The tough economic environment that is forcing airlines to either consolidate or cease operations is also affecting alliance memberships, Star Alliance acting CEO Mark Schwab told in Taipei last week.
Schwab told that Star was surprised and disappointed to see Spanair cease operations earlier this year. When that happens, it creates a hole in the alliance’s strategy, “which we then have to back fill,” Schwab said.
“There is consolidation in general. We have been on the benefit side in the past but now we are impacted as well,” he said, adding that the alliance is braced for whatever will happen with Star member British Midland International within the new IAG ownership. IAG CEO Willie Walsh told recently that the bmi brand will disappear inside British Airways.
“The train for airline consolidation [has already] left the station,” Schwab said.
He said that alliance memberships are creating deep commercial discussions on joint ventures and mergers. “I think more like that [is] going to happen as we [saw with] Continental and United. Deeper cooperation is [what] everybody needs, because it is a tough environment for the airlines to operate,” he said.
The Star carriers have a “unique advantage,” said Schwab. “We bring strength to them. The alliance delivers a bilateral relationship, cost-saving measures. In the meantime, if fuel prices go up, every airline thinks twice before opening a new route. Getting to profitability takes longer ... You can’t slow down expansion plans because it takes longer to recover your investment.”
Concerning which alliance LANTAM will join , Schwab said that, like oneworld, Star is trying to keep the merged airline in the alliance. “I think we are a few weeks ahead [of their alliance decision] but Star also has a very tight timeframe [for the] decision,” he said.
Schwab said that India and Russia remain tough markets for alliances. Star suspended the induction of Air India into the global airline grouping after India's national airline failed to meet the minimum joining conditions.
“India is facing some unique circumstances. They have very rapid expansion, infrastructure difficulties and couldn’t deal with the growth in the last view years,” he said, referring to high taxation, especially on the fuel sector. “But we need a home carrier presence there (in India) to stabilize the situation.
In Russia, Schwab said “there is not much left there [regarding possible airline memberships], but we will find the right member sooner or later,” he said.
Article Source : ATW Daily News
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