Alliances Attempt To Be Service-Centric

By Cathy Buyck , Jens Flottau
Source: Aviation Week & Space Technology
April 29, 2013
Credit: Heathrow Airport Holdings

The three global airline groups—Oneworld, SkyTeam and Star Alliance—have been touting “seamless travel” between members' networks, but this has often been little more than a marketing gimmick. After establishing a global footprint, alliances now are focusing on improving the customer's flying experience.

To be fair, alliances offer some of what they claim. The customer receives—if permitted—coordinated schedules, intra-partner accrual and redemption of frequent-flier program miles, proximity for connecting flights (co-location at airports), shared lounges, recognition by the partner carriers at check-in and onboard, and coordinated baggage tracing. “By the same token, this doesn't always work perfectly. The fact of the matter is that the customer is still flying on multiple airlines with varying degrees of product quality and consistency, communication practices, and so forth. So true seamlessness probably remains more of a target than a fact—but the customer's experience is probably less fraught with the alliances than it otherwise might be,” says Mark Diamond, principal at ICF SH&E.

Alliances certainly can provide improvements to the customer flying experience, and somewhat reduce the hassle, he asserts. However, he warns, “as alliances grow, the challenge of offering a consistent and quality product grows as well. As with cost savings, optimizing product quality and consistency may not be easy to accomplish without some sort of equity stake in addition to the pure marketing alliance, as it involves asset commonality and capital expenditure.”

For John McCulloch, who was CEO of Oneworld from 2003-11 and now works as a senior principal at Seabury Group, improving the offering to the customer is the only way the traditional alliance model will stay relevant. But only time will tell if the alliances wake up and recognize this fact, he says.

SkyTeam is redirecting its strategic priority to intensifying efforts and investments that generate benefits for travelers when connecting from one airline to another, CEO Michael Wisbrun confirms. “When alliances were being formed 15 years ago, the first target was building up, piece by piece, a global footprint. Networks were connected gradually. But this phase is more or less completed (see page 45) and now we have to focus on the usage of the scope of the network. We're moving from building scale to the usage of this scale,” he says. It is about being relevant to the top segment of the customers base, Wisbrun adds, and “this means covering 90% of the travel wishes of the high-value customer—the customer that generates the most revenue and the highest margins.”

Last year SkyTeam introduced SkyPriority, an alliance-wide red carpet treatment for premium customers offering dedicated check-in desks, priority boarding and baggage collection and, at transfer points, priority of ticket desks. “We're proving that the alliance is not just the extension of network and selling capabilities beyond home-carrier networks, enhancement of frequent-flier program and lounge access. It is also [a means of] ease of travel and delivering consistent airport services across the globe,” avers Wisbrun, who reiterates that improving “the travel experience is our focus today, tomorrow and after tomorrow.” SkyPriority will be rolled-out to all of SkyTeam's 1,000 destinations worldwide by the end of this year, and priority security and passport clearance will be added where allowed.

In the second half of 2013, SkyTeam will open a common lounge at Beijing Capital International Airport and launch a new baggage drop-off functionality at London Heathrow that will be able to handle the nine SkyTeam airlines operating at the airport. “Our value is working together in the operating processes to make connectivity easier for the passengers and to increase the efficiency of the members, and thus lower their costs. It is also a win-win for airports, because we are making substantial less use of constrained space. [Airports] are big supporters,” Wisburn says.


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