Star Alliance CEO Jaan Albrecht sat down with Business Traveler this week after a Star Alliance board meeting (in beautiful Queenstown, New Zealand) to discuss a wide-variety of topics. Here are some of the highlights:
Consolidation is a trend we are seeing, and it’s happening on a regional basis – there is lots of consolidation in Europe, in North America and Latin America, and that will continue. But the added value of the alliance is to be like a bridge over these areas where they are not consolidating – so you have Lufthansa group in Europe and Continental/United in the Americas, but our alliance is still like the umbrella that bring these initiatives together and allows the carriers to offer a seamless product…Many airlines have decided that the key to future business success is consolidation – both of these airlines are in the process of merging –Aegean with Olympic and TAM with Lan Chile.
On Latam’s upcoming decision to choose Star Alliance or Oneworld:
Depending on that [decision], it might be nice coverage or it might become a new white spot for Star. We are open for that discussion.
A new alliance in Africa?
Ethiopian includes co-operation with our two African members Egyptair and South African Airways, and as we continue to build our strategy in Africa this will most probably result in an enhancement of the network with the creation of another carrier in the western part of Africa.
On Gulf carriers joining Star Alliance:
I cannot see any of the Gulf carriers joining. They are competing business models. The typical Gulf carriers, the Emirates, the Qatars and the Etihads, are building hubs in the desert with huge investment in infrastructure to try to connect South East Asia and Australia to Europe and the US, and these are exactly the traffic flows that we are intending [to connect] in a very efficient way, via hubs in Singapore, Bangkok, and India – now with a new terminal in Delhi – from our hubs in Europe. These airlines are competing, they are not generating new traffic – they are trying to steal the traffic from the established carriers. So why should we enter into this form of collaboration helping them to expand and get their brands known on a worldwide basis? The decision that we have taken so far is we don’t see any added value to the alliance from these carriers.
But what about Egyptair and Turkish Airlines?
You have a clear difference between Turkish Airlines and the Middle Eastern carriers, which are just building a hub and trying to ship the traffic from other traffic flows. Egyptair and Turkish Airlines have a big advantage in that they have huge local markets to connect with the Americas and Asia. We see the added value of Turkish Airlines because it is a partner that is willing to play, is willing to collaborate in the alliance.
Russia is top priority but we don’t have a top candidate airline. Why? Because in Russia the airlines are consolidating. We have seen so many changes over the last few years and even months – you had Airunion [a Russian airline alliance] that failed, you have S7, which was a series of airlines coming together, and you have Rossiya, which is a stand-alone airline that is being integrated into Aeroflot, so Russia is a puzzle. As our members already reach Moscow and St Petersburg, what we are looking at, and the customer is looking at, is a way of connecting domestically in Russia.
On Virgin Blue joining Star Alliance:
They have the right network but we have not done the due diligence on the other aspects – today in Star we have about 80 minimum joining requirements. Once the bilateral relationship between Air New Zealand and Virgin Blue has taken place, we will get feedback from Air New Zealand to tell us if their experience with Virgin Blue is a positive one and if it is a potential candidate to comply with the minimum requirements to join.
Will more low-cost-carriers like AirBerlin join major alliances?
This is what we call ‘the morphing of the low-cost carriers’. A few years ago they had a business model that was absolutely incompatible with an alliance or a network carrier but what we have seen is a race for low-cost carriers to improve their service and connectivity, and for us network carriers to lower our costs and somehow to meet halfway, so we are definitely seeing this evolution from some low-cost carriers.
My only surprise was the dismissal of Gulf carriers. Albrecht’s response has prompted me to examine the issue more closely, but I have always been of the opinion that it would be beneficial to have Qatar, Emirates, or Etihad join Star Alliance. With their worldwide route maps and extensive coverage in the Middle East, the addition of one of those carriers would open up many markets to Star travelers.