[United (UAL) Chairman & CEO] Glenn Tilton is absolutely right. Consolidation is the way forward," he said, adding that "anything that helps [a member of the (SAL)] helps us."
Mayrhuber, who spoke to reporters after addressing the International Aviation Club, also was firm that beyond its 19% investment in JetBlue Airways (JBL), "no other USA airline is on the radar screen." He stressed that the (JBL) deal "is a financial investment with strategic implications" owing to the potential connecting opportunities for (DLH) at New York (JFK), but in general, "We are not interested in putting 10% to 20% into something."
He also clarified that (DLH) is not currently talking to bmi (BMA) controlling shareholder Michael Bishop about acquiring his 50% plus 1 share stake, because "we don't need to," owing to the fact that (DLH) has a call option to acquire the holding while Bishop has a put option to sell to (DLH). He declined to comment on whether (DLH) will exercise its right, but said, "You can make assumptions about how valuable a footprint [of this size] in Britain is."
He also downplayed reports that (DLH) is pursuing Austrian Airlines (AUL). "There are no negotiations or discussions at the moment," he said, noting that the Austrian government still holds a sizeable stake (42%) in the carrier. "(AUL) is a very valuable partner for us in the (SAL) . . . [but] we are not in the business of buying airlines, we are in the business of growing access for our customers. In the case of (AUL), yes there is a market, but they must want to do it. It must be friendly." Nor is (DLH) interested in sharing the carrier with the Austrian government. "If it is in our own backyard, we want to have control," he said.
Turning to the latest A380 delays, Mayrhuber said he had not received specific information from Airbus (EDS) concerning how (DLH), which has ordered 15, will be affected, but assuming it is a three-month delay, "it is not a major impact for us . . . We have flexibility in the fleet."
June 2008: Continental Airlines (CAL) and United Airlines (UAL) signed a "framework agreement to cooperate extensively, linking their networks and services worldwide," and (CAL) revealed that it will leave SkyTeam (STM) to join the Star Alliance (SAL), with (UAL) and (CAL) planning to form joint venture operations with other (SAL) carriers for transatlantic services, as well as flights to Latin America and Asia. Both airlines recently said they would not enter into any merger agreements and both will remain independent and retain their brands. But the pact goes "well beyond a traditional codeshare agreement," (UAL) Chairman, President & CEO, Glenn Tilton said. It will include "significant cooperation" on frequent-flier programs, airport lounges, facility utilization, information technology (IT), and procurement, the carriers said. The deal stems from "efficiency opportunities identified and relationships developed during the parties' earlier merger discussions," the airlines said. Domestically, (CAL) and (UAL) plan "a coordinated process for reservations/ticketing, check-in, flight connections, and baggage transfer."
(CAL) said it will ask the USA Department of Transportation (DOT) to allow it to join (UAL), Lufthansa (DLH), Air Canada (ACN), and six other (SAL) carriers in an already-established antitrust-immunized alliance. "This will enable Continental (CAL) . . . to establish transatlantic and other international joint ventures" with Star (SAL) members, that will include pooled revenue, it said. Joint ventures also are planned for Latin America and Asia.
(CAL) has been considering leaving SkyTeam (STM), since Delta Air Lines (DAL) and Northwest Airlines (NWA) announced a merger agreement. It explored partnering with Oneworld (ONW)'s British Airways (BAB), and American Airlines (AAL). "In a network business, there is significant value gained from linking with larger networks to provide truly national coverage and expanded global reach," (CAL) Chairman & CEO, Larry Kellner said. He and Tilton met in Chicago to sign a framework accord outlining a "systemwide alliance and cooperation principles," the carriers said. Both antitrust immunity and codesharing agreements are subject to approval by applicable USA and foreign government agencies. "Continental (CAL) intends to terminate its existing agreements with SkyTeam (STM) members . . . although Continental (CAL) may not be successful," (CAL) cautioned.
(UAL) and (DAL) attempted to form a similar extensive cooperation agreement in 1998, but the deal died in the face of strong opposition by the Air Line Pilots Association (ALPA). They formed a more limited marketing partnership that ended in 2003.
July 2008: Lufthansa (DLH) Systems signed a contract with EgyptAir (EGP) for implementation of its SchedConnect codeshare management solution. Scheduled to be introduced in a few weeks, the technology is expected to help fulfill Star Alliance (SAL) membership requirements. Features include schedule synchronization and codeshare integration.
(EGP) became the (SAL)'s 21st member in a ceremony in Cairo. (EGP) said it fulfilled all minimum requirements to become a (SAL) member in fewer than nine months. It hopes to benefit from feed provided by (SAL) members to bring further traffic to Cairo and (SAL) hopes to be able to extend its presence in Africa via its newest member.
(EGP) serves 14 destinations in Africa, and soon will add Dar Es Salaam, Abidjan, and Conakry to its network. A new terminal, capable of handling 11 million passengers annually will open in Cairo in November and be used exclusively by (SAL) member carriers. (EGP) has expanded its fleet from 32 airplanes in 2003 to 50 today and plans to operate up to 75 by 2011. Three new 737-800s will be added this year, with another five of the type slated to arrive in early 2009. (EGP) will double its EMB-170 fleet to 12 next year as well. Eight 777-300ERs will be delivered between 2010 and 2012. (EGP) expects to carry 7.8 million passengers this year, and hopes to grow the figure to 11 million by 2011.
(SAL) CEO, Jaan Albrecht said that the (SAL) is committed to increasing its presence in Africa and better coordinating the continent's fragmented network. "Now we have a dual gateway with (EGP) and [South African Airways (SAA)] in Cairo and Johannesburg. There are 305 airports and a population of 900 million people, but just 16,000 weekly flights are offered within Africa," he said. "The economic and business climate of Africa is getting the world's attention. The (SAL) is well positioned to serve the business interests of the continent by having (EGP) in the north, (SAA) in the south, and nine other member airlines flying to Africa," Albrecht said in a statement. (EGP) and (SAA) are Africa's largest carriers in terms of capacity, fleet and passengers, followed by Royal Air Maroc (RAM), Kenya Airways (KEN), and Ethiopian Airlines (ETH). The (SAL) holds a 22% market share in Africa, followed by SkyTeam (STM)'s 17% (with (KEN)) and Oneworld (ONW) with just 7%.
The (SAL) is evaluating the possibility that (EGP) and (SAA) might cooperate to create transfer points in Central Africa to boost intra-continental travel. The (SAL) also is reshuffling its schedule in Cairo to create more efficient flight connections and will benefit when the airport's new dedicated Terminal 3 opens this fall with the capacity to serve 11 million passengers per year.
The 11 (SAL) members currently serving Africa fly to 78 destinations in 36 countries. Albrecht denied that the alliance is discussing membership with Ethiopian (ETH), which is working on bilateral agreements with alliance members like Lufthansa (DLH).
Meanwhile, (SAA) still is reconstructing its own network. "With the closure of our Capetown - Frankfurt route, we are getting back to our core network that we can build on," (SAA) Head of Network Development, Alliances & Aeropolitical Affairs, Jason Krause said. It has no further route cuts planned. (SAA) is looking to lease three A319s/A320s and three A340-300s, that will replace A340-200s. Krause said it favors the A340-300 over the A340-600, because the lighter airplane is more fuel efficient. It is studying the possibility of launching service to China, but would require an airplane to operate the route nonstop.
(EGP)'s fleet of 50 airplanes is scheduled to increase to 75 by 2013. It carried more than >6.8 million passengers in the 10 months ended April 30, up +20% year-over-year.
October 2008: The Star Alliance (SAL) returned to Latin America, formally inviting Brazil's TAM (TPR) to be its 24th member, and said it will look to increase its presence further in the region next year. Without a member south of the USA since Varig (VAR) was expelled in 2006, the (SAL) believes TAM (TPR)'s inclusion will turn Latin America from a "white spot" into a "hot spot" on its map, according to CEO, Jaan Albrecht. (TPR) currently flies to 42 domestic and 16 international destinations with a fleet of 116 airplanes. It will add 36 destinations to the (SAL)'s network and has codeshare agreements in place with (TAP) Portugal, Lufthansa (DLH), and its mentor United Airlines (UAL), plus a new partnership with Air Canada (ACN). "We are talking about a country and a region of the world, which cannot be ignored," Albrecht said, claiming that Brazil accounts for 30% of commercial aviation revenue in South America. TAM (TPR) holds a 20% market share on the continent, a massive 73.9% share of Brazil's international traffic (in August), and 54.2% of its domestic market.
TAM (TPR) CEO, David Barioni said Star (SAL) membership will help it grow even stronger. "Eight years ago we were Brazil's fourth-biggest carrier. Now we are . . . number one," he said. "This is a very important step forward for (TPR), as through our alliance membership we will gain further international brand recognition." He said the airline will become a full (SAL) member within 12 to 18 months and should realize an additional $60 million in revenue during its first year of membership. It intends to work with the alliance and Sao Paulo Guarulhos to establish a dedicated (SAL) terminal next year.
(TPR) will end its cooperation with SkyTeam (STM)'s Air France (AFA) by October 31, but will continue working with Oneworld (ONW) member (LAN) for the time being. "But after a certain time, we will have to rethink that situation," Barioni said.
If Albrecht has his way, (TPR) should not lack regional partners for long. "The alliance system has been proven, especially in difficult times. We see a lot of interest to join us," he said in Sao Paulo. "(TPR), which mainly covers the southern part of the continent, is just one step. We are looking at Avianca (AVI), Copa (COP) [Airlines], and TACA (TAC). Don't be surprised when we make an announcement in 2009."
(TPR), which formally was invited to join the (SAL), also hopes to play a major role in Latin American maintenance, repair and overhaul (MRO). The carrier's Technology Center (TC) is located in Sao Carlos, some 230 km northwest of Sao Paulo. It has invested $185 million in the 4.6-million-sq-m, six-hangar facility since it opened in 2001 at the site of a former truck factory. "We want to make a more aggressive move in third-party business," VP MRO, Ruy Amparo said. (TPR) currently can perform all major checks, including "C" and "D" checks, on A320 family airplanes, A330s and F 100s. It eventually wants to offer (MRO) on EMB-170s/190s. It will decide before year end whether its pursuit of third-party work will necessitate the spinoff of its (MRO) center into a separate subsidiary. "We don't want to exclude partnerships," Amparo said, adding that the company would consider working with (VEM), the former (MRO) division of Varig (VAR) now owned by (TAP) Portugal, which is its largest competitor. Lufthansa Technik (DLH)/(LTK) and Air France Industries (AFI) also are candidates to invest in (TPR), which is looking to make an international splash. "The (MRO) market in Latin and South America is very strong and expecting an overall growth rate of +5% per year," he said.
(TPR) owns the airfield at Sao Carlos and operates up to three weekly maintenance flights to/from the two Sao Paulo airports. It prefers to operate in the interior, where it has more space and flexibility than at the constrained airports in the state capital. (TPR) intends to construct a two-bay hangar to accommodate the 777 and extend the runway at Sao Carlos to 3,000 m. The Technology Center employs 860 and is the beneficiary of (TPR)'s $300 million annual investment in fleet maintenance.
The (SAL) is active in Europe as well. (SAL) is in talks with Russia's S7 Airlines (SBR) and Rossiya (SDM) about possible membership (AiRUnion had been considered (SAL)'s Russian target until its collapse last month) and may find itself in Italy. "It is no surprise that our member Lufthansa (DLH) is a serious bidder for Alitalia (ALI)," Albrecht said. "If (DLH) buys (ALI), then of course we would have to hold talks for (ALI) to join the (SAL)." (SAL) currently has 21 members and is preparing to welcome Air-India (AIN), and Continental Airlines (CAL).
Brussels Airlines (DAT)/(EBA)'s recent financial tie-up with Lufthansa (DLH) and its possible entry into the (SAL) will not affect its cooperation with Jet Airways (JPL), (DAT)/(EBA) Managing Director, Bernard Gustin said. "We included our partnership with (JPL) in our discussions with (DLH) from the beginning and made it very clear [to (DLH)] that the cooperation [with (JPL)] is very important to us. They understand this," Gustin said, noting that the successful (JPL) partnership is a "positive" the carriers value. (DLH) acquired an initial 45% of (DAT)/(EBA) for €65 million/$90.4 million, and in 2011 will have an option to purchase the remaining 55% at a price related to its performance. "(DAT)/(EBA) fully supports the growth plans of (JPL). We benefit from their hub here," Gustin said. (DAT)/(EBA)'s passenger total, thanks to the (JPL) hub has increased from 585 per month in August 2007 to 6,217 last July. "About 200 (JPL) passengers per day take a connecting flight with Brussels Airlines (DAT)/(EBA) and I dare to forecast a doubling of this," Gustin said. Improved connection times and frequencies, as well as joint sales efforts should increase volume further, he added. This winter schedule, 20 (DAT)/(EBA) destinations will connect within a 2-hour timeframe with (JPL)'s schedule compared to three in winter 2007.
December 2008: The Star Alliance (SAL) confirmed that Brussels Airlines (DAT)/(EBA), which is owned partially by Lufthansa (DLH), will join the (SAL) organization, and (SAL) CEO, Jaan Albrecht said the 21-member group eventually may more than double in size. "We have a lot of requests from carriers" to join the (SAL), he said at (SAL)'s annual board meeting in Chicago. "We are now working on a new concept that we can see up to 50 member carriers in the future. That could mean maybe 30 or 40 or even more carriers." He said greater size will mean greater strength during downturns like the one currently facing the industry. "We developed from a 'good weather' alliance to a global alliance, that can handle difficult situations like now," he said.
(SAL) already is set to add Continental Airlines (CAL) (now in SkyTeam (STM)), Air-India (AIN), and TAM (TPR). Albrecht said it is talking to "several carriers" regarding future membership, especially in Africa and Latin America. "But we don't need a hub in the desert. We are not talking to Middle East carriers about joining the (SAL)," he said.
To handle its much larger future, (SAL) is examining restricting its leadership and management, Albrecht revealed. He said that smaller carriers will provide "local leadership" while (SAL) linchpins like (DLH) or United Airlines (UAL) will offer "global leadership." He said management strategy "is one of the main topics we are working on currently." He assured that membership will not be stratified and that every (SAL) airline, regardless of size, will be considered a full member.
No time line was revealed regarding (DAT)/(EBA)'s membership. It will become (SAL)'s 10th European member and operates 45 airplanes on approximately 300 flights to 55 European and 15 African destinations. (DLH) reached agreement to purchase 45% of (DAT)/(EBA) in September and has an option to acquire the remainder in 2011. (UAL) Chairman, President & CEO, Glenn Tilton cited (DAT)/(EBA)'s "greater connectivity throughout Europe and Africa" as its appealing feature. (DLH) will sponsor (DAT)/(EBA) through the membership process.
(DLH) Chairman & CEO, Wolfgang Mayrhuber said recently that the acquisition of Austrian Airlines (AUL) and Brussels Airlines (DAT)/EBA) is a "logical step" toward creating a pan-European network.
Speaking at the (SAL)'s annual board meeting in Chicago, Mayrhuber said (DLH) is targeting further consolidation. "From the (DLH) management perspective, we can do more," he said. "What we have already done is no surprise." He declined to say whether (DLH) will bid for either the (SAS) Group or (LOT) Polish Airlines, but said the company's goal is to "create our own (SAL) network" with a "modular" concept comprising the amalgamation of several airlines. He called it (DLH)'s "European answer" to the need for consolidation. The company continues to have its sights set on Alitalia (ALI) and Mayrhuber said he will not back down despite speculation that (AFA)/(KLM) is leading the race to partner with Compagnia Aerea Italia (CAI). "Our logo is the crane, not a chicken," he said. (DLH) board member, Holger Hatty told "Il Messaggero" that (DLH) would offer (ALI) "more than" >€500 million/$686 million in synergies and that a "multihub and multibrand" network would feature a Rome Fiumicino hub "focus[ed] on tourism" and a Milan Malpensa hub "focus[ed] on business."
(DLH) decided against a bid for Iberia (IBE) last year, when it displayed considerable caution as consolidation started to unfold.
The short-term outlook remains gloomy, however, and Mayrhuber said (DLH) has planned no growth next year. "You should only produce what you can sell," he said.
January 2009: Amadeus and the Star Alliance (SAL) announced that three additional (SAL) members switched over to the (SAL) Common Information Technology (IT) Platform based on the Amadeus Altea customer management system. Austrian Airlines (AUL), Adria Airways (ADR) and Croatia Airlines (CRH) "have all switched their inventory, pricing, flight schedules, seat planning and passenger re-accommodation applications," according to a statement from Amadeus and (SAL). (CRH) and (ADR) are regional members of (SAL).
March 2009: Star Alliance (SAL) members now fly 18,100 daily flights to 975 airports in 162 countries with a fleet of 3,359 airplanes. (SAL) members carried a total of 405.7 million passengers with a turnover of US$95.3 billion in 2006. The (SAL)'s market share is 28% of the global market based on revenue passenger kilometers (RPK) traffic. All (SAL) carriers combined employ over >401,577 pilots (FC), flight attendants (CA), and other staff.
(SITA) and Swissport announced deployment of the world's first common-use bag-drop solution at Zurich, allowing passengers from multiple airlines to use the same queue. Eleven Star Alliance (SAL) carriers will use 10 common-use counters at the airport, where the departure control system will employ (SITA)'s PassengerBagdrop software. (SAL) Manager Product & Services, Anita Elste said the common-use bag drops have helped reduce processing time to under 30 seconds per passenger.
April 2009: The European Commission (EC) confirmed that it has opened antitrust investigations against four Star Alliance (SAL) members and three Oneworld (ONW) carriers regarding concerns that their current or planned agreements to coordinate commercial, marketing and operational activities on transatlantic routes might breach European Union (EU) rules. One inquiry relates to the proposed cooperation among American Airlines (AAL), British Airways (BAB) and Iberia (IBE). The other covers the existing transatlantic cooperation between Lufthansa (DLH) and United Airlines (UAL), as well as between (DLH) and Air Canada (ACN), plus the proposed four-party agreement that adds Continental Airlines (CAL), which is slated to join the (SAL) in October (Atlantic Plus-Plus).
The (EC) said the level of cooperation in question appears far more extensive than the general cooperation among the aforementioned airlines and others in their respective alliances. "In particular, the parties to each agreement intend to jointly manage schedules, capacity, pricing and revenue management on transatlantic routes, as well as share revenues and sell tickets on these routes without preference between these carriers," it said, noting it is assessing whether the joint activities "may lead to restrictions of competition on certain transatlantic routes." It added it will take "any demonstrated consumer benefits which may arise from the parties' cooperation" into consideration. The (SAL) and (CAL) won antitrust immunity from the the USA Department of Transportation this month.
Oneworld (ONW) VP Communications, Michael Blunt confirmed that (ONW) anticipated the inquiry into the planned cooperation of (AAL), (BAB) and (IBE). "It is no surprise, he said. "It is the normal European process for addressing any agreement of this kind. It also confirms it is Brussels which [is] investigating the planned cooperation rather than a national competition authority." Last August, the three carriers formally informed the (EC) of their intent to conclude a joint business agreement covering flights between North America and Europe and to apply for (ATI) together with Finnair (FIN) and Royal Jordanian (RJA). The latter two do not appear to be involved in the investigation.
The opening of proceedings does not imply that the (EC) has conclusive proof of an infringement. There is no strict deadline for it to complete inquiries into potentially anti-competitive conduct.
The (EC)'s Directorate General Competition has been reviewing the SkyTeam (STM) alliance for nearly a decade and in 2006 sent a so-called statement of objections to several member carriers after concluding that their cooperation on a number of routes, including some between the (EU) and the USA, would reduce competition. The (STM) carriers offered remedies in October 2007, but the inquiry is ongoing.
(SAS) Scandinavian Airlines, Wideroe and Blue1 (BLF) signed a 10-year agreement to adopt the full Amadeus Altea Customer Management platform to manage global sales and reservations, inventory and departure control processes. Amadeus will implement the new technology platform "through a phased migration process" starting next year. Altea is the heart of the common Information Technology (IT) platform adopted by the Star Alliance (SAL) a few years ago.
The USA Department of Transportation approved Continental Airlines (CAL)'s entry into the Star Alliance (SAL), granting tentative antitrust immunity (ATI) to the carrier and certain (SAL) partners and to (CAL)'s proposed transatlantic joint venture (JV) with Air Canada (ACN), Lufthansa (DLH) and United Airlines (UAL).
The (SAL) alliance and the four carriers seeking the (JV), to be called "Atlantic Plus-Plus," petitioned for (ATI) last summer. (ATI) enables airlines to coordinate their operation and act as a single carrier for international air services, sharing capacity, sales and marketing and revenue. In a statement recently released, the (DOT) said (CAL)'s entrance into (SAL) and the quartet's (JV) "would be in the public interest because it would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times, and reduce fares." (UAL) and (DLH) have held transatlantic (ATI) since 1996.
Atlantic Plus-Plus must be implemented within 18 months as a condition of immunity, the (DOT) said, adding that airlines would remain subject to antitrust regulations with respect to their domestic services.
"(CAL)'s entrance into the (SAL) will provide substantial benefits for consumers worldwide while preserving domestic competition and jobs" (CAL) Chairman & CEO, Larry Kellner said. "In addition, a timely final approval will allow (CAL) to provide a seamless transition for its customers from the SkyTeam (STM) alliance to the (SAL) Alliance this fall."
(ATI) granted to the alliance covers the aforementioned four carriers as well as Austrian Airlines (AUL), bmi (BMA), (LOT) Polish Airlines, the (SAS) Group, Swiss International Air Lines (CSR) and (TAP) Portugal.
The (DOT) said objecting parties will have three weeks to file their statements regarding the latest ruling. Oneworld (ONW) members: American Airlines (AAL), British Airways (BAB), Finnair (FIN), Iberia (IBE) and Royal Jordanian (RJA) expect the (DOT) to issue its decision on their (ATI) application in the second half of this year.
The (SAL) said it plans to move current London Heathrow (LHR) Terminal 2 tenants Austrian Airlines (AUL), Croatia Airlines (CRH), Lufthansa (DLH), Swiss International Air Lines (CSR) and (TAP) Portugal to T1 this summer. At that point, the 21 (SAL) members serving (LHR) will remain split between T1 and T3.
May 2009: The Star Alliance (SAL) Chief Executive Board accepted Aegean Airlines (CRM)'s membership application, (SAL) CEO, Jaan Albrecht announced at a news conference in Athens. (CRM) is the first Greek carrier to join an alliance and will add a network spanning 23 domestic and 24 international routes on 200 daily flights.
"We believe (CRM) is an ideal fit into the (SAL)'s network . . . It has a strong regional presence in the southeast of the Mediterranean, at the crossroads of East and West," Albrecht said, adding that the carrier "has done everything right, in our minds, to prepare for the (SAL) membership, including the building up of bilateral links with several members. It has a high brand recognition, high safety standards and service levels, it has a solid and successful management and has grown in a focused but controlled manner since its founding."
(CRM) Chairman, Theodore Vassilakis called it a "very exceptional day" for the carrier, which commenced scheduled flights with two new Avro RJ-100s on domestic routes exactly 10 years ago. Publicly listed, (CRM) currently operates a fleet of 31 airplanes of which 21 are new A320s/A321s that constitute part of an order for 27 placed in 2005. (CRM) achieved a major milestone last year when it surpassed rival Olympic Airlines (OLY) in passenger numbers. (CRM) carried 6 million in 2008, up +14% over 2007, and its domestic market share is 58%. It has been profitable since 2003 and posted net earnings of +€29.5 million/+$41.3 million in 2008. Managing Director, Dimitris Gerogiannis said that expected benefits from joining the (SAL) include increased revenue and additional passengers through network connectivity in addition to "operational improvements by sharing terminal facilities in a large number of airports, cost reductions through joint sourcing projects, know-how exchange and synergies in Information Technology (IT)." He confirmed that (CRM) will migrate to (SAL)'s common Amadeus Altea platform for reservations, inventory, ticketing and check-in. It is confident it will finalize its integration by May 2010. The (SAL) currently has 21 full members, with an additional four preparing to join.
The previous newest member is EgyptAir (EGP) which joined the (SAL) last year as No 21. (SAL) CEO, Jaan Albrecht said that the (SAL) is working on a long-term project to become an alliance of the 50s, meaning up to 50 members.
The European Commission (EC) approved (DLH)'s proposed acquisition of bmi (BMA), stating that the transaction would not affect competition between airlines in the European Economic Area or within any substantial part of it. The (EC) noted that (DLH) and (BMA) already cooperate on many routes because both are members of the Star Alliance (SAL). It added that its investigation showed (DLH) would be "unlikely" to start operating flights on those routes on which it currently only markets flights operated by (BMA) and vice versa. "The (EC) therefore concluded that the transaction would not significantly impede effective competition on any of these routes," it said in a statement. "The same conclusion was reached for all other routes where the parties currently do not cooperate, as . . . the combined entity would continue to face sufficient competition on these routes."
In its investigation, the (EC) treated Brussels Airlines (DAT)/(EBA) as a subsidiary of (DLH) because (DLH) is in the process of acquiring (DAT)/(EBA), although it noted that this was "without prejudice to the outcome of the investigation currently being conducted by the (EC) with regard to the acquisition of (DAT)/(EBA) by (DLH)." A ruling on that transaction is expected next month.
Despite obtaining the (EC) clearance, (DLH) confirmed it is not yet completing the takeover because not all contractual conditions have been fulfilled, Dow Jones reported. In December, (BMA) founder & Chairman, Michael Bishop exercised an option to sell his 50% plus one share stake to (DLH), which already owned 30% minus one share.
Earlier this month, reports surfaced that (DLH) is seeking a recapitalization of the loss-making UK carrier ahead of the agreed acquisition, but Bishop apparently dismissed the request. According to "Reuters," (DLH) wants all shareholders to inject capital in (BMA). (DLH) declined to identify to Dow Jones the conditions that have not been fulfilled, citing a confidentiality agreement.
Continental Airlines (CAL) CEO, Larry Kellner hinted that (CAL) may migrate to the Star Alliance (SAL) Common Information Technology (IT) Platform (CITP) at some point after it joins (SAL) in October. In a conference call to discuss first-quarter earnings, Kellner said, "I and other members of the (CAL) management team meet regularly with Glenn Tilton [United (UAL) Chairman, President & CEO] and his team at (UAL) as we develop plans to co-locate at airports, deliver mutual cost savings, share airport lounges, bring benefits to each other's elite customers and ultimately move to a single (IT) platform so that we can provide excellent service to each other's customers." Following the (CAL) conference call, a spokeswoman responded to an email enquiry that "We are evaluating a number of options and no decision has been made, but having commonality around one system with (UAL) would facilitate our work together."
In 2005, the (SAL) selected Amadeus to build a common (IT) platform (CITP). The (SAL) (CITP) is a customized version of its platform.
(UAL) and Lufthansa (DLH) were the first (SAL) carriers to commit to migrating to the (CITP). (UAL) is slated to begin migration in 2010. (DLH) was already using the Alt￩a reservations module when the (SAL) deal was signed, and it implemented the inventory module a year ago.
(CAL)'s reservations system has been managed by EDS since 1991. In October 2007, it awarded a new seven-year, (IT) services contract to EDS and (HP).
S7 Airlines (SBR) will join Oneworld (ONW) next year, the 10-member group announced, adding 54 new destinations and eight new countries (Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan) to the alliance's network.
(SBR) will be the second Russian carrier in an alliance. Aeroflot (ARO) joined SkyTeam (STM) three years ago. (SBR)'s first step toward integration will be its June 1 addition to (ONW)'s Global Explorer round-the-world fare. British Airways (BAB) will be its sponsor and adviser during the 18-month alliance implementation program.
(SBR) carried 6 million passengers in 2008 and operates 26 A320 family airplanes, seven A310s and two 767s. It earned a +$3 million net profit in 2008 on revenue of $1.7 billion and is 25% state owned. (ONW) members (BAB), American Airlines (AAL), Iberia (IBE), Japan Airlines (JAL) and Royal Jordanian (RJA) serve (SBR)'s Moscow Domodedovo hub. Mexicana (CMA) is set to join the alliance this year.
"(SBR) fills one of (ONW)'s few remaining membership white spaces with a carrier that matches our alliance's demanding quality requirements. It will expand (ONW)'s presence substantially in Russia and the [CIS]," (ONW) Managing Partner, John McCulloch said. (SBR) CEO, Vladimir Obyedkov said membership "will also strengthen us financially, through revenues from passengers transferring to our network from our (ONW) partners and the cost reduction opportunities the alliance offers."
Meanwhile, in Athens, Star Alliance (SAL) CEO, Jaan Albrecht said he was not bothered by the fact that his group will be the only one of the three global alliances to lack a Russian member. He stressed there is no "rush for Russia" and that the (SAL) talked to (SBR), the defunct AiRUnion alliance and Transaero Airlines (TRX) in the past as part of its strategy to recruit members in Russia, Brazil, India, and China. It has secured commitments from major carriers in the latter three nations. "The Russian airline industry is still very unsettled," he said at the Aegean Airlines (CRM) joining event in Athens. "There are still too many airlines in Russia and it's still a very uncertain environment. Look at what happened to AiRUnion. Two years ago they were the upcoming airline group in the (CIS), but they folded. We have time. We will not rush into announcing a member because others do so"
(SAL) CEO, Jaan Albrecht said he sees a "renewed and more aggressive" interest in the alliance from member airlines as well as from non-allied carriers owing to the recession and industry downturn.
"We have seen a similar trend after "9/11." Our members are keener to find or participate in initiatives in the area of cost savings and synergies," he said at the Aegean Airlines (CRM) joining event in Athens. Recent projects include sourcing of the priority bag tag by the (SAL) for 14 members, reducing the collective bill from $600,000 per year to $90,000 with savings of up to -90% for some participating airlines.
The (SAL) received a similar mandate from members to source onboard blankets, which now are bought from one Chinese manufacturer although airlines maintain their own specifications and designs. The network, revenue and cost savings benefits also are attracting more carriers to the world's largest alliance, Albrecht claimed, adding that "many candidates do contact us. Initially it was very difficult to recruit candidates." The fact that the (SAL), Oneworld (ONW) and SkyTeam (STM) account for three-quarters of global traffic, proves "that we were right, 12 years ago, to establish an alliance. Many were very critical of the idea and many have been equally critical of a lot of the initiatives we have taken, yet many have followed our example. Look at the recent decision of (ONW) and (STM), ten years later than we did, to have airplanes with their alliance livery."
Albrecht said he sees a similar shift in mentality "from push to pull" at other stakeholders, like corporate account holders and airports. "Several years ago, airports were not interested in talking to us. Now, often they take the initiative to talk to us. Co-location was an annoyance, now they regard it as a more rational distribution of space." He dismissed criticism that the (SAL), with 21 full members, three regional members and five confirmed future members, is becoming too large and unmanageable. "We started with five, grew to ten and today we have over 20 members. It's an evolution, and we had to rethink several times the way we do business and how to remain relevant. We are in the process of a new analysis of our corporate governance" that will be announced "soon" he said.
The (SAL), however, will not announce soon another future member, he added. He confirmed that the (SAL) has held talks with Air Malta (MLT), which some sources mention as a future associate, as well as other carriers, "but there are no new application talks going on right now."
Aegean (CRM), Air India (AIN), Brussels Airlines (DAT)/(EBA), Continental Airlines (CAL) and TAM (TPR) all are set to come on board. Once they complete their respective integration processes, which are in different stages, the (SAL) network will encompass 26 carriers and three regional members (Adria Airways, Blue1 and Croatia Airlines) operating some 21,000 daily flights on a network spanning 1,010 destinations in 176 countries. Presently, the network offers close to 17,000 daily flights to 916 destinations in 160 countries.
Jaune 2009: The Star Alliance (SAL) board is expected to approve changes to its organizational structure that will see elimination of the regional member category, CEO, Jaan Albrecht confirmed. Currently there are three regional members: Adria Airways (ADR), Blue1 (BLF) and Croatia Airlines (CRH). It is expected that all will become full members in the alliance.
At the same time, the (SAL) will introduce a menu-driven or "a la carte" membership concept. The new approach, informally described as "Rights, Responsibilities and Contributions," means that members, after fulfilling certain mandatory requirements such as Information Technology (IT) integration, can choose their level of participation in the alliance. Carriers with more resources will be able to do more, while those with limited resources may do less after fulfilling minimum membership standards.
Additionally, under the revised structure, the (SAL) is limiting the number of items requiring a unanimous vote among the membership. The idea is to encourage those airlines that want to take on a more integrated role to do so while ensuring that the customer sees a single alliance without formalized categories of membership. The result should be a more flexible working arrangement for all members and the alliance as a whole, Albrecht said.
Continental Airlines (CAL) Chairman & CEO, Larry Kellner said (CAL) will enter the Star Alliance (SAL) "hours or days" after it exits the SkyTeam (STM) Alliance on October 24. "The difference for us between the (STM) and the (SAL) is that we and Delta (DAL) have a lot of overlap . . . whereas within the (SAL) there's a lot of open area," he said. "So it's a good fit for us."
EgyptAir (EGP) completed its move to the new Terminal 3 at Cairo International, joining six other Star Alliance (SAL) carriers as part of the group's "move under one roof" initiative. "T3 brings high connectivity for us and our partners," CEO Tawfik Assy said. "Our membership in the (SAL) changed our image and we are getting a lot of positive response. Nevertheless, the biggest challenge for (EGP) is to improve the level of our service," he added, citing ground handling as one area that needs to get to a higher standard.
Assy said that having a defined role within the (SAL) has helped. "We are the carrier to the Middle East and Africa. Now we have been in the (SAL) for one year and (EGP) has +40% more travelers to our African destinations," he said. It serves 15 continental airports, with Lusaka and Douala set to come online soon. The number could grow to up to 25. He said (EGP) will look to increase its code share relationships with its (SAL) partners.
July 2009: Shanghai Airlines (SHA) hopes to maintain its membership in the Star Alliance (SAL) even after its merger with China Eastern Airlines (CEA), which most likely will join the SkyTeam (STM) alliance, Chairman, Zhou Chi said. He noted that (SHA) needs to discuss the matter with (SAL) airlines. "Also, whether we can maintain it or not will be up to which global airline alliance (CEA) joins," he said. (CEA) Chairman, Liu Shaoyong has said internally that the carrier prefers the (STM), which already includes China Southern Airlines (GUN). (CEA) was scheduled to sign an agreement with the (STM) last month, but it was postponed because it is "busy with merger issues with (SHA)."
After the merger, (SHA) is expected to become a wholly owned subsidiary of (CEA) but maintain its brand. "It is important for us to operate independently. Our relationship with (CEA) will be just like Cathay Pacific (CAT) and Dragonair (DRG)," Zhou revealed. "We never expected to expand our business by relying on the merger with (CEA), but the merger will produce synergies and will help build Shanghai as an international aviation hub." The carriers remain in negotiations and the specific merger plan is expected to come out this month. Zhou emphasized that the merger is being pushed by Beijing and led by (CEA). "The whole merger process will have to take about 4 to 5 months to complete," he said.
Current members of the Star Alliance (SAL) and aspiring member Continental Airlines (CAL), pushed back strongly against the USA Department of Justice (DOJ)'s opposition to the extension of antitrust immunity (ATI) to (CAL) when it joins in October, arguing in a filing with the (DOT) that the (DOJ) favors a "myopic policy" that would "abandon almost two decades of highly successful international aviation policy."
The (DOT) in early April approved (CAL)'s entry into the (SAL) and granted tentative (ATI) to the carrier and certain (SAL) partners and to (CAL)'s proposed transatlantic joint venture with Air Canada (ACN), Lufthansa (DLH), and United Airlines (UAL). It has final say on whether (ATI) will be granted, but the seemingly clear path to final approval hit a roadblock last month when the (DOJ) weighed in to argue that (ATI) would bring "substantial" harm to consumers. A 52-page response filed by the (SAL) carriers and (CAL) urged the (DOT) to ignore the (DOJ) and "promptly" issue a final order that would grant (ATI) "without modification" from its tentative order. The (DOJ) is proposing "a narrowly focused and ill-conceived policy that ignores unique considerations affecting international aviation," the carriers wrote. "Aside from being inconsistent with [DOT's] statutory mandate, such a myopic policy would jeopardize current and future "open skies" agreements [and] hobble the (SAL) and (CAL) so they cannot compete effectively with the SkyTeam (SKT) Alliance."
The carriers added that consumers would lose out on benefits that immunized alliances bring if the (DOJ) had its way and argued that adding (CAL) to the (SAL) and allowing it to participate in the transatlantic joint venture (JV) does not raise any issue that "justifies such an abrupt reversal of international aviation policy," particularly considering that (CAL) "offers fewer than 3% of worldwide scheduled seats." The (SAL) carriers and (CAL) said the (DOJ) is advocating a "radical shift . . . predicated on faulty analysis [that] ignores critical aviation policy considerations." They wrote that the department does not understand that current and future open skies accords "directly" depend on immunized alliances, adding that it also "ignores the substantial benefits that would flow from immunity" and "fails to recognize . . . substantial and actual competition" in markets in which (CAL) would operate in conjunction with (SAL) members.
The (DOJ) in its filing with the (DOT) estimated that fares "are likely to increase by roughly +15% on routes where the number of nonstop competitors decreases from two to one, and by roughly +6% on routes where the number of nonstop competitors decreases from three to two." The (SAL) carriers said this analysis is "flawed, contradicted by previous analyses and the (DOT)'s findings, and should be disregarded."
Later, largely overruling last-minute objections by the USA Department of Justice (DOJ), the Department of Transportation (DOT) gave final approval for antitrust immunity (ATI) to (CAL) for its participation in the Star Alliance (SAL) and also granted (ATI) to (CAL)'s entry into "Atlantic Plus-Plus," the transatlantic joint venture with Air Canada (ACN), Lufthansa (DLH), and United Airlines (UAL). The (DOT)'s decision, which confirmed a tentative decision, was welcomed by the affected airlines and the industry at large and signaled that its approach to regulating global airline alliances is unlikely to change under President Barack Obama's administration.
(CAL) Chairman & CEO, Larry Kellner said (ATI) "greatly benefits our customers, employees and shareholders. It ensures global competition with other antitrust-immunized alliances while encouraging the retention and growth of "open skies" between the USA and other nations."
(UAL) Chairman, President & CEO, Glenn Tilton added that "(UAL), (CAL) and the (SAL) carriers will be able to compete more effectively in an increasingly global air travel market." USA Air Transport Association President & CEO, James May said the "decision will increase current levels of service while preserving jobs for thousands of airline employees."
The (DOT) did impose a number of route "carve-outs" that are "anticipated to be temporary" in response to concerns expressed by the (DOJ). But in the main, it was "not persuaded" by the (DOJ)'s argument that granting (ATI) would bring significant harm to consumers, saying that "the full depth and breadth of consumer benefits" could not be realized absent (ATI). The (DOT) also noted that these benefits "are not available [to the airlines] through other means," since "ownership restrictions preclude truly integrated joint ventures or mergers similar to those pursued in other industries." In rejecting the (DOJ)'s concerns over a reduction in competition, the (DOT) argued that "an alliance faces competitive pressure both from other carriers in particular city-pair markets and from other alliances offering global network connectivity." The (DOJ) erred in only analyzing "nonstop routes" to reach its conclusions on competition, the (DOT) said, noting that "the vast majority of transatlantic passengers use connecting services and benefit from the improved connecting products at lower fares that integrated alliances provide." Such "coordinated connecting services" on rival alliances "disciplines fares on nonstop routes."
The (DOT) did agree to remove a number of routes from the scope of (ATI), but it "emphasize[d] that these carve-outs are anticipated to be temporary, lasting only until new entry introduces further competition." The (CAL)/(UAL)/(ACN)/(DLH) (JV) will not be granted (ATI) on routes from New York to Copenhagen, Geneva, Lisbon and Stockholm. Should a new entrant enter one of these markets with at least five weekly round trips for nine months, Atlantic Plus-Plus may seek (ATI) for that route. In addition, the (DOT) is restricting competition among (CAL), (UAL) and (ACN) on additional USA - Canada routes. Also, (UAL) and (CAL) will not have (ATI) on nonstop service between the USA and Beijing, a restriction that will remain "until additional competing service is introduced," the (DOT) said.
Continental Airlines (CAL) CEO, Larry Kellner said (CAL) is planning to develop a common information technology (IT) system with United Airlines (UAL) as part of their new relationship as partners in the Star Alliance (SAL). "What we continue to be focused on is getting (CAL) and (UAL) on a common platform," Kellner said.
August 2009: TAM (TPR) and Air China (BEJ) announced that they will begin code sharing on flights this month to allow passengers to travel between Sao Paulo (GRU) and Beijing (PEK), via Madrid Barajas (MAD). (TPR) passengers originating at (GRU) will be able to connect to (MAD) - (PEK) Air China (BEJ) flights while (BEJ) passengers originating in the Chinese capital will be able to connect to (MAD) - (GRU) (TPR) flights. Both carriers are members of the Star Alliance (SAL). "This is the first agreement we have made with an Asian company, a fact made more significant by being made with a company that has such an extensive network," (TPR) VP Commercial & Planning, Paulo Castello Branco said.
The Star Alliance (SAL) added functionality to its website allowing customers to book and purchase round-the-world tickets. Such transactions previously required the assistance of an airline call center, ticket office or travel agent.
London Heathrow (LHR) airport officials unveiled plans for a new £1 billion/$1.67 billion Terminal 2 construction project that will allow the consolidation of Star Alliance (SAL) operations and provide capacity for an estimated 20 million passengers each year. Construction will take place in two phases, with the initial creation of a terminal building on the site of the existing T2 and Queen's building, both of which will be demolished later this year. Construction is scheduled for completion in 2013. The second half of the project will extend T2 into the existing T1 site and will include a satellite building. T1 will remain open throughout construction but will close upon completion in 2019. The new building is designed to produce -40% less carbon than those it is replacing.
Continental Airlines (CAL) announced that October 27 will be its first day as an official member of the Star Alliance (SAL).
The Star Alliance (SAL) said EgyptAir (EGP), South African Airways (SAA), and (TAP) Portugal are the first members to use the (SAL)'s newly developed Common Information Technology (IT) Mobile Platform. The mobile services are being rolled out in stages and currently include flight schedules, real-time departures and arrivals and lounge information among other features. More interactive services such as frequent-flyer program status, online check-in and seat selection and mobile boarding passes with 2D barcodes will be made available in the coming weeks, the (SAL) said.
The European Commission (EC) officially approved Lufthansa (DLH)'s proposed acquisition of the Austrian Airlines Group (AAG), saying (DLH) alleviated antitrust concerns by agreeing to reduce service between five European cities and Vienna. The (AAG) announced draconian cuts to its management structure.
The (EC), which previously signaled its intention to grant approval, cleared both the proposed merger and €500 million/$713 million in restructuring assistance for the (AAG) from the Austrian government. (DLH) had said it would not go through with the takeover absent the state aid.
Competition Commissioner, Neelie Kroes said, "This case shows that consolidation in the airline sector is possible with proper remedies to safeguard consumers' interests." The (EC) said (DLH)'s antitrust "remedies package" includes a commitment to relinquish slots, "according to an efficient and timely slot allocation mechanism," that will increase competition, "namely [on] the routes from Vienna to Frankfurt, Munich, Stuttgart, Cologne, and Brussels."
(DLH) launched a public offer for the (AAG) on March 2 after reaching agreement with state holding company (OIAG) to buy its 41.56% stake for €366,000 plus a per share "earn-out option" for all (AAG) shareholders willing to sell. Its €4.49-per-share offer was conditioned on antitrust clearance and approval of €500 million in restructuring aid from (OIAG) to the (AAG). It also was subject to acquiring at least 75% of (AAG)'s permanent voting shares.
(DLH) said that "all of the necessary conditions for the merger in accordance with the public takeover offer have been met within the prescribed deadline and Austrian Airlines (AUL) will be integrated into the Lufthansa Group as of September 2009."
It added that (AAG) shareholders who have offered their shares for sale will receive €4.49 per share "probably on September 3." It said it will be paying the free-float shareholders €166 million in total. The (AAG) said in a statement that its "economic basis . . . improves enormously as a member of the Lufthansa Group."
(DLH) plans to operate the (AAG) as an independent subsidiary as part of its strategy of becoming a "system of independent airlines" with multiple European power bases.
September 2009: Air India (AIN)/(IND) and Singapore Airlines (SIA) signed a reciprocal loyalty program agreement taking effect ahead of (AIN)/(IND)'s entry into the Star Alliance (SAL).
October 2009: Continental Airlines (CAL) became the 25th member of the Star Alliance (SAL) in Newark ceremonies attended by leaders of current and future member airlines, at which (CAL) also unveiled a winglet-equipped 757-200ER in alliance livery. Ahead of the formal induction, (CAL) entered into bilateral commercial agreements with the other 24 members and signed code sharing deals with four - - United Airlines (UAL), Lufthansa (DLH), Air Canada (ACN) and bmi (BMA) - - the first three of which are part of the "Atlantic Plus Plus" antitrust immunized partnership.
"Bringing (CAL) into the Star Alliance (SAL) has been a truly unique experience," (SAL) CEO, Jaan Albrecht told media as he described (CAL) as "one of the finest airlines in the world" and a "perfect fit" for the (SAL) alliance. Both he and (CAL) President & COO, Jeff Smisek observed that this is the first time a major airline has moved directly from one alliance (SkyTeam (STM)) to another. (CAL) officially left the SkyTeam (STM) on October 24, having joined on September 13, 2004.
Speaking to reporters, Smisek, who succeeds Larry Kellner as Chairman & CEO on January 1 after Kellner leaves (CAL) to start his own firm, said the transition to the (SAL) took a lot more work than (CAL) had expected. Discussing the decision to depart the (STM) alliance, he said the die was cast when Delta Air Lines (DAL) and Northwest Airlines (NWA) merged. The alliance "worked well for us when there were three major [USA] airlines [but] once (DAL) and Northwest (NWA) merged, we were relegated in effect to junior partner status." Switching from the (STM) to the (SAL), even without Atlantic Plus Plus, is worth +$100 million per year to (CAL), he said. Monetary costs to leave the (STM) were "negligible."
Kellner said that following the end of merger talks between (UAL) and (CAL) in 2008, (UAL) Chairman & CEO, Glenn Tilton "called the next day to invite (CAL) to join the (SAL)." (UAL) sponsored (CAL)'s admission and Tilton said (UAL) "could not be more proud to welcome (CAL)." He added that the carriers in Atlantic Plus Plus are considering "potentially expanding that to include up to six immunized (SAL) partners."
Addition of (CAL) dramatically increases (SAL)'s presence in the New York metropolitan market. According to (SAL) alliance figures, 17 members operate 696 daily departures and offer 69,000 departing seats at Newark, LaGuardia and (JFK) airports. The (SAL) has a 51% seat share among the airports compared to 28% for the (STM) and 21% for the Oneworld (ONW) alliance.
(CAL) also brings an extensive network into Latin America and particularly Mexico. And it may bring another carrier: Copa Airlines (COP), whose CEO, Pedro Heilbron, attended but did not participate in the ceremonies. The (SAL) has flights to 30 airports where other alliance members have hubs or flight concentrations.
(CAL) signed code share agreements with two more (SAL) members, (ANA) and Asiana Airlines (AAR). (CAL) after officially joining the (SAL) inked code sharing pacts with United Airlines (UAL), Lufthansa (DLH), Air Canada (ACN), and bmi (BMA). (CAL) said that it will start code sharing with (AAR) in December and with (ANA) next year. (AAR) President & COO, Young Doo Yoon said that in the first phase of the agreement, (AAR) and (CAL) will code share on transpacific flights, with the (AAR) code going on (CAL) flights from Tokyo Narita to Newark and Houston, while the (CAL) code will go on (AAR) flights to Seoul Incheon from Los Angeles, Seattle, and San Francisco. Yoon also said the passenger and cargo markets are picking up "and we hope it will continue." The weak South Korean won is boosting traffic from Japanese tourists, who enjoy a stronger yen for shopping, but transpacific traffic remains weak and the carrier is not yet seeing any significant benefit from South Korea's participation in the visa waiver program. "China is still slow," he stated. (AAR) is hoping to launch service to Beijing from Seoul Gimpo but this has to be approved by both governments.
Aegean Airlines (CRM) expects 2010 and 2011 to be "very difficult years," but it is targeting growth "even in a tough environment" thanks to the Star Alliance (SAL) membership expected to take effect next May, Managing Director, Dimitris Georgiannis said.
Speaking at the European Regions Airline Association Annual General Meeting in Interlaken, Gerogiannis said the (SAL) membership "gives us the possibility to get extra feed into Athens, like we have done in the past four years with Lufthansa (DLH)," with which it already has a partnership. (CRM) currently holds a 50% domestic market share but hopes to increase its international profile. (CRM) already is planning to launch flights to Moscow and Tel Aviv. (CRM) will transfer its twice-daily, London service from Stansted to Heathrow on October 25 and will code share with bmi (BMA). Georgiannis said (CRM) is in better shape than some European counterparts because it never has depended much on full-fare business (C) passengers. (CRM) has no plans to introduce long-haul flights. "We have to be realistic," he said, adding that (CRM) expects to transport 6.5 million passengers this year, up from 6 million in 2008. Analysts expect another profitable year for (CRM), which concluded last year +€29.5 million/+$44 million in the black.
(CRM) flights to Madrid and Vienna, both Star Alliance (SAL) hubs (Spanair (SPP) and Austrian (AUL)) start in December.
Brussels Airlines (DAT)/(EBA) is "set and ready" to enter the Star Alliance (SAL), with the formal accession scheduled for December 9 in Brussels, Managing Director, Bernard Gustin said. "We performed out last Information Technology (IT) tests and we expect a green light," he said. "When we were formally invited to join the (SAL) in December in Chicago, I was cautious and expected the integration could take between 12 and 18 months. We did it in less than a year." Lufthansa (DLH), a 45% shareholder in (DAT)/(EBA), assisted (DAT)/(EBA) with the integration.
December 2009: Brussels Airlines (DAT)/(EBA) became the 26th member of the Star Alliance (SAL) in ceremonies in the Belgian capital, 12 months after it was invited to join and following the conclusion of a strategic partnership with Lufthansa (DLH), which acquired 45% of parent SN Air Holding in June. "Since its inception, (SAL) carriers have been flying to Brussels but from now on, we can start developing the airport as a hub," (SAL) CEO, Jaan Albrecht said. With the addition of (DAT)/(EBA), the (SAL) Alliance network covers 1,077 destinations in 175 countries, including four new destinations in Africa: Bujumbura, Conakry, Kigali, and Monrovia.
"Eight years after (DAT)/(EBA) was created [as successor to Sabena (SAB)], we are extremely proud to become a member of the (SAL) Alliance," (DAT)/(EBA) co-CEO, Bernard Gustin said, pointing out that for Brussels Airport (BRU), located between SkyTeam (STM) Alliance hubs at Paris Charles de Gaulle (CDG) and Amsterdam and "not too far" from Oneworld (ONW) Alliance's hub at London Heathrow (LHR), "this is a key opportunity."
According to (DAT)/(EBA) figures, (SAL) alliance members operate up to 190 daily weekday departures from (BRU) to 80 destinations. Five (SAL) alliance airlines operate to 19 long-haul destinations and 14 (SAL) alliance members operate intra-European services. (SAL) alliance carriers currently represent some 55% of all flight movements at (BRU). In line with its "under one roof" strategy, the (SAL) alliance reportedly is eyeing the airport's Terminal A, which serves Schengen destinations as well as (DAT)/(EBA)'s African flights, as a co-location area.
Ahead of the formal induction, (DAT)/(EBA) entered into bilateral commercial agreements with several (SAL) alliance members and signed code share deals with Blue1 (BLF), Austrian Airlines (AUL), EgyptAir (EGP), and Spanair (SPP). (DAT)/(EBA) extended agreements with Lufthansa (DLH), Swiss International Air Lines (CSR), bmi (BMA), (LOT) Polish Airlines, (TAP) Portugal, Adria Airways (ADR) and future member Aegean Airlines (CRM).
Gustin confirmed that (DAT)/(EBA) is negotiating code share deals with Air Canada (ACN), United Airlines (UAL), US Airways (AMW)/(USA) and Continental Airlines (CAL). (ACN) and (UAL) have announced new service to (BRU) from Montreal and Chicago O'Hare, respectively, while (AMW)/(USA) will increase its Philadelphia service to daily next summer. Agreements with (CAL) and (UAL) would replace the current agreement with American Airlines (AAL) that terminates at the end of March.
"We cannot walk faster than the music," Gustin explained. "We're a small carrier. It takes time to implement all the code share agreements." He said he expects (AL) alliance membership, combined with (DAT)/(EBA)s participation in (DLH)'s "Miles & More" loyalty program, to lift passenger numbers by +4% to +5%.
The Star Alliance (SAL) is holding exploratory talks with Ethiopian Airlines (ETH) and will discuss (ETH)'s potential membership at its chief executive board meeting in Brussels, (SAL) alliance CEO, Jaan Albrecht confirmed. "We have been talking to them as part of our strategy to fill in our white spots on the world map," he said, pointing out that that while small in market share, Central Africa is showing strong growth. A decision on (ETH) is not "imminent," he stressed, and an announcement can be expected in the first half of 2010.
(ETH) would be the (SAL) alliance's third member in Africa and would provide a good fit with EgyptAir (EGP) in the north and South African Airways (SAA) down south. Eleven (SAL) Alliance members serve 81 destinations in 40 countries across Africa at present. (ETH) carried 2.8 million passengers in its fiscal year ended June 30, a +12.3% increase year-on-year, and net profit jumped +165% to +ETBillion1.35/+$105.2 million.
(ETH) has five 777-200ELRs, 10 787s, 12 A350s and eight DHC-8-Q400s on order.
Transaero Airlines (TRX) is discussing increasing its cooperation with the Star (SAL) Alliance (it currently code shares with Austrian Airlines (AUL) and bmi (BMA)) and would consider full membership, although Director General, Olga Pleshakova said this currently is "not the top priority," Vienna's "Der Standard" reported. (TRX) is the most obvious Russian target for the (SAL) alliance, since Aeroflot (ARO) is a member of the SkyTeam (STM) alliance and S7 Airlines (SBR) is set to join the Oneworld (ONW) alliance. Pleshakova claimed (TRX) has weathered the downturn more effectively than its rivals. While passenger numbers have dropped -12% during the recession, the carrier reported a -1.4% year-over-year growth in passengers during the first 11 months of 2009 to 4.7 million. Traffic measured in (RPK)s climbed +4.4% and surged +70.7% on domestic routes. It flew 1.67 billion total (RPK)s in November, up +23.6% year-over-year, while passenger numbers soared +26.9% to 381,000, it said. It operates 24 domestic routes, half of which were launched this year.
April 2010: Justin Erbacci, VP Information Technology (IT).
May 2010: Air India (AIN)/(IND) has delayed its plans to join the Star Alliance (SAL), previously anticipated in the June to October period. "We are targeting internally to be a member in December, officially maybe in the first quarter of 2011," Chairman & Managing Director, Arvind Jadhav said on the sidelines of the Star Alliance (SAL) joining ceremony for TAM (TPR) in Sao Paolo. (AIN)/(IND) is still working on bringing its Information Technology (IT) systems to alliance requirements. A source close to the (SAL) alliance said that by the end of March 2011, the airline could get its membership.
Management also is busy integrating (AIN) and Indian Airlines (IND) - - an ongoing process since the Indian government announced the merger of the state-owned carriers in July 2007 - - and is reviewing its fleet mix. It is trying to lease out several of its 777s as part of a plan to reduce its network by -15%. "We currently operate 57 domestic airplanes, 27 narrow bodies for international operations and 26 wide body long-haul airplanes," Jadhav said. He believes the worst is over for (AIN)/(IND) and said it achieved a positive operating result in the last four months. He expressed optimism about its outlook, citing strong growth rates for aviation in China and India, which should create business opportunities for (AIN)/(IND). He also is counting on the opening of new airport facilities in New Delhi, set for July 14. "There will be an in integrated terminal, which brings more alliance facilities," he added.
July 2010: Aegean Airlines (CRM) became the 28th member of Star Alliance (SAL) in ceremonies in the Greek capital, just over one year after it officially was invited to join. "One more time the (SAL) alliance family is growing today, one more time we are adding a high-quality brand name to our impressive list of world-class airlines, one more time are we proud to call an exciting country our home," (SAL) CEO, Jaan Albrecht said. (SAL) added TAM (TPR) as a member in May. Despite some delay, Air India (AIN)/(IND) is on course to join by the end of this year or early next year, he confirmed.
"The (SAL) Alliance can simply not afford not to have a home here," Albrecht said, noting that Greek people have traveled the world long before many others and they "continue to enjoy traveling and connecting communities in every corner of the globe." (CRM)'s induction into (SAL) extends (CRM)'s and the grouping's network to/from/within Greece to more than >1,500 weekly flights to 69 destinations in 27 countries.
He heaped praise on its new member, describing (CRM) as a "fascinating" airline because of its "young and successful history, the stringent and entrepreneurial business concept of its owners and its management, and its competitiveness in the marketplace based on its dedication to cost-efficiency, quality and service."
(CRM) Chairman, Theodore Vassilakis said, "Joining the (SAL) Alliance is an honor and a great opportunity for (CRM). Our customers will enjoy recognition, loyalty benefits and end-on-end global service that the (SAL) Alliance is renowned for. At the same time, there will be a 'star' on the map, showing that services and access to Greece have been significantly upgraded."
(CRM) operates a fleet of 30 airplanes covering 26 domestic and 28 international short/medium-haul routes with more than >150 daily flights. It became Greece's largest carrier in terms of passengers in 2008 and is awaiting approval from the European Commission (EC) to merge with rival Olympic Airways (OLY), which had been in alliance talks with the SkyTeam (STM) alliance.
"They lost this one," Albrecht joked, confirming that the enlarged entity (which will carry the "Olympic" name) will be a full (SAL) member if the planned merger wins regulatory approval.
Following the integration, (CRM) will seek to enter into bilateral commercial agreements with several (SAL) members and sign code share deals with Continental Airlines (CAL), among others, depending on regulatory approval, CEO, Dimitris Gerogiannis said. (CRM) presently code shares with bmi (BMA), Lufthansa (DLH), and (TAP) Portugal.
Shanghai Airlines (SHA) reached an agreement with the Star Alliance (SAL) to “terminate” its membership by the end of October.
It noted that the move results from (SHA)’s recent merger with China Eastern Airlines (CEA). (CEA) joined the SkyTeam (STM) alliance in April, and although (SHA) never officially confirmed it also would join SkyTeam (STM), it was widely anticipated it would leave (SAL). (SHA) joined the Lufthansa (DLH)-led alliance in December 2007 along with Air China (BEJ).
“The departure of (SHA) will lead to a slight reduction of the Star (STM) alliance network in China but the decision was not unexpected and member carriers have been exploring several options to fill the gap,” an industry insider said, conceding that one of the possible options is to bring some of Air China (BEJ)’s “recent airline acquisitions” into the alliance as full members.
Air China (BEJ) in March became the majority shareholder of Shenzhen Airlines (SHZ), when it increased its stake from 25% to 51%. Shenzhen (SHZ) is the country's fifth-largest carrier and is providing Air China (BEJ) with a strong foothold in the Pearl River Delta region.
August 2010: Star Alliance (SAL) members are carving out their space in the new Terminal 3 of Indira Gandhi International Airport in Delhi.
Austrian Airlines (AUL), Continental Airlines (CAL), Lufthansa (DLH) and SWISS International Air Lines (CSR) are sharing a ticket desk
usable from inside and outside the terminal for easier passenger
access. The joint space is made possible by Air India (AIN)/(IND), which is expected to join the Star (SAL) Alliance by the end of March next year. (AIN) is developing Terminal 3 into an integrated hub
and will permit Star Alliance (SAL) members to use its lounge, set to open by mid-September, as a part of the co-location program.
The Star (SAL) Alliance has become the first airline alliance to group its members by establishing a series of joint passenger amenities and related infrastructure in T3. “Our presence at T3 through Star Alliance (SAL)’s ‘Move under one Roof’ [initiative] . . . has ensured that from the onset, many facilities are shared with future member, (AIN)/(IND), thereby laying the groundwork for offering a seamless alliance product from the moment they officially
join,” says Lee Hock Lye, Star Alliance VP Products & Services.
From Delhi’s airport, nine Star (SAL) members offer more than >70 flights to 10 Star Alliance hubs in nine countries. From these hubs — Bangkok, Beijing, Frankfurt, Istanbul, Munich, Newark, Seoul, Singapore, Vienna, and Zurich — passengers can connect to more than >1,100 destinations served by the Star (SAL) network.
The prospective (LAN) Airlines/TAM (TPR) merger, if it is cleared by both companys' shareholders and relevant regulators, will create a new airline company that aims to be the dominant operator in Latin America and a formidable presence on the world stage, with a major battle over airline alliance membership likely on tap.
The all-stock transaction, which the airlines aim to complete in the first half of next year, is valued at $3.7 billion and would create a parent company, the LATAM Airlines Group, with combined annual revenue of $8.5 billion. Executives made clear that the intent of the merger is to build a platform for future growth.
"Together, (LAN) and TAM (TPR) will be able to offer new destinations that neither company could have supported on its own," (TPR) CEO, Marco Bologna said. "This will position us to compete with the many foreign carriers that continue to increase service to our region."
(LAN) already operates affiliate carriers in Peru, Argentina, and Ecuador, and in May announced that start-up Colombian carrier "Aeroasis" will become part of the (LAN) group of airlines, all of which will come under the LATAM umbrella. (LAN) CFO, Alejandro de la Fuente said the networks of (LAN) and (TPR) "are highly complementary with little overlap." He added that in addition to a passenger network spanning 115 destinations in 23 countries, LATAM will offer "the most comprehensive cargo network in Latin America."
The airlines said LATAM will provide "seamless passenger and cargo services across the continent and around the world," but executives did not say in which airline alliance (LAN)/(Tpr) would be a member. (LAN) is in the Oneworld (ONW) alliance, while TAM (TPR) joined the Star (SAL) Alliance in May. (LAN) CEO and designated LATAM CEO, Enrique Cueto said the airlines "don't have an answer to that question" presently.
"There are hundreds of millions of dollars at stake when measured in access to almost the entire South American market,"the Centre for Asia Pacific Aviation (CAPA) said in an analysis of the proposed merger and its global implications. It said (LAN) is the "driver" behind the merger and will ultimately make the call on which alliance the group will be a part of, possibly favoring the Oneworld (ONW) alliance.
"But merely dumping the Star (SAL) alliance is not a decision to be taken lightly," it stated. "TAM (TPR) has many valuable linkages throughout the Star (SAL) alliance grouping."
Star Alliance (SAL) partners Continental Airlines (CAL) and Aegean Airlines (CRM) announced plans to start code sharing on (CAL)'s flights between its Newark (EWR) hub and Athens (ATH). (CAL) will also place its code on selected flights operated by (CRM) in Europe. Effective immediately, (CRM) will place its A3 code on (CAL) flights between (EWR) and (ATH). Pending government approval, (CRM) also will code share on (CAL) flights from (EWR) to/from Paris Charles de Gaulle and Rome Fiumicino.
(CAL) will place its code on (CRM) domestic flights from (ATH) to Thessaloniki, Heraklion, Rhodes, Mykonos, Santorini, Chania, as well as on (ATH) - Larnaca flights. (CAL) said it will eventually code share on (CRM) flights from (ATH) to London Heathrow, Munich, and Frankfurt.
September 2010: Ethiopian Airlines (ETH) has extended its code share with Star (SAL) Alliance member, South African Airways (SAA) to include (SAA)’s regional flights to Gaborone, Botswana, and Windhoek, Namibia, as well as domestic services from Johannesburg to Cape Town and Durban to Port Elizabeth. The extension is scheduled for September 14, just weeks before (ETH) is expected to be unveiled as the (SAL) alliance’s newest member. (SAA) already code shares on (ETH)’s daily flights from Johannesburg to Addis Ababa and on services to Bahrain; Douala, Cameroon; Kuwait; Bamako, Mali; and
(ETH) was officially invited to join the Star Alliance (SAL), and aims within 12 months to become the group’s third member on the African continent following EgyptAir (EGP) and South African Airways (SAA). (ETH)’s integration, under the mentoring of Lufthansa (DLH), will begin “shortly.”
“On behalf of the Chief Executive Board, it gives me great pleasure to invite (ETH) to join the the Star Alliance (SAL) network,” (SAL) CEO, Jaan Albrecht said at a ceremony in Addis Ababa. “(ETH)’s extensive intra-African network will provide more choice for our travelers and bring the (SAL) benefits to new markets. Moreover, we will in the future have three main hubs in Africa: — Addis Ababa, Cairo, and Johannesburg — allowing for an ideal access to the continent from either the North, Center-East or South.”
“(ETH) will definitely enhance the (SAL) Alliance’s global network. Our long experience in the Africa market, coupled with our strategic hub Addis Ababa (ADD) and the recently created Lome hub, will allow (SAL) Alliance members to access many new markets in Africa,” outgoing (ETH) CEO, Girma Wake said.
The (SAL) alliance noted that the acceptance of (ETH) is an “integral part” of its Africa strategy aimed at responding to the predicted high growth of the continent’s air traffic. Market studies by (IATA) and (ICAO) show that Africa is forecast to have the second-highest growth rate in air traffic in the coming years.
(ETH) will add five new countries (Chad, Congo, Djibouti, Mali and Niger) and 24 African destinations to the (SAL) Alliance network. Several (SAL)r carriers currently operate to/from (ADD), including (DLH), (MAS), (SAA), Turkish Airlines (THY), and bmi (BMA).
October 2010: Air Canada (ACN) and United Continental Holdings (UCH), the parent of merger partners United Airlines (UAL) and Continental Airlines (CAL), said they've concluded a Memo of Understanding (MOU) "setting out the principles for a comprehensive revenue-sharing joint venture (JV)" on USA/Canada trans-border services.
(UAL), (CAL), and (ACN) are all members of the Star Alliance (SAL). "Working cooperatively with our partner Air Canada (ACN), we can create a more streamlined travel experience for customers traveling between the United States and Canada, providing more travel options and benefits while reducing travel times," (UCH) President & CEO, Jeff Smisek said.
(ACN) President & CEO, Calin Rovinescu added the (JV) would "provide many benefits and revenue synergies. By managing pricing, scheduling and sales through a stronger joint venture (JV), the carriers will be better able to serve customers by offering more travel options."
(ACN) operates flights to 59 USA cities while (UAL)/(CAL) operates to 16 Canadian destinations. (ACN) said the (JV) "is expected to come into effect in early 2011" and is subject to relevant regulatory approvals in Canada and the USA and "finalizing documentation."
As co-members of the Star (SAL) Alliance, the carriers already have received antitrust immunity (ATI) from the USA Department of Transportation.
(UCH)’ Continental Airlines (CAL) division and Star Alliance (SAL) partner (TAP) Portugal from October 11 started code sharing on
flights across Africa, Central America, Europe, and the USA. (CAL)'s ‘CO’ designator code is placed on (TAP)’s services to Newark
Liberty International Airport from Lisbon, as well as (TAP)’s
domestic flights between Lisbon and Faro, Madeira and Oporto. The ‘CO’ code is also placed on (TAP)’s African destinations of Praia, Sal, and Sao Tome, as well as services to Spain, Germany, France, and the UK. Once government approvals have been granted, the code share will be expanded to include (TAP)-operated flights to Angola, Guinea-Bissau, Morocco, and Mozambique.
In return, (TAP)’s ‘TP’ code is placed on (CAL)’s Lisbon flights from Newark, as well as 20 across the USA and Mexico, and on (CAL)’s daily transatlantic flights between Lisbon and Newark Liberty.
November 2010: China Eastern Airlines (CEA) said that its wholly owned subsidiary, Shanghai Airlines (SHA) has withdrawn from the Star Alliance (SAL) to join the SkyTeam (STM) alliance along with (CEA) next year.
(CEA) signed a formal agreement with the (STM) alliance in June and is scheduled to gain membership in 2011. Shanghai (SHA)'s departure had been expected after it agreed to merge with (CEA). (SHA)'s network will add +32 destinations to the grouping's network.
SkyTeam (STM) Alliance Managing Director, Marie-Joseph Male said, "The addition of the combined networks of China Eastern (CEA) and Shanghai Airlines (SHA) gives new opportunities for the SkyTeam (STM) alliance customers to access cities in all regions of China using Shanghai's Pudong and Hongqiao airports." (CEA) acquired (SHA) last year.
The SkyTeam (STM) alliance also counts China Southern Airlines (GUN) as a member. China Airlines (CHI), based in Taipei, is additionally expected to join the alliance in 2011.
Without (SHA), the Star (SAL) alliance's only Chinese member is Air China (BEJ). The Oneworld (ONW) alliance has no mainland Chinese participants but Hong Kong-based Cathy Pacific (CAT) is a member.
The Star Alliance (SAL) took yet another step in its dynamic expansion by announcing it has officially invited Avianca (AVI) - TACA (TAC) and Copa Airlines (COP) to join the grouping. “The addition of these two quality airline groups concludes a strategic process which increases the alliance’s footprint in the vibrant, growing economies of Latin America,” (SAL) CEO, Jaan Albrecht said. The two airline groups will add +46 new destinations and five new hubs in Latin America to what Albrecht called “Star (SAL)’s worldwide web.”
Copa Airlines (COP) and Copa Airlines Colombia (REU), formerly Aero Republica, operate hubs in Panama City and Bogota and the Avianca (AVI) - TACA (TAC) group operates hubs in Bogota, San Salvador, Lima and San Jose (Costa Rica).
Albrecht said that the inclusion of (COP) and (AVI) - (TAC) should not infer that the (SAL) alliance is anticipating Latin American member TAM Airlines (TPR)’s departure from the group but rather as the culmination of a strategic process to extend (SAL)’s reach in the region. (TPR) joined in May but in August announced it reached a merger agreement in principle with Oneworld (ONW) alliance member (LAN) Airlines, opening the possibility for the new merged entity to move to the (SAL) or to Oneworld (ONW). “Our clients told us that we had a white spot in our coverage, [namely] in Central America, the Caribbean and the northern and western regions of South America. (COP) and (AVI) - (TAC)’s networks are complementary to TAM’s (TPR),” Albrecht noted. He recognized that the pending merger of (TPR) and (LAN) does create “new challenges” and that it is the first time there is a cross-alliance merger in Latin America. But, he stressed, “We are aggressively looking forward to their discussions and we will make the best proposal.” He also noted that the wooing of (COP) started over a year ago with the addition of Continental Airlines (CAL), which subsequently merged with United Airlines (UAL). (COP) left the SkyTeam (STM) alliance together with its partner (CAL) in October last year. The “new” United (UAL)/(CAL) will mentor (COP)’s entry process and Lufthansa (DLH) will support (AVI) - (TAC). Both groups said they anticipate they will become full members in 18 months.
“(COP)’s membership in the Star (SAL) Alliance will enhance our global reach as we implement strong partnerships with its 27 carriers and link Latin America’s most efficient hub, our Hub of the Americas in Panama City, to (SAL)´s vast global network,” said (COP) CEO, Pedro Heilbron. (COP) and (REU) serve 52 destinations in 25 countries aboard 34 737NGs and 26 EMB-190ARs.
For (AVI) - (TAC) CEO, Fabio Villegas, the group’s joining of the Star (SAL) Alliance is “a determining factor for our competitive strategy that will enable us to leap forward in terms of the scope and scale of the benefits provided to our passengers.” (AVI) - (TAC), which consolidated several smaller Latin American carriers, agreed to a strategic merger in October 2009, creating a combined network serving some 128 destinations in the Americas and Europe. The group operates a fleet of 118 airplanes and expects to carry more than >17.9 million passengers this year. Revenue is over >$3 billion. (TAC)’s initial request for (SAL) membership dates back to 2008.
December 2010: Ethiopian Airlines (ETH) and Air China (BEJ) signed an agreement under which the carriers will code share on their 14 weekly services between Addis Ababa on the one hand and Guangzhou and Beijing on the other. (BEJ) announced its intent to reach an agreement with (ETH) back in June. Air China (BEJ) is a member of the Star Alliance (SAL) and Ethiopian (ETH) is in the process of joining. “The code share agreement strengthens (ETH)’s partnership with one of the global airlines in China, allowing passengers of both carriers to have wider choices of services between Asia and Africa,” (ETH) said.
February 2011: The European Commission (EC) announced that it has launched formal antitrust investigations (ATI) into the free-flow code share agreements between Lufthansa (DLH) and Turkish Airlines (THY) on the Munich (MUC) - Istanbul Ataturk (IST) and Frankfurt (FRA) - (IST) routes and between Brussels Airlines (DAT)/(EBA) and (TAP) Portugal on the Brussels (BRU) - Lisbon (LIS) route. The two investigations are separate. All four airlines are members of the Star (SAL) Alliance.
"While code share agreements can provide substantial benefits to passengers, some types of such agreements may also produce anti-competitive effects," the (EC) said, noting it had opened the investigations on its own initiative. "These investigations focus on a particular type of code sharing arrangement where these airlines have agreed to sell seats on each others' flights on the Germany - Turkey routes and on the Belgium - Portugal routes, where both companies already operate their own flights between their own hubs ('parallel hub-to-hub code sharing') and should, in principle, be competing with each other."
(DLH) and (THY) are the major operators on the (MUC) - (IST) and (FRA) - (IST) routes, while (DAT)/(EBA) and (TAP) are the only operators on the (BRU) - (LIS) route. (DLH) holds a 45% stake in (DAT)/(EBA), with the option to buy the remaining 55% this year.
April 2011: (SAS) Scandinavian Airlines, along with Star (SAL) Alliance partners Lufthansa (DLH), Swiss (CSR) and Austrian Airlines (AUL), said it has again won the Swedish government's procurement of air travel, in a contract carried out by Swedish Armed Forces Logistics (FMLOG). The agreement is worth a total of SEK700 million/$111.6 million.
Air China (BEJ) is pressing ahead with requiring its majority-owned subsidiary, Shenzhen Airlines (SHZ) to join the Star Alliance (SAL). The Star Alliance (SAL) is still evaluating (BEJ) and there is no specific timetable for a formal agreement.
(BEJ) formally joined the (SAL) alliance at the same time as Shanghai Airlines (SHA) at the end of 2007, but (SHA) terminated its membership last October following its merger with China Eastern Airlines (CEA). After (SHA)'s departure, the (SAL) alliance faced a reduction of its route network in China and is reportedly exploring ways to fill the void.
(BEJ) became the majority shareholder of (SHZ) when it increased its stake from 25% to 51% in March 2010, a move that enhanced (BEJ)’s position in prosperous South China. (SHZ)’s pending Star (SAL) alliance membership would help to fill the (SAL) alliance's network gap in China.
Most of (SHZ)'s routes are domestic; it operates four international routes from Shenzhen to Ho Chi Minh, Seoul, Osaka, and Kuala Lumpur. As of December 31, 2010, (SHZ) operated a fleet of 99 narrow bodies comprising five A319s, 38 A320s and 56 737s. " (BEJ) has decided to [gradually] open more international routes for Shenzhen Airlines (SHZ).
May 2011: Scandinavian Airlines (SAS) and Star (SAL) Alliance partner All Nippon Airways (ANA) reached a code share agreement under which (SAS) will place its code on (ANA) Tokyo Narita (NRT) service to Sapporo, Osaka Itami, and Fukuoka, effective May 23. (ANA) will place its code on (SAS) (NRT) - Copenhagen (CPH) service, and will “at a later stage” put its code on (SAS) flights from London Heathrow to (CPH), Oslo (OSL) and Stockholm Arlanda (ARN); Frankfurt to (CPH), (OSL) and (ARN); and from Munich to (CPH) and (OSL).
Star Alliance (SAL) CEO, Jaan Albrecht said that Air India (AIN) has until July 31 to fulfill the requirements to join the airline grouping or (AIN)'s invitation will be withdrawn. "The process for (AIN) to fulfill its requirements has now taken nearly four years," he noted. "We will not extend this deadline anymore. One day there must be a final point." Nevertheless, he added, "We expect that (AIN) will make it."
Former (AIN) COO, Gustav Baldauf, who resigned earlier this year said (AIN) will have difficulty meeting the deadline. "I strongly believe that (AIN) will not fulfill all the necessary requirements to be able to join the Star Alliance (SAL) by the end of July. (AIN) is simply not ready for the (SAL)."
(AIN) may be in a better position to meet the (SAL) Alliance's requirements following the resumption of normal operations after a disruptive 10-day strike by a portion of its pilots (FC) came to an end. The work action by about 800 former Indian Airlines (IND) pilots (FC) led to more than >1,000 flight cancellations.
(AIN) was originally slated to join the (SAL) Alliance in 2010, but has had trouble meeting the alliance's membership standards regarding Information Technology (IT) systems and other areas. (AIN) has struggled financially in recent years and is attempting to gain the backing of Indian bankers for a comprehensive restructuring plan.
Albrecht said that "the Indian government is very well informed that (AIN) has to fulfill the requirements" to become a (SAL) Alliance member.
When asked what happens if (AIN) fails to meet the standards for joining the (SAL) Alliance, Albrecht said, "There is no plan B. But in the contract between the (SAL) Alliance and (AIN) it is mentioned that [the airline] will not be in an exclusive position" in India. Similar to the USA and China, India is a market in which the (SAL) Alliance believes more than one member is necessary "and Jet Airways (JPL) has always been a factor. Even when (AIN) becomes a member, we will keep our door open [for a second Indian partner]." A network overlap between two Indian carriers within one alliance would be possible, he added. "But we also believe traffic streams within India will concentrate, there will be a split of the market and the need to feed hubs will be necessary," he explained.
Albrecht said the (SAL) Alliance has shown a great deal of patience with (AIN). "It is a complex process," he commented. "By the end of July, we will have a clear vision of where the (SAL) Alliance and (AIN) stand."
June 2011: Canadian Commissioner of Competition, Melanie Airken filed an application with Canada's Competition Tribunal, an independent law enforcement agency, seeking to "prohibit" Air Canada (ACN) and United Continental Holdings (UAL)/(CAL) from launching a planned revenue-sharing joint venture (JV) on USA/Canada trans-border services.
In a statement, Airken said, "If the (JV) is allowed, it will monopolize 10 important Canada/United States routes, and substantially reduce competition on nine additional routes, leading to increased prices and reduced consumer choice on key trans-border routes. If allowed to proceed, consumers will face higher prices and even less choice on key, high demand air passenger routes. The proposed (JV) is effectively a merger between (ACN) and United Continental (UAL)/(CAL) on all of their Canadian and USA operations."
Airken did not stop at challenging the (JV), arguing that three existing "coordination agreements" between (ACN) and (UAL)/(CAL) give the companies "the power to charge passengers inflated fares. The current agreements between (ACN) and (UAL)/(CAL) already allow the companies to set prices above competitive levels on all key 19 trans-border routes, which alone violates [Canadian antitrust (ATI) law]. Making matters worse, they now want to fully merge their operations."
(ACN), (UAL) and (CAL) are all members of the Star Alliance (SAL). As co-members of the (SAL) Alliance, the carriers already have received antitrust immunity (ATI) from the USA Department of Transportation. (ACN) operates flights to 59 USA cities, while (UAL)/(CAL) operates to 16 Canadian destinations.
(ACN) said in a statement that it "strongly disagrees with the Commissioner's position. (ACN) and United Continental Holdings (UAL)/(CAL) believe in the merits and consumer benefits of the proposed trans-border (JV) and enhanced cooperation between the parties that builds on the existing relationship between (ACN) and (UAL). The airlines' position is consistent with the findings of regulatory agencies around the world, and supported by leading international economists, who have recognized and documented the benefits to consumers of such arrangements."
(ACN) added that it has agreed with (UAL)/(CAL) to "suspend the proposed trans-border (JV) pending further developments relating to the outcome of the Commissioner's application. (ACN)'s trans-border services remain unaffected."
July 2011: Air China (BEJ) subsidiary, Shenzhen Airlines (SHZ) signed a Memo of Understanding (MOU) with the Star Alliance (SAL) and is expected to formally join the global airline grouping in the second half of 2012.
Parent, Air China (BEJ) said that (SHZ)’s Star Alliance (SAL) membership will help (SHZ) attract more transfer passengers. It noted that (BEJ) reported CNY1.75 billion/$270.3 million in additional operating revenue in 2010 through its cooperation with (SAL) member carriers.
(SHZ) President, Feng Gang pointed out that being a (SAL)) Alliance member will enable (SHZ) to further explore the international market. (BEJ) Chairman, Kong Dong said that (SHZ) plans to launch more international routes. To accommodate the new routes, (SHZ) is scheduled to expand its fleet from 100 airplanes currently to 171 by 2015. (SHZ) is slated to introduce 19 new airplanes while phasing out nine airplanes this year.
(SHZ)’s membership will also enable the Star (SAL) Alliance to enhance its position in prosperous South China. Addressing the (SAL) Alliance’s weak representation in the Shanghai market, Kong said that Air China (BEJ) would try to overcome a “slot shortage” at Shanghai Pudong by allocating more long-haul airplanes for international flying. It also plans to boost flight frequencies from Shanghai Hongqiao over the next five years.
(SHZ) will add five new destinations to the (SAL) Alliance’s network in China: Juzhou (Zhejiang Province), Linyi, Qinhuangdao, Shijiazhuang, and Zhoushan.
(BEJ) joined the (SAL) Alliance in December 2007; Shanghai Airlines (SHA) withdrew from the (SAL) Alliance in October 2010 to pave the way for it to join the SkyTeam (STM) Alliance with parent company, China Eastern Airlines (CEA) last month. China Southern Airlines (GUN) joined the SkyTeam (STM) Alliance in November 2007.
August 2011: The Star Alliance (SAL) suspended the induction of Air India (AIN)/(IND) into the global airline grouping after (AIN)/(IND) failed to meet the minimum joining conditions agreed upon in December 2007.
The (SAL) Alliance said, "Following a recent review of the status of (AIN)/(IND)'s application at a meeting held between the Indian Ministry for Civil Aviation, (SAL) Alliance CEO, Jaan Albrecht and [(AIN)/(IND) Chairman & Managing Director], Arvind Jadhav, the decision to suspend has received subsequent confirmation by the Star (SAL) Alliance Chief Executive board."
Albrecht stated, "With the collective decision to put the integration efforts on hold, we aim to contribute to (AIN)/(IND)'s flexibility to concentrate on its ongoing strategic reorientation. In this process, our member carriers will continue to provide assistance to (AIN)/(IND) wherever required."
The world's largest airline alliance (SAL) said that (AIN)/(IND)'s "existing bilateral relationships with Star (SAL) Alliance member airlines are not affected by this decision, which also leaves room to discuss a potential alliance membership at a future stage, if deemed appropriate by both parties."
(AIN) has been struggling for some time with the integration of Indian Airlines (IND) and is contending with mounting debts. In April, it presented a turnaround plan to a consortium of Indian bankers aimed at making the struggling carrier operationally profitable by 2015. (AIN)'s board has approved the plan, which targets INR40 billion/$898 million in annual cost cuts and INR50 billion in annual revenue enhancement.
According to (AIN), the plan includes an equity infusion, converting short-term loans to long-term loans, reducing interest rates, spinning off its Maintenance Repair & Overhaul (MRO) and ground handling subsidiaries, and resolving lingering Indian Airlines (IND) integration/merger issues.
September 2011: Star Alliance (SAL) CEO, Jaan Albrecht was nominated by Lufthansa (DLH) Group's executive board to become Chairman & CEO, Austrian Airlines (AUL). The (DLH) Group's supervisory board is expected to take up and approve the nomination at a September 22 meeting.
It is anticipated that Albrecht, who has helmed the Star (SAL) Alliance for a decade, will start his tenure at (AUL) by November. The Vienna-based, (DLH) Group carrier, which has struggled in recent years, reported a 2011 first-half operating loss of -€63.1 million/-$89.8 million.
(DLH) Group CEO, Christoph Franz said that Albrecht's "experience, his network and excellent industry know-how, equip him ideally to master the huge challenges facing Austrian Airlines (AUL)."
Air New Zealand (ANZ) CEO, Rob Fyfe, Chairman of the Star (SAL) Alliance's Chief Executive board, said, "It is with regret that we are losing such a capable and high performing CEO." The Star (SAL) Alliance said it will launch a CEO search process. (DLH) and (AUL) are Star (SAL) Alliance members.
December 2011: Ethiopian Airlines (ETH) became the 28th member of the Star Alliance (SAL), as the alliance network in Africa grows. (ETH) is the (SAL)’s third carrier based in Africa, joining Egyptair (EGP) and South African Airways (SAA). (ETH) serves 62 international and 17 domestic destinations.
"Today we have taken a large step forward in completing our Africa strategy," said outgoing (SAL) Alliance CEO, Jaan Albrecht at the signing ceremony at Addis Ababa’s Bole International Airport (ADD). "With Ethiopian Airlines (ETH) now part of the Star Alliance (SAL) network, we offer our customers the widest choice of flights connecting to, from and within Africa. Moreover, (ETH) will bring the (SAL) Alliance customer benefits to more markets across Africa, a region of the world in which air travel is enjoying steady growth rates."
With the addition of (ETH), the (SAL) Alliance network in Africa is growing to cover major commercial and political cities of the continent particularly in East, Central and West Africa. The 16 (SAL) Alliance member carriers serving Africa offer more than >750 daily flights to over >110 destinations in 48 countries on the continent, with Addis Ababa, Cairo, and Johannesburg serving as the main hubs.
“We worked hard during the integration process to join the (SAL) Alliance,” (ETH) CEO, Tewolde Gebremariam said at the ceremony. “(ETH) has fulfilled around 80 necessary requirements to join the (SAL) Alliance in about 14 months.”
(ETH)’s fleet of 48 airplanes comprises five 777-200LRs, 11 767-300ERs, seven 757-200s, two 757-200Fs, two 747Fs, two MD-11Fs, five 737-700NGs, six 737-800NGs and eight Bombardier DHC-8-Q400NGs.
(ETH) has on order 10 787s, 12 A350-900s, and nine 737-800s.
The 787 touched down before the ceremony at (ADD) to kick off the Africa portion of its Dream Tour, a six-month worldwide tour, before traveling to Nairobi, Kenya. During the four-day stop, (ETH) executives and employees, government officials and other guests got the chance to view the airplane, including the interior.
"(ETH) will be the first airline in Africa to operate this great new flying machine," Gebremariam said. “Besides the very painful delay of our [Boeing] 787 for nearly three years, it was worth the wait. We expect the first of four 787s to be delivered in July . By 2025, we want become the leading aviation group in Africa, which currently carries 18 million passengers and 710,000 tons cargo annually.”
Gebremariam said (ETH)’s 767 fleet retirement should be completed in 2013. “One 767-300 is going out right now, another three 757-200s are leaving the fleet [in] February/March 2012,” he said.
The next Star (SAL) Alliance members are expected to be Avianca (AVI)/Taca (TAC) and Copa Airlines (COP), which are slated to join the (SAL) Alliance in the 2012 second quarter.
The "Economist" in its article about Africa's economic prospects, mentioned a number of positive trends: High commodity prices, favorable demography, greater adoption of productive technologies, improving infrastructure, falling barriers to small business creation, more stable governments, better health care, falling trade barriers, more foreign investment, a growing middle class and indeed, greatly improved air links within Africa, thanks to airlines in countries like Ethiopia, Kenya, and South Africa.
The Star Alliance (SAL) has appointed former United Airlines (UAL) Senior VP, Mark Schwab to head the (SAL) Alliance’s central organization, based in Frankfurt. He succeeds Jaan Albrecht, who was appointed as (CEO) of Austrian Airlines on November 1.
Rob Fyfe, Air New Zealand (ANZ) (CEO) and also Chairman of the Star (SAL) Alliance’s Executive Board, said that with Schwab as (CEO), the (SAL) Alliance has “secured an internationally renowned airline executive, who has all the qualifications required to lead our alliance into the next chapter of its success story.”
Schwab has held numerous executive positions at (UAL), US Airways (USA), and American Airlines (AAL). He began his aviation career in 1975 with Pan American World Airways (PAA) in Rio de Janeiro. Schwab has also headed organizations in Latin America, Europe, and Asia.
January 2012: The Star (SAL) Alliance’s Greek member, Aegean Airlines (CRM) reported a +4% growth in passengers carried last year to 6.5 million, owing to strong growth on its international network. International enplanements exceeded domestic passenger traffic for the first time.
Spanair (SPP) declared it has ceased operations after reportedly running out of financing options.
A statement on (SPP)’s website says it suspended operations on January 28 and advises customers with reservations to contact their credit card company, insurance company or travel agency. “Due to these exceptional circumstances all our flights are canceled.”
(SPP) reportedly made the decision to halt operations after being told it would receive no more government-backed loans and talks with Qatar Airways (QTA) about potentially taking a stake in Spanair (SPP) fell through.
"Bloomberg" reported that a (SPP) spokesman said (QTA) was not interested any more in a business deal.
The (SAS) Group, meanwhile, issued a statement saying that (SPP)’s board of directors had decided to apply for bankruptcy. (SAS) divested most of its ownership in (SPP) in early 2009, but said recently it had a remaining exposure of about 1.8 billion Swedish krona. “The (SAS) Group will follow customary procedures as a creditor in the upcoming bankruptcy process,” it said.
(SPP), a Star (SAL) Alliance carrier, issued a statement almost exactly a year ago warning that it was in an emergency financial situation.
AviancaTaca (AVI)/(TAC) has firmed up an order for 33 A320neo and 18 A320 family airplanes. The order follows a previously announced memorandum of understanding (MOU) at the Paris Air Show in June. It is the largest order from a single airline in the region, according to Airbus (EDS).
The new airplanes will support (AVI)(TAC)’s expansion into new markets in Latin America, while keeping the airline’s fleet among the youngest in the region.
With the order, (AVI) has acquired 190 Airbus airplanes. (AVI) has 88 A320 family airplanes and eight A330s in service.
In 2011, (AVI) boarded 20.7 million passengers, a +17.8% increase over 2010. Domestic operations in Colombia, Peru, and Ecuador resulted in a +23.4% growth in traffic, up to 11.3 million. International traffic was up +11.7%, to 9.4 million passengers.
The group is on track to join the Star Alliance (SAL) in April.
March 2012: (EVA) Airways has been accepted into the Star Alliance (SAL) and expects to become a member by 2013. “This decision underscores the (SAL) alliance’s long-term strategy of seeking network growth and providing access to new regions, which shows strong economic potential and development,” Star (SAL) Alliance (CEO), Mark Schwab said at the signing ceremony in Taipei. He said (EVA) is a very good fit for the (SAL) alliance, with a specific focus on the growing Far East aviation market.
(EVA) will become the second Taiwanese carrier to join an alliance, after competitor China Airlines (CHI) joined the SkyTeam (STM) Alliance last year.
“After careful evaluation, we concluded that the Star (SAL) Alliance offers the best match for (EVA). Our networks complement each other and we will expand the existing alliance flight options in the growing cross-straits market . . . in addition, our partnership with Air China (BEJ) makes the Star (SAL) Alliance especially attractive to us,” said (EVA) Chairman, James Jeng.
Air China (BEJ), which joined the (SAL) alliance in 2007, will assist in the integration process as the mentor airline. “I hope this will be a win-win situation and collaborate in the important cross-strait market,” (BEJ) Senior VP, Xiao-Hang Zhao said.
Regarding which alliance has the strongest position in China, Zhao said there will be fewer carriers in the SkyTeam (STM) Alliance when Shenzhen Airlines (SHZ) joins the Star (SAL) Alliance in the fourth quarter.
Schwab said “They [the SkyTeam (STM) Alliance] have China Southern (GUN) and China Eastern (CEA), but what I like is the spread of our position [in China]. We are well covered in the North and the South. (EVA) helps to grow our position. Asiana Airlines (AAR) alone offers 21 destinations in China.”
“Many airlines try to fly to China. But not everybody can. For example, no foreign carrier is allowed to operate on the cross-straits market. This is a unique service. (EVA) [will] become a member at a good time,” (EVA) President, K W Chang added.
UTair (TYU) has signed a code share agreement with Turkish Airlines (THY. The agreement gives (TYU) access to (THY)’s 129 destinations including domestic flights starting at Istanbul Ataturk (IST).
From March 25, (THY) will transfer all flights from Istanbul, Ankara and Antalya to Moscow from Sheremetyevo (SVO) and Domodedovo (DME) to Vnukovo (VKO).
(TYU) is headquartered in Tyumen, Western Siberia, and (VKO) is one of its base airports. (TYU) (CEO), Andrey Martirosov said (TYU), which carried more than >1 million passengers between the countries on charter flights, should begin to see these charter flight customers book scheduled flights.
After Lufthansa (DLH) announced it would transfer several flights between Germany and Moscow from (DME) to (VKO), market experts said the move could set the stage for (TYU) to become a future Star (SAL) Alliance member. (THY) has become the second biggest Star (SAL) Alliance carrier to move to (VKO). (THY) (CEO), Temel Kotil said he would be happy to invite (TYU) into the Star (SAL) Alliance.
(TYU), Russia’s third largest carrier, increased its 2011 traffic 31.3% to 5.8 million people. Martirosov said in 2012, it plans to nearly double this number.
April 2012: British Midland International bmi (BMA) has been acquired by the International Airlines Group (IAG) which includes British Airways (BAB) and Iberia (IBE) and has left the Star (SAL) Alliance.
June 2012: Avianca (AVI)-Taca (TAC) and Copa Airlines (COP) (with subsidiary, Copa Columbia (REU)) became Star (SAL) Alliance members this month.
Star (SAL) Alliance (CEO), Mark Schwab said the addition of the new airlines “strengthens our presence in the rapidly growing Latin American market. Our customers now enjoy increased connectivity across the Americas by connecting through five new (SAL) Alliance hubs right in the middle of the American continent," he said.
October 2012: (EVA) Air, due to join the Star (SAL) Alliance next year, expanded its network to Japan on 28 October when (EVA) connected its Taipei Taoyuan (TPE) hub with Hakodate (HKD) on the northern Japanese island of Hokkaido. This is (EVA) Air’s seventh route to Japan from Taipei Taoyuan. Competition on the route comes from TransAsia (FSH)’s also twice-weekly operation.
November 2012: The Star (SAL) Alliance has elected Air Canada (ACN) President & (CEO), Calin Rovinescu as the new Chairman of the Star (SAL) Alliance Chief Executive board. He succeeds Air New Zealand (ANZ) (CEO), Rob Fyfe, who has held the post for the last two years. Fyfe plans to retire from (ANZ) at the end of the year after seven years.
“The (SAL) alliance needs careful steering in these testing times for the aviation industry and Calin is an excellent choice to lead the group through the challenges to come,” Fyfe said.
Rovinescu said he is looking forward to working toward deepening the (SAL) alliance and pursuing shared priorities — which include strengthening the global network, focusing on providing a seamless travel experience, and maintaining the loyalty of customers through superior service and convenience.
Shenzhen Airlines (SHZ) joined the Star Alliance (SAL) on November 29 becoming the (SAL) Alliance’s 27th member. (SHZ) is the (SAL) alliance's second Chinese carrier after Shenzhen Airlines majority shareholder, Air China (BEJ) which holds 51% in the new (SAL) alliance member. (BEJ) became a (SAL) Alliance member in December 2007. Air China (BEJ) was (SHZ)’s mentor for the joining process. Shenzhen Airlines (SHZ) is China’s fifth largest carrier.
By joining the (SAL) Alliance, (SHZ) hopes to accelerate the pace of its international expansion as well as strengthen the alliance position in China and across Asia. (SHZ) will add some +400 daily flights to 70 (SAL) Alliance destinations, including five new cities for the (SAL) alliance — Juzhou, Linyi, Qinhuangdao, Shijiazhuang, and Zhousan.
(SHZ) operates bases in Shenzhen and Guangzhou.
“Our customers now benefit from improved access throughout the economical Pearl River Delta and across Southern China . . . I feel pretty good with the [Star (SAL) Alliance] network in China,” (SAL) Alliance (CEO), Mark Schwab said.
Taiwan-based, (EVA) Air is expected to join the (SAL) Alliance in June 2013.
Shenzhen Airlines (SHZ) operates 116 passenger and cargo airplanes, comprising 5 A319-100s, 53 A320-200s, 2 737-300s, 4 737-700s, 49 737-800s and 5 737-900s from its home base and bases at Guangzhou Baiyun (CAN), Nanjing Lukou International (NKG), Nanning Wuxu International (NNG), Shenyang Taoxian International (SHE) and Wuxi Sunan Shuofang International (WUX) airports. By the end of 2015, the fleet should grow from 122 to more than >170 airplanes by 2015.
(SHZ) is predominantly a domestic carrier only serving Hong Kong Chep Lap Kok International (HKG), Macau International (MFM), Osaka Kansai International (KIX), Seoul Incheon International (ICN), Singapore Changi International (SIN) and Taipei Taoyuan International (TPE) outside mainland China.
December 2012: Star (SAL) Alliance member AviancaTaca Airlines (AVI)/(TAC) is ready to fill the gap in Brazil if (TAM) Airlines (TPR) leaves the (SAL) alliance, as expected. Brazilian-based, (TAM) (TPR) merged with Oneworld (ONW) Alliance member (LAN) Airlines earlier this year, creating the (LATAM) Group.
(AVI)/(TAC) (CEO), Fabio Villegas Ramirez said (AVI)/(TAC) is working to tap more into Brazil, which he considers an “important market. It is difficult to operate there, but it is a market you have to be in.”
A top Star (SAL) Alliance executive said that TAM Airlines (TPR) will have to pay a $25 million fee to leave the (SAL) alliance.
The (AVI)/(TAC) group of airlines, which was formed from the merger of Colombia’s Avianca (AVI) and El Salvador’s Grupo (TACA) (TAC) into AviancaTaca (AVI)/(TAC), said it will unify all members under the single "Avianca" brand “by the second part of this year.”
Ramirez said the (AVI)/(TAC), which is expecting a +15% passenger year-over-year growth, has “the opportunity to be in one of the top markets in Latin America.” He said (AVI)/(TAC) will “increase frequencies and add new destinations” to counter the effects of the economic weakness of Europe and the USA. “You always have issues here [in Latin America], like increasing fuel prices, but we will be conservative to maintain our profitability.”
The (AVI)/(TAC) group operates 150 airplanes. “We have 51 Airbus (EDS) airplanes and 15 Boeing (TBC) 787s on order and are planning to add new destinations in Europe, like London or Frankfurt,” Ramirez said.
December 2012: The balance of power in the London Heathrow (LHR) long-haul market may once again shift, as the Virgin Group and Singapore Airlines (SIA) appear to be moving closer to selling a stake in Virgin Atlantic (VAA), possibly to Delta Air Lines (DAL) and AirFrance (AFA)-(KLM).
(SIA) in a short statement to the Singapore stock exchange says it is “in discussions with interested parties concerning the possible divestment of its 49% shareholding in Virgin Atlantic (VAA).” But it adds, “These discussions may or may not result in a transaction.”
The disclosure came after UK newspaper "The Sunday Times," without citing sources, reported that (DAL) is in talks with (SIA) to buy its 49% stake in (VAA). The report also says (DAL)’s SkyTeam (STM) Alliance partners AirFrance (AFA)-(KLM) is planning to buy part of the Virgin Group’s 51% stake in (VAA).
(DAL), meanwhile, is not commenting on the story, calling it rumor and speculation. If (DAL) proceeds with the acquisition, the move would provide a major boost to the (STM) Alliance’s access at (LHR), and at the same time curtail Star (SAL) Alliance’s reach at the airport, which has been limited by Lufthansa (DLH)’s sale of its BMI (BMA) division to the International Airlines Group (IAG) unit British Airways (BAB). (BAB) currently is the dominant player on transatlantic services from (LHR), a position that is strengthened by its joint venture with Oneworld (ONW) Alliance partner American Airlines (AAL).
In contrast, (VAA)’s strategic position has become weaker as its competitors grow. This prompted (VAA) in 2010 to appoint an adviser to investigate potential growth options, including alliance membership and buying a stake in another airline. Sir Richard Branson, (VAA)’s controlling shareholder through his Virgin Group, has said that he wants to remain involved in (VAA) even if part of (VAA) is sold.
(VAA)’s biggest asset is its transatlantic network from (LHR), the main gateway into the UK and one of the world’s most important business destinations. But (VAA) has been losing money. In the 12 months ending February 29, (VAA) posted a loss of -£80 million/-$128.3 million, compared to a profit of +£18.5 million in the previous year. (VAA)’s (CEO), Steve Ridgway, at the time said the loss was due to “sky-high fuel prices,” global economic uncertainty and a +25% increase in passenger duty fees. Ridgway is due to retire from his position in early 2013.
(VAA) is particularly vulnerable to high fuel prices. Its fleet of 42 airplanes includes four A340-300s, 17 A340-600s and 13 747-400s. These four-engine airplane types burn more fuel and are more expensive to maintain than newer models. (VAA) has taken steps to update its fleet by ordering 16 787-9s and six A380s. First delivery of the 787-9s and A380s is in 2014 and 2015, respectively, says (VAA).
Despite the cost exposure, (VAA) has valuable airport slots and may be of strategic importance to a USA carrier. It will still be difficult for (SIA) to secure a price comparable to what it paid for its stake in early 2000. (SIA) paid £600.25 million for the 49% share, which included a capital injection of £49 million. The deal valued (VAA) at £1.2 billion, but (SIA) has since written down the value of the shareholding.
Star (SAL) Alliance member AviancaTaca Airlines (AVI)/(TAC) is ready to fill the gap in Brazil if (TAM) Airlines (TPR) leaves the (SAL) alliance, as expected. Brazilian-based, (TAM) (TPR) merged with Oneworld (ONW) Alliance member (LAN) Airlines earlier this year, creating the (LATAM) Group.
(AVI)/(TAC) (CEO), Fabio Villegas Ramirez said (AVI)/(TAC) is working to tap more into Brazil, which he considers an “important market. It is difficult to operate there, but it is a market you have to be in.”
A top Star (SAL) Alliance executive said that TAM Airlines (TPR) will have to pay a $25 million fee to leave the (SAL) alliance.
The (AVI)/(TAC) group of airlines, which was formed from the merger of Colombia’s Avianca (AVI) and El Salvador’s Grupo (TACA) (TAC) into AviancaTaca (AVI)/(TAC), said it will unify all members under the single "Avianca" brand “by the second part of this year.”
Ramirez said the (AVI)/(TAC), which is expecting a +15% passenger year-over-year growth, has “the opportunity to be in one of the top markets in Latin America.” He said (AVI)/(TAC) will “increase frequencies and add new destinations” to counter the effects of the economic weakness of Europe and the USA. “You always have issues here [in Latin America], like increasing fuel prices, but we will be conservative to maintain our profitability.”
The (AVI)/(TAC) group operates 150 airplanes. “We have 51 Airbus (EDS) airplanes and 15 Boeing (TBC) 787s on order and are planning to add new destinations in Europe, like London or Frankfurt,” Ramirez said.
Star (SAL) Alliance (CEO), Mark Schwab said the alliance model is still working, even though many airlines are strengthening their positions through code sharing and partnerships.
Schwab said he understands that all carriers are trying to maximize their opportunities due to the “tough economical conditions facing all airlines right now.” However, he said, “The Star (SAL) Alliance still believes the [alliance] model we laid out is still working very well today. The fact that other airlines have joined us is validation for the alliance.”
As the Star (SAL) Alliance prepares for Brazilian-based (TAM) Airlines (TPR) to leave following its merger with Oneworld (ONW) Alliance member, (LAN) Airlines, Schwab said the alliance will have to look to replace the domestic connectivity it will lose when (TPR) leaves. “That’s a big thing,” he said. “There is nothing we can do about it. (TPR) will eventually leave the (SAL) Alliance. We don’t have a [departure] date, and we are continuing to cooperate,” he said. The (SAL) Alliance has a strong presence in Brazil with partners including (TAP) Portugal. He expects Avianca Brazil (ONE) will grow into this role.
Schwab said finding the right partners in some blank spots on the alliance network remains difficult. “Russia is an important market but we don’t have a solution right now. We continue to monitor it,” he said.
He confirmed there is no active, ongoing discussion with Air India (AIN)/(IND) since they left the application process. “We are still looking for a solution,” he said. “We have talked to Jet Airways (JPL) for many years, but we still don’t have an answer.”
Concerning airlines that see no need for joining an alliance, such as the rapidly expanding Kazakhstan-based Air Astana (AKZ), Schwab said: “I respect their position. I suspect that over time (when the airline grows into more markets) they will rethink that position and will look for an alliance membership.”
Schwab said that alliances can contribute to the bottom line of some financially struggling carriers. “We can’t solve the carrier’s profitability problem [but] the alliance [can] contribute to their bottom line,” he said.
Even huge airlines need an alliance, Schwab said. “Everyone is in the alliance for a reason, getting foundational benefit. They still cannot fly to every part of the world.”
March 2013: USA airline consolidation is complete. Just in case you have been living in a cave recently, there will now be only three USA network airlines by this fall (regulatory clearance is expected in the third quarter (Q3) 2013): (AAL), which will marginally become the world’s largest airline, United Airlines (UAL) and Delta Air Lines (DAL). In terms of capacity, these three, plus Southwest Airlines (SWA) will dominate 90% of the USA domestic seats.
Outside of the combined carrier’s 10 recognized hubs and focus airports (in order of size — Dallas/Fort Worth, Charlotte, Miami, Chicago O’Hare, Philadelphia, Phoenix, Washington National, Los Angeles, New York La Guardia and New York (JFK)), which will represent nearly 60% of the new airline’s weekly seat capacity, a host of second tier airports will be jostling to maintain their based airplanes and gate space with the new (AAL). At the largest of these airports, Boston Logan, US Airways (AMW)/(USA) is the #3 operator ((AAL) is fifth) behind JetBlue Airways (JBL) and Delta (DAL), but the new united carrier will jump to second place with 23% of all seats, and will be more than double the size of (UAL) in fourth spot, and four times larger than (SWA).
The standing for the conjoined airline will improve even more markedly at San Francisco, where pre-merger (AAL) is in fifth spot ((AMW)/(USA) is 6th), lagging the (UAL) hub, (DAL), Virgin America (VUS) and (SWA). After the merger is finalized, (AAL) will barge its way into second place, still only one-fifth the size of (UAL), but commanding 10% of all seats from the Californian airport. Looking at low-cost dominated Fort Lauderdale, US Airways (AMW)/(USA) held the lowly position of sixth ((AAL) was seventh). However, the merged entity will become the largest network carrier at the Florida airport, but will still trail JetBlue (JBL), Spirit Airlines (SPR) and (SWA).
Network overlap is very limited, since the two airlines only compete on 12 of their 900 amalgamated routes, which is one reason that many industry observers feel the merger will be viewed far more favorably than when US Airways (AMW)/(USA) tried to tie the knot with (DAL) in 2006. As (AMW)/(USA) is expected to leave the Star (SAL) Alliance, and the combined carrier will join the Oneworld (ONW) Alliance, the fact that Heathrow will become (AAL)’s number one international port-of-call, is significant. In the process, the new (AAL) will become the largest USA network airline at the London airport, boasting an additional +3,800 weekly seats than its nearest rival (UAL). The tie-up is also anticipated to see Oneworld (ONW) Alliance’s global market share rise from 26% to 34%.
With one exception, of all the remaining top 12 routes, either (AAL) or (AMW)/(USA) was already the leading network airline across all the above destinations, so the fused company will further consolidate its dominance in these markets. It is as at Cancun, where it will leapfrog (UAL) to become top dog, and at the same time hold a 40% advantage over its rival in terms of seats, and become more than four times bigger than (DAL).
The new company will offer flights to 336 destinations (218 domestic, 118 international) in 56 countries. However, the merger will see (AAL) return to Belgium (it last cancelled its New York (JFK) flights on 6 November 2012) and see new operations at both Tel Aviv and Amsterdam, neither of which it currently serves, but (AMW)/(USA) does fly both daily from Philadelphia.
The biggest country market beneficiaries of the deal are Germany, Brazil and Jamaica. While for pre-merger (AAL), Germany is only its 27th largest country market in its portfolio, it is US Airways (AMW)/(USA)’s #2, which has pushed the nation up to sixth place when both airlines come together. Roles are reversed when it comes to Brazil, which is only the 16th biggest country market for (AMW)/(USA), but for its merger partner (AAL) was rated as third most significant, resulting in Brazil taking the third spot overall. Two country markets now inside the top 12 (namely Venezuela and Japan) were previously not even served by (AMW)/(USA). Only time will tell whether the regulators will have a significant impact on these markets when they make their recommendations later in the year.
April 2013: Star (SAL) Alliance (CEO), Mark Schwab is in talks with US Airways (AMW)/(USA) management about the carrier’s exit from the Star (SAL) Alliance after the merger with American Airlines (AAL) is completed later this year.
May 2013: (EVA) Airways will join the Star (SAL) Alliance June 18 as the alliance’s 27th member, according to several media reports. The Taiwanese carrier was accepted into the alliance last year, paving the way for its full membership.
(EVA) Airways is Taiwan’s second biggest carrier and has a global network that stretches from Asia to Europe, North America and Oceania, linking more than >60 cities.
Its larger competitor, China Airlines (CHI), joined the SkyTeam (STM) Alliance in September 2011, becoming its 15th member.
Air China (BEJ) has started flights from Beijing to Geneva, Switzerland and to Houston. It also has started flights from Chengdu to Frankfurt. Frankfurt, Geneva, and Houston are all Star (SAL) Alliance hubs.
June 2013: (EVA) Airways officially joined the Star (SAL) Alliance on June 18th, further strengthening the (SAL) alliance's presence in the Asia-Pacific. (EVA) will give extended access to the cross-strait market between China and Taiwan. (EVA) joins Star (SAL) Alliance members Air China (BEJ) and Shenzhen Airlines (SHZ) on those routes, which have grown from an annual passenger volume of just over >3 million in 2009 to around 9 million in 2012. (EVA) brings Kaohsiung, Taiwan and Surabaya in Indonesia to the (SAL) alliance network. Air China (BEJ) was a sponsoring airline since the (SAL) alliance's integration process which began in March 2012.
The Star (SAL) Alliance operates to 10 hubs across the Asia-Pacific, comprising Tokyo Narita and Haneda, Seoul Incheon, Beijing, Shanghai Pudong, Taipei Taoyuan, Shenzhen, Bangkok, Singapore, and Auckland, NZ.
SEE ATTACHED - - "SAL-2013-06 - EVA JOINS."
December 2013: Star (SAL) Alliance executives agreed to extend Avianca (AVI)’s membership to include Avianca Brazil (ONE).
Air India (AIN) and Avianca Brazil (ONE) are each set to join the Star (SAL) Alliance, despite the Indian airline’s previous attempt to join the grouping being halted in 2011.
The Star (SAL) Alliance said Air India (AIN) had been given the green light to restart its alliance process at the group’s annual board meeting. The (SAL) alliance has long viewed India as a ‘white spot’ in its global strategy. The Star (SAL) Alliance’s move comes weeks after Etihad (EHD) upped its stake in India’s Jet Airways (JPL).
"The Star (SAL) Alliance has long held the opinion that India is such an important aviation market that it should be fully represented in the alliance," said Mark Schwab, (SAL) Alliance (CEO). "However, the level of change in the domestic market in recent years did not make it easy for (AIN) to become an alliance member." Schwab added that the Indian market was now showing “signs of stabilization”.
“Today we see an Air India (AIN) which has successfully completed its merger with Indian Airlines (IND) and is building up a new fleet that forms the basis for a much improved level of service. This is why we believe the time is now right to recommence the integration process," he added.
The Star (SAL) Alliance will also extend Avianca (AVI)’s membership to its Avianca Brazil (ONE) arm. Schwab said this would enable the group to maintain its coverage in one of the other all-important (BRIC) countries. "This will allow us to maintain our presence in Brazil following the departure of (TAM) Airlines (TPR),” he said.
(TAM) (TPR) is set to leave the grouping for rival Oneworld (ONW) in 2014, following (TPR)’s merger with (LAN).
January 2014: The Star (SAL) Alliance maintained its position as the largest airline alliance in 2013 with 26.6% of total scheduled traffic in revenue passenger kilometers (RPK), followed by the SkyTeam (STM) Alliance (20.1%), and the Oneworld (ONW) Alliance (15.4%).
May 2014: Air India (AIN)/(IND) is on track to join the Star (SAL) Alliance in July following three years of delays. The Indian flag carrier was originally accepted as a future member of the (SAL) Alliance in 2007, but the airline was going through a merger process and financial issues. Its entry was suspended in 2011 and revived last year after a government-backed turnaround program began showing results.
According to (SAL) Alliance (CEO), Mark Schwab, these issues have now all been addressed. “We conducted a safety review of Air India (AIN)/(IND) and are very pleased with the results. We are very happy with the progress made by (AIN)/(IND),” he said.
(AIN)/(IND) Managing Director, Rohit Nandan said that 45 of the 64 full entry requirements have been satisfied and the rest will be signed off by the end of May. The majority are relatively easy-to-address Information Technology (IT) procedures, (AIN)/(IND) said.
The final sign off will come at a full (SAL) alliance membership vote, which will be held in London on June 23. Schwab said an exact date for the airline to become a full member is “yet to be decided,” but confirmed it would be in July.
Schwab noted the airline today is “a very different Air India” from the airline that originally applied for membership. “They have been through a difficult merger process, and now have a strong management team that has led to substantial improvements,” he said. Schwab said (AIN)/(IND) only had a “few commercial agreements that need to be signed” with other members on code share agreements.
The move will make Star (SAL) the first alliance on the Indian mainland to date, filling a gap Star (SAL) has in its coverage of the subcontinent. Star (SAL) Alliance’s membership is currently weighted toward Europe and North America. (AIN)/(IND)’s membership should help the (SAL) alliance fend off some intense competition coming from both east and west in the form of the Gulf carriers and rising low-cost carriers (LCC)s from Southeast Asia such as Scoot (SCT) and AirAsia X (ASX).
June 2014: London Heathrow Airport (LHR)’s new Terminal 2 officially opens June 4, following a £2.5 billion/$3.8 billion upgrade, the Star (SAL) Alliance has confirmed. United Airlines (UAL) will be the first carrier to arrive at the revamped terminal. According to the Star (SAL) Alliance, 23 of its members will operate to (LHR), the highest number of (SAL) alliance carriers coming together at any airport. About 12 million Star (SAL) Alliance passengers are expected to pass through (LHR) annually.
Currently, (LHR) handles 121 Star (SAL) Alliance flights per day to 45 destinations in 25 countries.
The new T2 can handle 20 million passengers annually, “but the terminal is designed to expand if necessary,” Star (SAL) Alliance VP Customer Experience & Information Technology, Justin Erbacci said. Erbacci said the (SAL) alliance is “expecting a dramatic reduction of operation costs for our member airlines,” which became part of the synergies of having all member airlines under one roof.
“In the last two years, we have worked very hard to bring all the airlines together in the terminal,” Erbacci said, adding that no one else in the industry has achieved a project like this.
Star (SAL) Alliance carriers, which are currently spread out over three (LHR) terminals, will be transferred to T2 from June 4 through October.
T2, which was (LHR)’s first terminal, closed after 54 years of service in 2009 and was demolished in 2010. The new T2 is the latest phase of an £11 billion transformation of (LHR).
Star (SAL) Alliance carriers, which are currently spread out over three (LHR) terminals, will be transferred to T2 from June 4 through October.
Aer Lingus (ARL), Germanwings (RFG) and Virgin Atlantic Airways (VAA) will also operate from T2.
T2, which was (LHR)’s first terminal, closed after 54 years of service in 2009 and was demolished in 2010. The new T2 is the latest phase of an £11 billion transformation of (LHR).
United Airlines (UAL) on June 4th became the first airline to operate into and out of London Heathrow (LHR) Airport’s new Terminal 2, signaling the official opening of the renovated terminal following a £2.5 billion/$3.8 billion upgrade. (UAL) was scheduled to operate 17 departures from the terminal on June 4th, bringing all its operations at (LHR) (previously split between Terminals 1 and 4) under one roof for the first time.
According to the Star (SAL) Alliance, all 23 member airlines operating at (LHR) will move over the next six months. Air Canada (ACN), Air China (BEJ), and (ANA) will be the next new occupants, transferring their operations to T2 from June 18. In July, Aegean Airlines (CRM), (EVA) Airways, Thai Airways (TII) and Turkish Airlines (THY) will move in, together with Avianca (AVI) (which will launch a service between London and Bogota on July 4).
“After a break for the European summer holiday period, moves will resume in September with EgyptAir (EGP), Ethiopian Airlines (ETH), Scandinavian Airlines (SAS), and Singapore Airlines (SIA). Then finally, October sees the arrival of Air New Zealand (ANZ), Asiana Airlines (AAR), Austrian Airlines (AUL), Brussels Airlines (DAT)/(EBA), Croatia Airlines (CRH), (LOT) Polish Airlines, Lufthansa (DLH), South African Airways (SAA), SWISS (CSR), and (TAP) Portugal.”
The Star (SAL) Alliance has unanimously approved Air India (AIN)/(IND)’s entry into the network, set for July 11. The government-owned airline will be the first Indian carrier to join a global alliance. The entry was approved at a (CEO) meeting in London on June 23rd. “The integration teams at Air India (AIN)/(IND), the Star (SAL) Alliance and its member carriers will now complete the last necessary work in order to ensure that (AIN)/(IND) can offer all (SAL) Alliance customer benefits from July 11.”
The airline was originally accepted as a future (SAL) Alliance member in 2007, but its entry was suspended in 2011 after it failed to meet minimum joining conditions. The process was revived last year, when (AIN)/(IND)’s government-backed turnaround plan started showing results.
Star (SAL) Alliance (COO), Jeffrey Goh said, “We restarted the re-integration with Air India (AIN)/(IND) in December last year and just half a year later, we are ready to confirm the official joining date. We look forward to welcoming (AIN)/(IND) passengers to our global network and offering them our (SAL) alliance benefits. At the same time, we are pleased to be providing our existing customers improved access to a region which includes the world’s fifth largest domestic aviation market.”
Air India (AIN)/(IND) Chairman, Rohit Nandan said, “(AIN)/(IND) worked hard to meet the exacting expectations prior to joining. It is indeed an honor and privilege to be the first airline from India to join the (SAL) alliance.”
(AIN)/(IND) will add +400 daily flights and +35 new destinations in India to the Star (SAL) Alliance network. The biggest growth will come from its home market, which is being served by 13 (SAL) Alliance members flying to 10 destinations and holding a 13% market share.
Bringing (AIN)/(IND) into the equation not only adds more airports, but also increases the (SAL) alliance’s market share in India to 30%.
Air India (AIN)/(IND)’s entry will allow the (SAL) Alliance network to grow to 27 members, offering about 18,500 daily flights serving 1,316 destinations in 192 countries. (AIN)/(IND) has a network of 33 destinations across the USA, Europe, Canada, the Far East and Southeast Asia, and the Gulf.
July 2014: Air India (AIN)/IND) officially joined the Star (SAL) Alliance this month. (AIN)/(IND) Chairman & Managing Director, Rohit Nandan announced that now (AIN)/(IND) is formally integrated into the Star (SAL) Alliance network, “our entire European operations, Asian Operations, [and] Pacific operations shall be through the 787 Dreamliner.”
Air India (AIN)/(INDd) officially joined the Star (SAL) Alliance on July 11th, opening the world’s fifth-largest aviation market to the other 26 member airlines comprising the (SAL) Alliance network. The government-owned airline will be the first Indian carrier to join a global alliance.
At noon, with a Bollywood-referencing “lights, camera, action” flourish, a huge red curtain dropped at Indira Gandhi International Airport’s Terminal 3, revealing an Airbus A320 SEE PHOTO - - "AIN)/IND-A320-STAR ALLIANCE-2014-07" painted in the Star (SAL) Alliance livery, as (AIN)/(IND) Air India Chairman & Managing Director, Rohit Nandan and the Star (SAL) Alliance (CEO), Mark Schwab walked the red carpet out onto the tarmac to greet (AIN)/(IND) flight crew (FC) members and fellow (SAL) Alliance executives descending the A320's passenger stairs.
The day culminates a seven-year process for (AIN)/(IND). It will add nearly 400 daily flights and 50 domestic Indian destinations to the (SAL) Alliance network. (AIN)/(IND) is the first Indian airline to be inducted into the group and is its 27th member.
“New destinations include the industrial hubs of Aurangabad and Vadadora; [pharmaceutical production hub] Indore; textile and engineering center Coimbatore, and Jamnagar, India’s ‘oil city’,” Air India (AIN)/(IND) said.
Air India (AIN)/(IND) said the biggest growth will come from its home market, which had been served by 13 (SAL) Alliance members flying to ten destinations, holding a 13% market share. The addition of (AIN)/(IND) to the (SAL) Alliance will increase the (SAL) alliance’s market share in India to 30%.
Air India (AIN)/(IND)’s primary hub is located in Delhi, with its major secondary hub situated in Mumbai. (AIN)/(IND) had 95 airplanes in its fleet (one of the youngest in the industry, with an average age of four-and-a-half years) which includes a mix of wide body Boeing 777s, 747s, 787 Dreamliners, Airbus A330s, A321s, A320s and A319s.
October 2014: The Star (SAL) Alliance is seeing a huge uptake of self-serve kiosks at the new London Heathrow (LHR) Terminal 2. A large majority of passengers at the new London Heathrow Terminal 2 are already using the self-service kiosks to print boarding passes and baggage tags.
December 2014: Star (SAL) Alliance member, Ethiopian Airlines (ETH) is preparing for Airbus A350-900 operations as it is expects to begin taking delivery of its first of 14 of the type from 2016.
January 2015: News Item A-1: Qatar Airlines (QTA) & the (IAG): "Shifting sands in the global reach of the Gulf carriers" January 30, 2015 by Karen Walker in (ATW) Editor's Blog:
The announcement that Qatar Airways (QTA) has acquired a 9.99% stake in (BAB)/(IBE) parent company, the International Airlines Group (IAG) is an interesting development in the ongoing change in the international airline landscape prompted by the growth of the Gulf carriers.
(QTA) (CEO), Akbar Al Baker describes the taking of a stake in the (IAG), worth about $1.7 billion, as an “excellent opportunity to further develop our Westward strategy.” (IAG) (CEO), Willie Walsh said he was “delighted” about the investment, and opportunities to work more closely with (QTA).
There’s an interesting history to the (IAG) and (QTA) connection. Al Baker and Walsh are long-time, firm friends who each hold the other in high respect. In October 2013, (QTA) joined the Oneworld (ONW) global alliance, becoming the first of the major Gulf carriers to join a global alliance. British Airways (BAB), a founding (ONW) member, was (QTA)’s sponsor and Walsh spoke very enthusiastically about the importance of having (QTA) join. My understanding is that his enthusiasm was not matched by every (ONW) member (CEO).
Dubai-based Emirates (EAD), meanwhile, remains alliance-independent, but in 2013 it entered a five-year alliance with Qantas (QAN), another Oneworld (ONW) Alliance founding member. And Abu Dhabi-based Etihad Airways (EHD) owns a 29% stake in airberlin (BER), another (ONW) airline. (EHD) has its own version of an alliance, taking stakes in relatively small carriers and creating a constellation of airline equity partners that includes airberlin (BER), Air Serbia (JAT), India’s Jet Airways (JPL), Virgin Australia (VOZ), Air Seychelles (ASY) and Aer Lingus (ARL). Interestingly, the (IAG) wants to buy Aer Lingus (ARL), a move, which if it happens, would further tangle the (IAG)-Oneworld (ONW)-Gulf carrier web.
(EHD), of course, is also now a 49% owner of Alitalia (ALI) (to keep you on track with the alliance matings here, (ALI) is a SkyTeam (STM) Alliance member). But (QTA)’s stake in the (IAG) is the first time that one of the “Big Three” Gulf carriers has invested in one of the “Big Three” European airline groups of the (IAG), the Lufthansa Group and Air France (AFA) - (KLM).
It will be fascinating to see if the (QTA) - (IAG) deal marks the beginning of more such equity partnerships (within the caps of the (EU) airline ownership rules) between Gulf carriers and their European counterparts. The fact is that it’s becoming increasingly challenging for the “traditional” global hubs of Amsterdam, Frankfurt, Heathrow, and Paris to compete with the “modern” world hubs of Abu Dhabi, Dubai, and Qatar.
In the USA, meanwhile, there is growing awareness that what happened in Europe regards Gulf competition could happen in America. A campaign is being run by North America’s “Big Three” (American Airlines (AAL), Delta Air Lines (DAL) and United Airlines (UAL)) to try and get lawmakers to review "Open Skies" policies and the international air transport competitive landscape to take account of the rise of the Gulf carriers.
Flying under the radar so far in the shifting sands of air transport power houses is Turkish Airlines (THY), which is a Star (SAL) Alliance carrier and which has developed an extensive network, very large and modern fleet and highly successful global hub in Istanbul. It will be interesting to see whether that continues to be the case if, as Al Baker described it, a “Westward strategy” by Gulf carriers begins, in some eyes at least, to look more like a "Westward" invasion.
February 2015: News Item A-1: Austrian Airlines (AUL) is aiming to corner a larger share of the "very competitive" Indian market, also (AUL)'s third largest, by offering attractive products to meet the growing challenges posed by its global competitors, a top airline official said.
"The Indian market is very competitive and it is growing so fast now. We have to be competitive. We are in competition with everyone who is flying in the Indian market," Stephan Linhart, International Sales Director of (AUL), said.
In a bid to attract Indian customers, (AUL) is offering Indian cuisine, as well as others products ranging from Bollywood movies on their in-flight entertainment systems to latest Indian news on board flights between Delhi and Vienna. India has become the third largest market for (AUL) in the Asia-Pacific region after China and Japan, he said.
"We are trying to pamper our customers. These are little things but it makes a huge difference," he said.
Noting that a major chunk of Indian air travellers were bound for destinations in North America, he said Vienna could become an important transfer hub for the change-over of flights to destinations in the USA and Canada.
Commenting on the burgeoning Indian aviation market, Linhart said the low cost carriers (LCC) in India have created an additional demand in the market. "It (LCC) makes people start flying, which means increase in demand," he said.
The premier European airline, which operates flights to 130 destinations across the world, is a member of the largest global airline grouping Star Alliance (SAL), of which Air India (AIN)/(IND) has become the latest member. (AUL) joined the Star (SAL) Alliance in March 2000.
(AUL) has been flying to Delhi since October 1997. (AUL) currently operates to 39 destinations in the Central and Eastern Europe. (AUL) Is scheduled to start its services to Mauritius in October 2015 and increase frequency of its flights to New York and Chicago sometime later this year.
(AUL) has been a part of Lufthansa Group since September 2009. (AUL) operates a fleet of 80 airplanes, including 11 long haul planes, and carried 11.2 million passengers worldwide in 2014.
News Item A-2: A350 (MSN2), one of Airbus’ five A350 XWB test airplanes, landed the evening of February 26 at Munich International airport for the first time. Munich is one of the biggest Lufthansa (DLH) and Star (SAL) Alliance hubs worldwide. Lufthansa (DLH) has 25 Airbus A350 XWB airplanes on order.
March 2015: News Item A-1: When asked at the (ATW) Annual Achievement Awards to share his biggest lesson learned, Star Alliance (SAL) (CEO), Mark Schwab said “To wake up every single day thinking of a way to create more value for Star Alliance (SAL) members.”
News Item A-2: Austrian Airlines (AUL) (CEO), Jaan Albrecht has been asked to head up SunExpress (SNS), creating a vacancy at (AUL), which will formally merge with Tyrolean.
Albrecht will continue as (AUL) (CEO), until the end of May, taking up his new role on June 1. He will replace current (SNS) Managing Director, Paul Schwaiger, whose contract has expired, although Schwaiger will stay on until mid-July to support the transition. (AUL) said its supervisory board will make a decision on Albrecht’s successor at a later date.
“The decision to ask Jaan Albrecht to assume a new position within the Lufthansa Group was not easy for us. After all, he led (AUL) out of a crisis and achieved a turnaround. However, his good international contacts and his experience in different positions in the airline sector make him an ideal (CEO) of (SNS),” (AUL) Chairman, Harry Hohmeister said.
The former Star (SAL) Alliance (CEO) has accepted his reassignment to (SNS), the Lufthansa (DLH) and Turkish Airlines (THY) joint venture (JV). “I will say it straight out. It is with a heavy heart that I will be leaving Vienna and Austrian Airlines (AUL) at the end of May. But I am leaving with a good feeling about the situation, because (AUL) is well on track. At the same time, I am also happy to be able to contribute my experience once again to such an important international (JV),” Albrecht said.
Albrecht began his career as a pilot (FC) with Mexicana (CMA), where he progressed into various senior operating and commercial management positions. He served as (CEO) of the Star (SAL) Alliance for 10 years before becoming Chairman & (CEO) of (AUL) in November 2011.
May 2015: News Item A-2: About SWISS:
Swiss International Air Lines (SWISS) (CSR) is Switzerland’s national airline, serving 106 destinations in 49 countries from Zurich, Geneva, and Basel and carrying over >16 million passengers a year with its 95-airplane fleet. The company’s Swiss WorldCargo division provides a comprehensive range of airport-to-airport airfreight services for high-value and care-intensive consignments to some 120 destinations in over >80 countries.
As “The Airline of Switzerland”, SWISS (CSR) embodies the country’s traditional values, and is committed to delivering the highest product and service quality. With its workforce of 8,245 personnel, SWISS (CSR) generated total operating income of CHF 5.2 billion in 2014. (CSR) is part of the Lufthansa Group, and is also a member of the Star (SAL) Alliance, the world’s biggest airline network.
June 2015: News Item A-1: "Portugal sells 61% stake in (TAP) Portugal to JetBlue (JBL) Founder" by (ATW) Kurt Hofmann, June 12, 2015.
The Portuguese government has sold its 61% stake in (TAP) Portugal to the Gateway consortium, a joint venture (JV) between JetBlue Airways (JBL) and Azul Brazilian Airlines (AZL) Founder, David Neeleman and Portuguese bus company, the Barranquiro Group.
The transaction, which still needs to be approved by the European Commission (EC), finalizes a long-planned privatization process for the loss-making (TAP) Portugal.
Several media outlets quoted the Portuguese Secretary of the Treasury as saying that the sale should generate between €354 million/$488 million and €488 million and it may take up to two years to realize the full value of the transaction.
The (TAP) Group has an estimated total debt of $1.4 billion, as well as a provisional valuation for government’s remaining 34% stake. Once the privatization process is completed, Lisbon may exit the (TAP) Group completely after 2017.
According to several media reports, Gateway offered to invest in 53 new airplanes for (TAP), to keep the (TAP) head office in Lisbon for a least 10 years, and have secured (TAP)’s hub operations in Lisbon for the next 30 years.
Star (SAL) Alliance member, (TAP) Portugal, together with Azul (AZL), could open up new opportunities for the (SAL) alliance.
Star (SAL) Alliance (CEO), Mark Schwab said on the sidelines of the (IATA) (AGM) in Miami, that the (SAL) alliance has always been interested in having two partners in Brazil, because it is a huge market.
“Both carriers, Azul (AZL) and Avianca Brazil (ONE), would offer a very complementary coverage in Brazil,” Schwab said, declining to give more details about an Azul (AZL) membership.
Azul Brazilian Airlines (AZL) began long-haul services from its hub at São Paulo’s Viracopos/Campinas International Airport (VCP) to Fort Lauderdale, Florida on December 2nd last year, followed by daily services to Orlando.
Avianca Brazil (ONE) will join the Star (SAL) Alliance in the second part of July.
(TAP)’s other two bidders were Avianca Holdings Chairman, German Efromovich and Portuguese investor/entrepreneur Miguel Pais do Amaral.
News Item A-2: Shenzhen Airlines (SHZ), a subsidiary of Air China (BEJ) and a Star (SAL) Alliance member, has agreed to buy 46 Boeing 737s, according to an Air China (BEJ) filing with the Shanghai Stock Exchange.
The stock exchange filing has been widely reported, but Boeing (TBC) has not officially confirmed the order and Shenzhen Airlines (SHZ) has not commented.
Air China (BEJ) said the 737s will be delivered between 2016 and 2020, but it did not say which 737 model or models (SHZ) ordered.
Based on list prices, the value of the order is at least $3.6 billion, which would be the value if all of the 737s are 737-700s. A number of news reports cite Air China (BEJ) valuing the order at $4.3 billion, which would indicate at least some of the 46 airplanes are models other than the 737-700.
July 2015: Avianca Brasil (ONE) joined the Star (SAL) Alliance in ceremonies at São Paulo Guarulhos International Airport Wednesday, July 22. This membership brings the number of Star (SAL) Alliance airlines to 28.
“Today we are setting the future pace of our airline and close a two year process, which saw us move to a new Information Technology (IT) platform, review and update our internal processes, and specific training program for our employees to ensure they can provide the best possible service to customers. We are proud to be part of the most experienced airline alliance and are pleased to put Brazil back on the Star (SAL) Alliance map,” Avianca Brasil (ONE) President & (CEO), Jose Efromovich said.
Avianca Brasil (ONE) is the fastest-growing airline in the country. From 2010 to 2014 it increased in market share from 2.6% to 8.4%. Until May, (ONE) continued this trend, reaching a cumulative market share of 9%.
(ONE) adds 15 new destinations in Brazil to the existing 12, which Star (SAL) Alliance carriers already served, bringing the total to 27.
Brazil’s (TAM) (TPR) switched from the Star (SAL) Alliance to the Oneworld (ONW) Alliance in March 2014 after merging with Oneworld member (LAN) Airlines to form the (LATAM) Airlines Group.
September 2015: News Item A-1: "(UAL)'s Head, Smisek’s Stunning News" by (ATW) Karen Walker in (ATW) Editor's Blog, September 8, 2015.
The September 8th announcement that United Airlines (UAL)’s Chairman, President & (CEO), Jeff Smisek has resigned and stepped down is stunning!
There was no public sign of this coming, but the departure is immediate, and a new President & (CEO) was already named (former (CSX) Corporation President & (COO), Oscar Munoz).
So what to make of Smisek’s departure (along with those of two other United execs)? Here’s what the (UAL) statement says: “The departures announced today are in connection with the company’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigations are ongoing and the company continues to cooperate with the government. “The company’s internal investigation and the related circumstances do not raise any accounting or financial reporting concerns.”
No question, then, that the departures were deemed a necessary action directly related to an ongoing federal investigation. The investigation concerned, though not detailed, appears to be that of former New York & New Jersey Port Authority Chairman, David Samson and regular United Express flights he took between United (UAL)’s Newark, New Jersey hub and Columbia, South Carolina.
Smisek became (UAL)’s (CEO) in 2010 after it was merged with Continental Airlines (CAL), where he was also Chairman, President & (CEO). He joined (CAL) in 1995 (and was hired by former (CAL) (CEO), Gordon Bethune, who remarked on (CNN) News on September 8th of the dangers of getting “too close to those New Jersey sleazebags”). Smisek is an executive with considerable industry knowledge and expertise, who ran one of the world’s top three largest airlines.
All this makes the September 8th’s news even more surprising. On the one hand, it’s difficult to believe that a man of this knowledge and caliber would cross any legal lines; on the other, why such a sudden departure?
Smisek was in New York in August as the guest speaker at the "Wings Club." He addressed two topics (first, the need for airlines to be able to conduct business like any other for-profit, privatized company; and second on the dispute over the Gulf carriers and government subsidies.
On the second subject, Smisek has been one of three airline (CEO) leaders that have led the controversial campaign, along with American Airlines (AAL)’s Doug Parker and Delta Air Lines (DAL)’s Richard Anderson, to reassess the USA government’s "Open Skies" agreements with the (UAE) and Qatar "Big3."
On the first subject, Smisek was essentially having a public dig at lawmakers and regulators, who treat airlines differently than they do other companies. The USA Department of Justice (DOJ) and Department of Transportation (DOT) began investigations this summer into what they say might be cases of unlawful behavior by the airlines. The (DOJ) has been investigating alleged collusion by the USA majors to fix capacity so that they could charge higher fares, while the (DOT) has been looking at whether the USA majors: Southwest Airlines (SWA) and JetBlue (JBL) had inflated air fares in the USA northeast market, after a serious and fatal Amtrak raiways crash had shut down key rail routes in that region.
Ahead of the Spisek speech, I had asked Smisek for his thoughts on those (DOT)/(DOJ) investigations, and his response was pretty ripe (and not for quotation). But to sum up, he made a strong and very credible case as to why he and his peers at the other airlines would never be involved in unlawful behavior (and he was clearly very angry that Washington regulators would even suggest such).
The (DOJ)/(DOT) investigations have nothing to do with the federal investigation that prompted Smisek’s departure, but it strikes me as odd to believe he would knowingly cross any legal lines here, any more than in the alleged collusion cases.
This (CEO) who had addressed the Wings Club just a few weeks ago, had showed no sign of leaving. It was then a very energetic speech that strongly defended the right of airlines to behave as proper businesses and which proudly touted some of (UAL)’s achievements now that it is profitable (investing in new airplanes, having an over-funded pension scheme, and being able to pre-pay debt and de-risk its business. Then, Smisek looked and sounded like someone who was looking forward to running an airline with those hard-won assets established, while taking on industry issues that he saw as wrong.
As a side note, Smisek’s stepping down is the sixth in recent months in a line of Star (SAL) Alliance (CEO) departures: following Air India (AIN), Avianca (AVI), Egyptair (EGP), (LOT), and South African Airways (SAA), whom have all seen changes at the top.
New incoming, (UAL) (CEO) Munoz may be new to the airline industry, but he won’t be the only relatively new face at the next Star (SAL) Alliance board meeting.
News Item A-2: "New United (UAL) (CEO) Oscar Munoz ‘Ready to Get to Work after Smisek Steps Down" by (ATW) Aaron Karp, September 8, 2015.
United Airlines (UAL)’s new President & (CEO), Oscar Munoz said he will focus on customer service and cost discipline, but offered few specifics on his first day at (UAL)’s helm.
Munoz, formerly the President & (COO) of rail and intermodal giant, (CSX) Corporation, was named (CEO) of (UAL) parent company, United Continental Holdings following the sudden departure of former Chairman, President & (CEO), Jeff Smisek. (UAL) General Counsel, Brett Hart said (UAL) could not provide any information on the USA government’s investigation into the Port Authority of New York & New Jersey that was cited as the reason for Smisek stepping down. “We have no control whatsoever over the timing of the federal investigation,” he said. “All we can say is we’re cooperating fully.”
Munoz served on Continental Airlines (CAL)’s board of directors from 2004 - 2010, and then on United (UAL)’s board following the United (UAL) - Continental (CAL) merger. During a conference call with analysts, he cited his 11 years on the boards of (CAL) and (UAL) as helping to prepare him for his new job. But Munoz conceded he needs to be briefed on a number of specific issues.
“I’m going to spend the first 90 days or so traveling the United (UAL) network and listening to and talking to people,” he said, adding, “I have a ton of calls [to make]. I’ll get up to speed very quickly.”
Munoz did say that he thought (UAL) and (CAL) had gone through a “rough integration” process and acknowledged the Information Technology (IT) systems failures that have hurt Chicago-based United (ual)’s operational performance and standing with consumers. “I have a very strong technology background,” he said. “Systems unfortunately have their ups and downs. We’ve made significant progress over the last several years and certainly this year [in terms of operational performance]. It’s just an absolute and complete point that we need to reach out to our customers with a better service product and that takes a lot of time and effort.”
Munoz said there “are a lot of analogs and parallels” between the airline and rail industries. “I think the airline industry has been closely watching, monitoring and following what the rail industry has done from a yield management perspective,” he said. Munoz said he will stick to the capacity discipline practiced by (UAL) recently, adding, “Capacity management seems to be something that has worked well in the [airline] industry.”
Munoz said he is “truly excited” about (UAL)’s potential. “I think the team has been doing a great job recently and the momentum is building,” he told analysts. “It is certainly a new chapter for (UAL). I’m ready to get to work.”
December 2015: Avianca Brazil (ONE), which joined the Star (SAL) Alliance in July, has inked code share agreements with Star (SAL) members Turkish Airlines (THY) and Ethiopian Airlines (ETH).
The code share agreement signings took place December 9 on the sidelines of the (SAL) Alliance chief executive board meeting in Chicago. Avianca Brazil (ONE), (CEO), Jose Efromovich said the code share pacts are the “first of many contracts we will sign within the (SAL) alliance.”
(THY) operates 7x-weekly Boeing 777 flights between Istanbul and São Paulo. (ETH) operates 3x-weekly 787 flights between Addis Ababa and São Paulo. “We hope to feed our partners with a lot of Brazilian passengers,” Efromovich told reporters in Chicago.
“Brazil is an important market for us,” (ETH) (CEO), Tewolde Gebremariam said. “There are [a significant number of] African descendants living in Brazil. We have been looking for connectivity out of São Paulo to the rest of Brazil, and Avianca Brazil (ONE) is going to provide it.”
Efromovich said he expected to gain approval from the Brazilian government for both codeshare accords within the next two months, adding that he did not expect regulators to raise any objections. Details on the routes covered by the code share deals will be provided, once regulatory approval is secured.
Efromovich conceded 2015 has been “a difficult year in Brazil” politically and economically, but noted that (ONE) has “managed to grow +15% and we managed to maintain our load factors” despite the county’s struggles.
(THY) (CEO), Temel Kotil said that Brazil’s economic situation didn’t dissuade him from pursuing a code share agreement with Avianca Brazil (ONE), explaining that the deal will pay dividends over time. “We are a long-runner,” he said. “This is the right time for this agreement.”
January 2016: News Item A-1: "United (UAL) (CEO), Munoz Released from Hospital Following Heart Transplant" by (ATW) Linda Blachly, January 15, 2016.
(UAL) (CEO), Oscar Munoz has been released from the hospital following heart transplant surgery on January 6. In a letter to employees released by (UAL), Munoz said he feels “as strong as ever. My doctors have been impressed with my progress and foresee a quick recovery. I feel great, and it won’t be long before we are working side by side again. Until that time, I expect to participate in key meetings and be involved in strategic planning.”
Munoz added, “As I thought about my return, I gave careful consideration to what greater things we can do together, and that has spurred my recovery. We’ve made a lot of positive changes these past few months thanks to your efforts. Take pride in these accomplishments and our success. Remember, even better days lie ahead if we stay focused on consistently earning our customers’ trust. Keep up the great work, and I look forward to seeing you soon.”
Munoz was stricken by a heart attack on October 15, 2015, and has since been on medical leave. (UAL) previously announced Munoz is expected to return at the end of the first quarter or the beginning of the second quarter of 2016. “Brett Hart will continue as the acting (CEO) until Munoz’s return,” (UAL) said in an earlier statement.
"Welcome Home Mr Munoz!" by Karen Walker in (ATW) Editor's Blog, January 15, 2016.
What a great photo posted by (UAL) of (CEO), Oscar Munoz with his doctors as he prepared to return home following a heart transplant.
Mr Munoz is all smiles, looks great and says in an open letter that he feels “as strong as ever” and promises it won’t be long before he’s back in the office.
A very good note to begin 2016. From all I’m hearing, Mr Munoz made an excellent start at (UAL), focused on the right things that need prioritizing, and brought a welcome warmth to the company’s leadership.
I have not always been kind about (UAL)’s customer service standards in this blog, and there’s no doubt that there is much yet to be done to bring this airline up to same levels of not just its international competitors, but increasingly its USA rivals. It stuns me that an airline can be a founding member of the Star (SAL) Alliance, yet not take note of the huge differences between its long-haul cabins and on board service and those of Star (SAL) partners like Air New Zealand (ANZ), (ANA), and Singapore Airlines (SIA). I mean, eight-abreast in business (C) class on a 777?
However, I am going to note here that I’ve just done a round trip from Washington to Geneva (on a 767 direct outbound and on a 777 via Heathrow (LHR) on the return. The less said about the airplane and cabins, the better. BUT, on both flights the cabin crew (CA) was outstanding; friendly, engaged, happy. On the return flight, we had a two-hour delay, sitting in the plane but still at the gate. This was caused by a software glitch with the pilots (FC)’s iPad electronic flight bags (EFB). However, the (FC) chatted with passengers and brought around snacks and drinks, and genuinely worked hard to keep everyone relaxed.
So I hope this is a sign of happier employees under their new leadership. And that this is the beginning of better days to come for (UAL). And, most of all, we wish all the very best to Mr Munoz as he completes his recovery. We look forward to his return.
February 2016: News Item A-1: (SAS) on February 5 commenced services between Stockholm Arlanda (ARN) and Munich (MUC). The 1,316 km sector will be operated 3x-weekly by (SAS)’s mixed 737 fleet. Competition on the city pair comes from fellow Star (SAL) Alliance member, Lufthansa (DLH), which offers 31x-weekly services. Norwegian (NWG) also offers competition on the same airport pair with 2x-weekly flights. Arlanda becomes the third destination for (SAS) from Munich, with (SAS) also serving Oslo Gardermoen and Copenhagen from the Bavarian gateway.
News Item A-2: "Star (SAL) Alliance Gold Card Holders Enjoy Free Upgrades on Heathrow (LHR) Express Trains" by China Aviation Daily, February 11, 2016.
See photo - "SAL-2016-02 - Heathrow Express.jpg."
Star (SAL) Alliance and Heathrow Express have teamed up to offer Star Alliance Gold Card holders a special benefit when traveling on Heathrow Express trains (a free upgrade).
Making use of this offer is very simple. Customers just need to purchase a standard class single or return ticket for the Heathrow Express, the fastest rail link between the airport and London Paddington Station. Once on the train, customers can choose any available seat in Business First Class and show both their train ticket and Star Alliance Gold Card to the attendant. Amenities in Business First include complimentary newspapers and magazines, more leg room, wider seats, a personal table, a power socket at each seat and on-board TV.
This special promotion is open to all frequent flyers holding Gold Status in any of the 21 Frequent Flyer Programs offered by the Star Alliance (SAL) member airlines. The offer will run from February 15th until further notice.
The Star Alliance network currently has 24 airlines serving Heathrow (LHR): Aegean Airlines (CRM), Air Canada (ACN), Air China (BEJ), Air India (AIN), Air New Zealand (ANZ), (ANA), Asiana Airlines (AAR), Austrian (AUL), Avianca (AVI), Brussels Airlines (DAT)/(EBA), Croatia Airlines (CRH), EGYPTAIR (EGP), Ethiopian Airlines (ETH), (EVA) Air, (LOT) Polish Airlines, Lufthansa (DLH), Scandinavian Airlines (SAS), Singapore Airlines (SIA), South African Airways (SAA), SWISS (CSR), (TAP) Portugal, Turkish Airlines (THY), THAI (TII), and United (UAL). In total, they offer over >120 flights per day to 47 destinations in 26 countries from (LHR), allowing customers to connect to the full Alliance network of more than >18,500 daily flights to 1,330 airports in 192 countries.
The Star Alliance (SAL) moved into the purpose-built Terminal 2 (The Queen's Terminal) in 2014, and has since been offering its more than >12 million annual passengers using the airport, a vastly improved travel experience. Latest technology is deployed throughout the terminal, giving passengers greater control of their journey. The check-in area has been specially designed for speed and efficiency, with airlines grouped in zones. The 80-plus common use self-service kiosks are available to any passenger for check in and/or bag-tag printing before handing their luggage to an agent at the fast bag drop. Full-service traditional check-in desks are provided for First (F) Class, Business (C) Class, and Star Alliance Gold passengers. This passenger group can also make use of the dedicated Gold Track lane when clearing security and relax in any of the four different lounges, operated by Air Canada (ACN), Lufthansa (DLH), Singapore Airlines (SIA) and United (UAL).
March 2016: News Item A-1: United Airlines (UAL) and Air New Zealand (ANZ) announced a joint venture (JV) revenue-sharing agreement, deepening the partnership between the two Star (SAL) Alliance members. Under the new revenue-sharing agreement, the carriers said they will more closely coordinate sales and marketing in order to offer their mutual customers more travel options between the mainland USA and New Zealand, as well as to other destinations throughout the airlines’ route networks.
The arrangement will begin when (UAL) launches its nonstop service between San Francisco and Auckland on July 1, 2016, subject to government approval. “This joint venture will allow us to work more closely with Air New Zealand (ANZ) to optimize our transpacific schedules and offer more convenient flight choices to our customers in both the USA and New Zealand,” (UAL) Vice Chairman & Chief Revenue Officer, Jim Compton said.
(ANZ) (CEO), Christopher Luxon said, “We know that New Zealand is a popular destination for American leisure travelers. By working more closely with such a strong home market carrier as (UAL) we look forward to welcoming even more American visitors to enjoy our unique Kiwi tourism experience.”
News Item A-2: SWISS (CSR) has introduced its Boeing 777-300ER to New York (JFK) Terminal 4. (CSR) will also be flying the 777-300ER primarily on services from Los Angeles and San Francisco to Switzerland, and other European leisure cities in the summer of 2016 in code share with Star (SAL) Alliance member, United Airlines (UAL).
News Item A-3: (SAS) on March 14 commenced services from its Stockholm Arlanda (ARN) base to Los Angeles (LAX). The 8,859 km sector will be flown by (SAS) the Star (SAL) Alliance carrier daily, using a mixture of its A330-300s and A340-300s on the route.
See photo: - "SAS-2016-03 - Stockholm to Los Angeles.jpg."
Karl Wistrand, (CEO) of Swedavia, commented on the launch by saying: “Air links to the USA west coast are important for both tourism and business exchanges between the countries of Sweden and the USA. The route also means increased productivity for companies that work or want to start working in the Swedish - USA market. So it is of great value that (SAS) is now launching a non-stop service to Los Angeles from Stockholm.” Although the route currently faces no direct competition, it should be noted that (LCC) Norwegian (NWG) does offer a seasonal summer operation between the two airports, with its services planned to resume on March 31.
April 2016: News Item A-1: "Lufthansa Group, Singapore Airlines Expand Asian Code Shares" by (ATW) Kurt Hofmann, April 6, 2016.
Star (SAL) Alliance members, Lufthansa (DLH), Singapore Airlines (SIA), and Swiss International Air Lines (SWISS) (CSR) are expanding their code share agreements as part of a commercial joint venture (JV) that was concluded in November 2015.
(SIA) expanded connections to more than >20 code share routings via the Lufthansa´s Group’s Munich and Zurich hubs, to and from various points in Austria, Belgium, Germany, and Switzerland.
Lufthansa (DLH) will add its code on (SIA) flights via Singapore to Denpasar and Jakarta (Indonesia).
In addition, SWISS (CSR) will add its code on (SIA) flights from Singapore to Australia’s Adelaide, Brisbane, Melbourne, Perth, and Sydney, as well as to Jakarta, Kuala Lumpur (Malaysia), Auckland, and Christchurch (New Zealand).
News Item A-2: "Lufthansa Eyes Investments in (SAS), Brussels Airlines" by (ATW) Kurt Hofmann, April 18, 2016.
The Lufthansa Group is in talks with (SAS) Scandinavian Airlines and Brussels Airlines (DAT)/(EBA) about those carriers becoming part of Lufthansa (DLH)’s low-cost carrier (LCC) Eurowings (EWG) business, several German media outlets reported.
(DLH) established Eurowings (EWG) in 2015 as a pan-European (LCC) platform, which it expects to grow quickly to become its second strongest brand, especially for point-to-point traffic. The Lufthansa Group has invited airlines to join (EWG) as part of a franchise.
“Of course, we are in talks with (SAS); we have been partners within the Star Alliance (SAL) since the alliance was founded. But [discussion] regarding a possible investment in (SAS) is just speculation,” (DLH) spokesperson, Helmut Tolksdorf said.
According to "Reuters," talks with (SAS) could lead to Lufthansa (DLH) taking a stake in (SAS). (SAS) has repeatedly been the subject of takeover speculation.
Star Alliance (SAL) member, Brussels Airlines (DAT)/(EBA) is already 45%-owned by (DLH). (DLH) Chairman & (CEO), Carsten Spohr said recently that the Group has an option to purchase the remaining 55% of Brussels Airlines (DAT)/(EBA), adding that a decision regarding a possible complete takeover will be made during the second quarter.
June 2016: The Star Alliance (SAL) has appointed Jeffrey Goh as (CEO) as of January 1, 2017, succeeding Mark Schwab, who will retire at the end of the year. “Jeffrey Goh will head Star Alliances Services Gmbh, the Germany-based brand and project management, which coordinates the activities of the (SAL) alliance.”
Goh, who joined the Star Alliance (SAL) in 2007 from (IATA), is currently Chief Operating Officer (COO) & General Counsel of the Star Alliance (SAL).
“This early decision lays the groundwork for a smooth leadership transition at the top of the (SAL) alliance company,” (SAL) Chairman of the Chief Executive Board and Air Canada (ACN) (CEO), Calin Rovinescu said.
Schwab, who has been (SAL) (CEO) for five years, said: “I’ve been 42 years in the airline business; it is time for me to ease a little bit.”
Goh said the “(SAL) alliance mid-term plan will go on, focusing on moving forward, and we need to be able to react quickly [to industry changes].” He said the (SAL) alliance has also recognized the phenomena of joint ventures (JVs) in the airline business. “They will not go away, but we believe they [JVs] have a place in the (SAL) alliance.”
October 2016: News Item A-1: Juneyao Airlines (JYA) announced it will officially join global alliance group Star (SAL) Alliance as Connecting Partner in 2017, to speed up its planned international expansion as more Chinese tourists travel abroad.
(JYA) has signed a strategic partnership agreement with the Star (SAL) Alliance in a ceremony in Shanghai, which will see it become the group's second connecting partner during the 2nd quarter of 2017.
Under the partnership, (JYA) will offer priority privileges, such as through check-in and lounge access to qualifying passengers traveling on connecting itineraries with Star (SAL) Alliance member airlines.
"We are back where we belong," Star (SAL) Alliance (CEO) Mark Schwab said at the event by accepting Juneyao Airlines. The Star (SAL) Alliance used to have Shanghai Airlines (SHA) as a member until (SHA) merged with SkyTeam (STM) Alliance's China Eastern Airlines (CEA).
17 Star (SAL) Alliance member airlines currently operate around 1,600 weekly services to and from Shanghai's 2 airports (Pudong and Hongqiao). Juneyao Airlines (JYA) has 1,700 weekly flights to 69 destinations in 8 countries, although the majority of its services are domestic.
(JYA) currently only operates routes to neighboring countries such as Japan, South Korea, and Thailand, but is eyeing more long-haul, intercontinental routes. (JYA) in the Star (SAL) Alliance would benefit from long-haul transits and enhance its presence in Shanghai.
In addition, the aviation watchdog released the allocation plan for the new Beijing airport in late July, saying (SAL) member Air China (BEJ) will remain at Beijing Capital International Airport. When (JYA) joins the Star (SAL) Alliance, (JYA) will stay, too.
The 17 full Star (JYA) Alliance members currently flying to Shanghai are: Air Canada (ACN), Air China (BEJ), Air India (AIN)/(IND), Air New Zealand (ANZ), (ANA), Asiana (ASA), Austrian (AUL), Ethiopian Airlines (ETH), (EVA) Air, Lufthansa (DLH), (SAS), Shenzhen Airlines (SHZ), Singapore Airlines (SIA), SWISS (CSR), Thai Airways (TII), Turkish Airlines (THY), and United Airlines (UAL).
News Item A-2: "Star Alliance (SAL) Connecting Partner Model Evolves as Juneyao Airlines (JYA) Replaces Mango (MGO) as 1st Member" by (CAPA) centreforaviation.com October 17, 2016.
Star Alliance (SAL)'s connecting partner model is evolving beyond a proposition for low cost airlines (LCC)s. In October 2016 (SAL) disclosed its intention to add Shanghai-based Juneyao Airlines (JYA). Although (JYA) is full service, the semantics of full service versus low cost (LCC) have proven irrelevant: the core concept of (SAL)'s connecting partner platform is to secure transfer options in key markets. The (SAL) benefits for a connecting partner are only realised when connecting on the same itinerary to a Star (SAL) member. Unlike the situation with full membership, (SAL) benefits are not offered on a connecting partner when the itinerary is only point-to-point.
(JYA) gives (SAL) a partner in China's financial hub and replaces (SAL)'s former Shanghai partner, Shanghai Airlines (SHA), which left when it merged with SkyTeam (STM)'s China Eastern Airlines (CEA). Juneyao Airlines (JYA) is the 2nd announced member after the South African Airways (SAA) (LCC) Mango (MGO), but (JYA) will be implemented 1st in (2Q) 2017. As Juneyao (JYA) grows and plans intercontinental 787 flights, (JYA) may transition to a full member.
The connecting platform was not in existence when (SAL) and (JYA) started discussions 3 years ago. The connecting partner platform can further evolve to incorporate the (LCC)s that are rapidly taking over the flying of some of Star (SAL)'s members (such as Lufthansa (DLH)'s Eurowings (EWG) – and thereby preserving some of (SAL)'s relevancy. All-new growth (such as adding an (LCC) in India) is still hoped for.
December 2016: News Item A-1: Star Alliance (SAL) members (SAS) Scandinavian Airlines and Singapore Airlines (SIA) are expanding their code share cooperation as part of a joint venture (JV) agreement that was signed in 2012. Starting May 30, 2017, (SAS) will place its code on 5x-weekly Airbus A350-900 flights between Stockholm Arlanda and Singapore via Moscow. (SAS) and (SIA) already have cooperation in place on the Copenhagen - Singapore route.
The (JV) includes the coordination of time tables and joint sales activities. (SAS) and (SIA) have had a code share agreement since December 2010 on a number of routes in Asia and Europe.
January 2017: News Item A-1: Ethiopian Airlines (ETH) will add 3x-weekly Addis Ababa - Antananarivo, Madagascar service from March 28.
News Item A-2: Ethiopian Airlines (ETH) is adding +7 new destinations within 5 months this year, 1 of its greatest network expansions.
From February to June, (ETH) will launch new service to Victoria Falls (Zimbabwe), Antananarivo (Madagascar), Conakry (Guinea), Oslo (Norway), Chengdu (China), Jakarta (Indonesia), and Singapore.
With the latest additions, (ETH) will serve 98 international destinations from its Addis Ababa hub.
(ETH) Group (CEO) Tewolde Gebremariam said that Africa’s share of global aviation is the smallest, at 3%. “As the largest airline group in the continent, we are highly concerned about the low base of air connectivity in the continent and we are a setting record expansion to enable Africans to enjoy safe, reliable and economical air connectivity both within the continent and between the continent and the rest of the world," he said.
Gebremariam added that—looking beyond the current economic slowdown, especially in the oil export-dependent economies of Africa, (ETH), the Star (SAL) Alliance member firmly believes the continent will become the magnet for foreign direct investment, trade and tourism, “which are the engines of air travel growth and, in turn, efficient air connectivity also drives socio-economic development.”
In 2016, (ETH) added new flights to Moroni (Comoros), Windhoek (Namibia) and New York Newark (USA), as well as Awasa, Kebri Dahar and Dembidolo in Ethiopia.
(ETH) plans to reach 120 international destinations worldwide by the year 2025.
News Item A-2: Ethiopian Airlines (ETH) is upgrading the infrastructure at Addis Ababa Bole International Airport for maintenance, cargo and flight simulators as (ETH), the Star (SAL) Alliance member continues to grow.
Nearing completion is a wide body maintenance hangar and a new cargo terminal. The maintenance hangar, which is 97% complete, has 2 bays for paint and maintenance. It can accommodate 2 Boeing 747-8s at a time, or more of other airplane types.
A new cargo terminal, which is 82% complete, is expected to open around April 2017. The new terminal will have an annual storage of 1.2 million tons and a capacity to handle 8 747-8F freighters at a time. Construction of the 1st phase will cost approximately $150 million.
Upon completion, (ETH) said its uplifting capability “will be equivalent to the cargo terminals at Amsterdam Schiphol, Singapore Changi, or Hong Kong.”
(ETH) has also constructed a flight simulator building and installed 5 of the latest full flight simulators, which includes Boeing 787, 777, 757, 767, 737NG and the Bombardier Q400. (ETH) plans to add simulators for the Airbus A350 XWB and Boeing 737 MAX airplanes.
February 2017: "United Airlines (UAL) and Colombia’s Avianca (AVI) Holdings are engaged in negotiations to “deepen the companies’ commercial and strategic relations,” (UAL) said.
(UAL) said it is also in talks with Avianca Brasil (ONE). (UAL), (AVI) and Avianca Brasil (ONE) are all members of the Star (SAL) Alliance.
Details of what form the strategic partnership may take were not revealed. “The board of directors of Avianca (AVI) has authorized Avianca (AVI) to carry out all the analysis and other steps that are required for a potential strategic-commercial alliance with United Airlines (UAL),” (AVI) told regulators in Colombia, according to "Reuters."
It is unclear whether the negotiations could lead to (UAL) taking a stake in Avianca (AVI) or Avianca Brasil (ONE). (ONE) (CEO) Jose Efromovich said last year that (AVI) had “opened up the door” to a potential outside investment.
“(UAL) and (AVI) have a long history of partnership through the Star (SAL) Alliance, and we look forward to enhancing our cooperation to provide even better service for our customers,” (UAL) President Scott Kirby said. “Deepening our relationship allows us to expand on our existing Star (SAL) Alliance and strategic partnerships in the region as we continue building a great network in Latin America.”
United (UAL) took a 5% stake in Azul Brazilian Airlines (ONE) in 2015.
March 2017: Avianca Holdings posted a net profit of +$44.2 million in 2016, reversing a -$139.5 net loss the company reported in 2015. “Through steadfast focus on implementing our [business] plan, and the benefit of improved microeconomic tailwinds, 2016 was a strong year for Avianca (AVI),” (AVI) (CEO) Hernán Rincón said.
Aviana Holdings is the parent of 7 Latin American passenger airlines including Colombian flag carrier Avianca (AVI) and air-freight carrier Avianca Cargo (TMP).
(AVI)’s operating revenue for the year totaled $4.1 billion, down -5.1% from $ 4.4 billion in 2015. Operating expenses decreased -6.3% to $3.9 billion, compared to $4.1 billion in 2015. The company’s operating profit for the year was +$258.5 million, up +18.1% year-over-year (YOY). The company’s full-year operating margin increased +1.3 points (YOY) to 7.2%.
“In [(1Q) 2016], I reiterated our commitment to improving Avianca (AVI)’s capital structure [and] we have made strong strides on this front, through implementing a 3 pronged approach during the year,” Rincón said. “1stly, we began by renegotiating aircraft deliveries for the 2016 through 2019 period, resulting in a significant reduction in capital expenditure for the company totaling $1.4 billion. 2ndly, we implemented an organizational restructuring in [(2Q) 2016] streamlining (AVI)’s administrative layers and finally, we reduced the company’s debt by -$198 million.”
Rincón projected Avianca (AVI)’s capacity growth for 2017 will be in the range of 6.5% to 8.5%, while maintaining load factors between 80% to 82% LF. Projected passenger growth in 2107 will be between +4.0% and +6.0%. “As a result, we estimate that our (EBIT) margin for 2017 will be in the range of 6.0% and 8.0%,” Rincón said.
In 2016, (AVI) recorded 29.5 million passengers, up +4.2% (YOY). Traffic increased +7.8% (YOY) to 38.2 billion (RPK)s and capacity increased +5.9% (YOY) to 47.1 billion (ASK)s. Load factor for the year came to 81.1% LF, up +1.4 points (YOY). (RASK) fell -1 point (YOY) to 8.8 cents; (CASK) declined -1.1 points (YOY) to 8.2 cents.
In January, Avianca (AVI) entered into negotiations with United Airlines (UAL) “to create a long-term strategic partnership that will provide our customers with the best possible travel experience when traveling to or from the USA,” Rincón said. “[We] seek to implement as soon as possible an agreement to enhance and deepen our commercial and strategic relationship with (UAL), our Star (SAL) Alliance partner.”
September 2017: The Star (SAL) Alliance has launched a new Connection Service to assist customers arriving at Chicago O'Hare International Airport to reach their onward flight with another (SAL) member carrier. The enhancement for customers in United (UAL)'s home hub will carry new branding that will be progressively rolled out for similar services operating at 11 major airports around the world.
The Connection Service springs into action if an incoming flight is delayed. Software monitors the transfer window for customers with an onward flight and flags any cases where a customer and any checked bags appear in danger of missing a connection.
"It is frustrating for customers, and indeed for the airlines, when relatively small delays have the knock-on effect that a connection is missed," said (SAL) VP Customer Experience Christian Draeger. "Connection Service staff are alerted as soon as a connection is at risk. They meet the customer on arrival and take the necessary steps to ensure that the customer and the bags are expedited and reach their onward flight. If a connection cannot be reached, the customer is assisted with re-booking."
Chicago is the 4th biggest transfer hub for Star (SAL) Alliance worldwide, with almost 750,000 passengers connecting from one (SAL) carrier to another each year.
"The Connection Service provides peace of mind to customers with a tight connection," said Mike Hanna, VP of United (UAL)'s O'Hare operations." This is a significant benefit for our customers, further strengthening the position of Chicago as a leading transfer hub."
Customers arriving on international flights need to clear customs and immigration before connecting. Those customers benefiting from the Connection Service are eligible to use the Express Connection lane, to enable them to get through customs and immigration quicker. Checked bags that need to be rechecked are specially tagged so they are handled faster.
(SAL) members online at O'Hare are: Air Canada (ACN), Air India (AIN), (ANA), Asiana Airlines (AAR), Austrian (AUL), Avianca (AVI), Copa Airlines (COP), (EVA) Air, Lufthansa (DLH), (LOT) Polish Airlines, SWISS (CSR), Scandinavian Airlines (SAS), Turkish Airlines (THY) and United (UAL). Together, they offer almost 17,500 flights per week to 187 destinations in 31 countries.
(SAL) Connection Centers have been operating behind the scenes for more than a decade, expediting checked bags at risk of missing their onward flight at 11 airports. Under the (SAL) Alliance's strategy of further improving the customer experience, enhancing this service to include assisting passengers with tight connections is being evaluated in all locations. A passenger service is already available in Frankfurt (FRA), Houston (IAH) and Munich (MUC) as part of the Connection Center product.
December 2017: News Item A-1: Founded in 1961, Adria Airways (ADR) is the national carrier of Slovenia. Privatized in 2016, it is 100% owned by (4K) Invest, a Luxembourg-based private equity fund with mainly German investors.
A member of the Star (SAL) Alliance, Adria Airways (ADR) operates a fleet of 3 Airbus A319 and 10 Bombardier CRJ900/CRJ700 aircraft from its hub at the Slovenian capital, Ljubljana. It also serves Frankfurt and Munich from both Pristina (Kosovo) and Tirana (Albania). (ADR) is the leading airline by seats on much of its network.
Its scheduled capacity is being reduced in 2017, although it has added 1 regional jet since the start of the year. It also operates wet lease contracts for other airlines.
In summer 2017, Adria Airways (ADR) bought Darwin Airline, formerly part-owned by Etihad Airways (EHD) and trading as Etihad Regional. The Swiss regional airline has been rebranded Adria Airways Switzerland, but is expected to suspend its only 2 scheduled routes in January 2018 to concentrate on wet lease operations for its new parent and other customers.
(ADR) has struggled to establish a record of sustainable profitability, but the monopolistic nature of many of its routes should provide a platform for improvement under its new owners.
News Item A-2: "Azul, Turkish Airlines to Code Share" by Kurt Hofmann, (ATW) Daily News, December 8, 2017.
Azul Brazilian Airlines (AZL) and Turkish Airlines (THY) have signed a code share agreement. Star (SAL) Alliance partner (THY) will add its TK code on (AZL) domestic flights via São Paulo (Guarulhos) to many destinations in Brazil, such as Rio de Janeiro, Belo Horizonte, Cuiaba, Curitiba, Porto Alegre, Recife, Goiania and Florianopolis.
(AZL) is the largest airline in Brazil by number of cities served, and offers 755 daily flights to 104 destinations with a fleet of 118 aircraft.
"The code share with (THY) will be very important to strengthen our international presence, especially for customers traveling from Europe and Asia to Brazil. Now they will be able to enjoy the convenience of thru ticketing, check-in and boarding passes," (AZL) Chief Revenue Officer Abhi Shah said.
Click below for photos:
SAL 757 2009-10 CAL
SAL-A320 - SHENZHEN AIRLINES
AEGEAN AIRLINES (CRM) (2009)
AIR CANADA (ACN) (1997)
AIR CHINA (BEJ) (2007)
AIR INDIA (AIN)/(IND) (2014)
AIR NEW ZEALAND (ANZ) (1999)
ALL NIPPON AIRWAYS (ANA) (1999)
ASIANA AIRLINES (AAR) (2003)
AUSTRIAN AIRLINES (AUL) (2000)
AVIANCA (AVI)-TACA (TAC) (2012)
bmi (BMA) (2000) left in (2012)
BRUSSELS AIRLINES (DAT)/(EBA) (2009)
CONTINENTAL AIRLINES (CAL) (2009)
COPA AIRLINES (COP) (2012)
COPA COLOMBIA (REU) (2012)
EGYPTAIR (EGP) (2008)
ETHIOPIAN AIRLINES (2011)
EVA AIRWAYS (2013)
(LOT) POLISH AIRLINES (2003)
LUFTHANSA (DLH) (1997)
SCANDINAVIAN AIRLINES (SAS) (1997)
SHENZHEN AIRLINES (SHZ) (2012)
SINGAPORE AIRLINES (SIA) (2000)
SOUTH AFRICAN AIRWAYS (SAA) (2006)
SPANAIR (SPP) (2003) CEASED OPERATIONS (2012)
SWISS INTERNATIONAL (CSR) (2006)
(TAP) PORTUGAL (2005)
THAI AIRWAYS (TII) (1997)
TURKISH AIRLINES (THY) (2008)
UNITED AIRLINES (UAL) (1997)
US AIRWAYS (AMW)/(USA) (2004) TO EXIT ALLIANCE THIS YEAR (2013) AS IT MERGES WITH AMERICAN AIRLINES (AAL)
*ADRIA AIRLINES (ADR)
*AIR DOLOMITI (DLA)
*CROATIA AIRLINES (CRH)
Click below for photos:
SAL-1-CALIN ROVINESCU - 2012-11
SAL-1-Mark Schwab - R - 2015-07.jpg
SAL-MARK SCHWAB - 2011-12
CALIN ROVINESCU CHAIRMAN (SAL) AND PRESENT PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO), AIR CANADA (ACN).
MARK SCHWAB, STAR ALLIANCE (SAL) (CEO), EX-(UAL)/(USA)/(AAL) (2011-12), TO RESIGN 2017-01.
Mark Schwab has held numerous executive positions at United Airlines (UAL), US Airways (USA), and American Airlines (AAL). He began his aviation career in 1975 with Pan American World Airways (PAA) in Rio de Janeiro. Schwab has also headed organizations in Latin America, Europe, and Asia.
September 2012: When Mark Schwab was appointed (CEO) of the Star Alliance (SAL) at the beginning of 2012, he was no stranger to the world of airline alliances, having previously worked for member carrier, United Airlines (UAL). However, he was faced with a significant challenge of heading a global organization that facilitates cooperation between 27 airlines.
"I wanted to be sure that I fully understood what our diverse membership expected and needed from us," he said. "For me, it was therefore important to get this information first hand and face-to-face. As a result, during my first 100 days, I spent a lot of time on the road, or more accurately (in our business), in the air."
This was well worth the effort for Schwab. The individual meetings with his member carrier (CEO)s allowed him to create good working relationships with each of them, while at the same time, get a better understanding of their individual requirements. "My team and I could now focus our resources more precisely on matters which would be of value to our members, enhancing the global travel experience for their customers and finding alliance synergies to contribute to their bottom lines."
December 2016: "INTERVIEW: Star Alliance (CEO) Mark Schwab" by Kurt Hofmann Hofmann.email@example.com, (ATW) Plus, December 21, 2016.
Kurt Hofmann interviewed Mark Schwab in Rio de Janeiro in December, where the Star Alliance (SAL) celebrated the opening of a dedicated lounge at Rio’s Galeão–Tom Jobim International Airport.
Mark Schwab joined the Star Alliance (SAL) from United Airlines (UAL) in 2011. He retires January 1 and will be succeeded by (SAL) (COO) Jeffrey Goh. The Star Alliance (SAL) currently has 28 members and will soon celebrate its 20th anniversary. The aviation industry is undergoing some drastic changes, so how important are alliances in this day and age?
MS: The fundamental reason for establishing the Star Alliance (SAL) nearly 20 years ago has not changed. Cross border mergers are still on a slow path to reality, and while I believe that someday these will be established, we are still a long way away from seeing this happen. Offering a global network with access to >1,300 destinations is as important as ever and is a key factor in keeping global alliances alive and relevant. Our global (SAL) network is very comprehensive and only has a few remaining regional gaps. Over the past 2 years we have gradually shifted our focus from adding new member airlines to further improving the traveler’s experience. The conversation at (SAL) has shifted from the filling of white spots in the network, to intelligently interconnecting our Information Technology (IT)-systems.
* What’s the next level for alliances?
Interconnecting systems does not just mean linking the reservation systems like Amadeus or Sabre, but also ensuring connectivity with the many different systems in use today. We are now working on ways on how we bring the information available across these multiple systems to the fingertips of our (SAL) Alliance customers, be it to their smartphones, tablets, etc. This is our objective and focus, and digitalization will no doubt be the next stage of alliance development.
* But is not every airline creating its own form of digitalization?
This is where the (SAL) Alliance needs to play an important role because nobody wants to download 100 airport or airline apps on their smartphone. When surfing one member airline’s website, our customers want to access all Star Alliance (SAL) relevant information provided by the other airlines. Our role will be to ensure the proper connectivity in the background, so that airline in question can push the information to the customer. We already have a team of experts comprised of specialists from our airlines, as well as people with external expertise working on this project.
* Where are the airline member gaps for (SAL)?
The fundamental reason for an airline to join an alliance is to link its network with like-minded airlines, creating immediate revenue and marketing opportunities. In today’s industry environment this calls for different solutions in different markets.
There are still some geographical areas which warrant a closer look. One is Brazil, the other Russia. Russia is going through a change in its aviation structure. Right now, there is no obvious player for the Star Alliance (SAL) to engage with. While the member airlines offer good access to and from international destinations in Russia, we lack the domestic connectivity.
We are having active conversations in Brazil (with Azul (AZL)). The country as a whole, however, is going through one of the worst economic crises I have ever seen. Therefore I fully understand that Azul (AZL) has set it priorities on addressing current market conditions. While I would have liked to have solved this during my tenure, I understand the reality. After all, it does take significant effort and resources to join the (SAL) alliance.
* Many alliance members are creating joint ventures (JV). Will this trend continue?
The industry itself is seeking more consolidation, because we still have too many airlines around the globe. The current capacity development is another challenge because in many regions, we see too many aircraft coming into service. With yields under pressure, (JV)s are helping airlines to realistically address market requirements.
So yes, I think that this trend of developing (JV)s will continue. Airlines can generate more value out of a (JV), than from a simple code share alliance. However, in our family, almost all of the bilateral or multilateral (JV)s, with very few exceptions, are being created among the members of the Star Alliance (SAL), taking their cooperation idea to the next logical level. I consider this development as fully complementary and strengthening the overall Alliance.
* Can low cost carriers (LCC)s fit the global alliance model?
The idea behind our “connecting partner model” is to be able to connect our network in selected markets with (LCC) or hybrid carriers that want to avoid the complexity of becoming a full member of the (SAL) Alliance.
In [South African] Mango (MGO)’s case, for instance, this would mean establishing commercial partnerships with only those carriers that fly to South Africa instead of all 28 members.
In addition to [Chinese] Juneyao Airlines (JYA), other “connecting partners” will be selectively added over time. “Move under one roof” is an important (SAL) initiative, housing member airlines in single terminals. How is that progressing?
I’m proud of the Terminal 2 project at London Heathrow (LHR), which could only have happened under the umbrella of the (SAL) Alliance. We cut counter-space requirements by >25%; connecting times in some cases were cut by >50%. At the same time, customer satisfaction ratings rose significantly. This was an important learning experience, which we will continue to take to other airports around the world, as we have already implemented at Tokyo Narita and Los Angeles. For us, it is clear that every airport that is planning new terminal space and has 5 or more of our (SAL) member airlines flying there, will be on our future projects list.
Addis Ababa is one example; Zagreb, Dakar, Nairobi are others. In Asia, the development of a new airport in Beijing will free up capacity at the current one, giving us a unique opportunity to provide more connections through the Chinese capital.
* Will global alliances eventually become a thing of the past?
Ever since I took this job, I have been asked when the last day of the alliances will be. I am convinced that alliances are here to stay for a long time. There may well come the day that they are no longer needed, but this would require a complete change of airline ownership rules around the world. And such a shift is not going to happen overnight. The Star Alliance (SAL) will likely grow by the introduction of several more connecting partners in the future; perhaps even adding full members in selected key markets. (SAL) will maintain its alliance leadership in terms of size, experience and integration, and I am sure, also in terms of innovative pace in this increasingly digital world.
* You have been (CEO) of the Star Alliance (SAL) for 5 years. You started your career in 1975 with Pan Am in Rio de Janeiro; how does it feel to hand over the reins?
I have had 5 wonderful years at (SAL). We concentrated our energies on creating connectivity in the fastest growing and emerging air travel markets in the world, China, Latin America, and India, innovating processes and standards in the airport environment and designing a next generation Alliance (IT) hub infrastructure. My team and I have had a busy schedule.
I have flown >275.000 miles this year and this was not the busiest year for me. In 2015, I spent 175 nights in airplanes or hotels. After having been in the business for 42 years, I know this is a perfect time to hand responsibilities over to my successor who will make sure that even 10 years from now, the answer to the question about whether or not alliances are needed in this industry will be, “of course.”
JEFFREY GOH, CHIEF OPERATING OFFICER (COO) & GENERAL COUNSEL.
Jeffrey will succeed Mark Schwab as Head of the Star Alliance (SAL) in January 1, 2017.
MICHAEL STAGL, CHIEF INFORMATION OFFICER (CIO).
JUSTIN ERBACCI, VP CUSTOMER EXPERIENCE & INFORMATION TECHNOLOGY (IT) (2010-04).
CHRISTOPHER KORENKE, VP COMMERCIAL, EX-(AFA).
CHRISTIAN DRAEGER, VP CUSTOMER EXPERIENCE.
ANITA ELSTE, MANAGER PRODUCT & SERVICES.