Wooing Budget Carriers to Join Oneworld

Oneworld alliance is on the lookout for deserving low cost carriers to join them. Rob Gurney, who became oneworld’s CEO last October commented that competitions from low cost carriers are increasing and there is a need for oneworld to look into ways to boost its presence in Africa, China and India.

Oneworld is the smallest alliance amongst the three main airline groupings with only 14 members and counts Qatar, Qantas, American Airlines Cathay Pacific and British Airways as their heavyweights.

Star Alliance has 28 members that include: Singapore Airlines, Lufthansa, China Eastern and United Airlines etc.

Skyteam has 20 members that include: Air France, Delta, Air China etc.

The report also states that Oneworld needs to consider carefully how it might want to include discount carriers without devaluing existing members. Gurney mentioned,

“No-frills specialists compete with traditional network operators and don’t generally participate in the code-share and interline relationships around which alliances are built, though the divide is becoming blurred as the discounters target business travel and former flag carriers seek to slash costs.”

Whilst it is true LCC are slowly eating away market share from legacy carriers and competing for the same set of customers, bringing them in may strengthen an alliance because members may have access to more (lesser known) cities and choice of flights. Many frequent flyers may baulk at the idea of a budget long haul flight but probably care less on a short haul as long as they get their points, tier credits and the ease of getting there. It makes more economical sense to divert some traffic to a low cost carrier that is able to serve much smaller cities than to have a full service airline trying to do a ‘city-hop’ kind of service.

So far, Jetstar and Scoot/Tigerair are the low cost airlines on this side of my world that allows you to earn Qantas and Singapore Airlines points as long as you are willing to pay a premium fee upon checkout.

Qantas has a JV with China Eastern and that means flights out of Australia into China on routes not served by Qantas allows you to earn QF points on China Eastern carriers. However, if your frequent flyer programme is not with Qantas, then regardless of your oneworld status, you will not be able to benefit from it. That’s probably the main reason why oneworld is very keen to partner with a Chinese carrier. On the other hand, Cathay Pacific, based in Hong Kong, serves several Chinese cities with their domestic airline, Cathay Dragon previously known as Dragonair. Yet their networks are still being undermined by the main Chinese carriers on the mainland. 

By the way, there is already a loosely created and probably unknown LCC alliance called Value Alliance. Member airlines include TigerAir, Scoot, Cebu Pacific, etc. If you take a look at their website, you will notice that they say nothing about their alliance. They don’t seem to have made any difference to travellers who choose to fly them and they are not making much headway here. I think at the end of the day, for those travellers who are more budget conscious, the airline with the cheapest fares win.

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