Traditional airline alliances “will not survive” – OAG

The Qantas-Emirates partnership is an example of the new type of strategic alliance emerging in the industry
The Qantas-Emirates partnership is an example of the new type of strategic alliance emerging in the industry

Traditional airline alliances have had their day and will not survive in the future, a new report has asserted.

In its new study, ‘The Fight for Global Markets’, aviation analysts OAG said that the next phase of the battle for global air passengers has already started, and that airlines that are focused purely on traditional alliance models could be at a significant disadvantage.

The report highlights the growth of new forms of airline cooperation, driven by carriers like Etihad Airways with its network of “equity partners”, which are now changing the industry landscape.

“Alliances are no longer the only means of international competition. Increasingly joint ventures, equity stakes and less formal partnerships are being used, all of which challenge existing structures and operations. There are currently more airlines than can realistically exist and in a truly global market where barriers were eased, we would expect to see a consolidation of carriers,” said OAG’s executive vice president of data & market intelligence, John Grant.

“The global aviation outlook is transforming and there have to be changes to the business structure, the key players and shape of the industry. Alliances are not a long-term solution – they are a fixed solution which have run their course.”

According to OAG, while airline alliances have “served a purpose”, the merits of being aligned to a few major brands will be outweighed by the need to new develop strategic partnerships. This has been highlighted in recent years by airlines like Qantas, a oneworld member which has formed partnerships with SkyTeam‘s China Eastern Airlines and unaffiliated Emirates.

OAG also highlighted the rise of low-cost carriers. The report stated that while most have the wrong fleets to develop long-haul networks, major LCCs could use joint ventures and alliances with full-service carriers to move forward.

OAG’s report concludes that China, Indonesia and Turkey could be the markets where globally dominant airlines are based in 10 years’ time.

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