Delta CEO Ed Bastian expressed indifference bordering on hostility to the SkyTeam alliance this week even though his airline is a founding member. Now SkyTeam has hit back, gently, with a reminder of the value that it brings travelers.
Bastian told Bloomberg that he has not seen the value brought to customers by SkyTeam:
One of the things that has not been successful in the airline world are the alliances. We, self-critical, SkyTeam alliance I don’t think we’ve brought a lot of great value to customers, I don’t think we’ve brought a lot of great value to our member airlines. And we’re going at this thing in a very different approach.
We’re going at it through Delta making bilateral investments in the most important partners. We own 49% of Virgin Atlantic, we own 49% of Aeromexico, the two closest carriers to us on either side of the country. We’re invested in Air France KLM. We invested in Korean. We invested in China Eastern. We invested in Gol down in Brazil.
As a consequence what you see is this network of influence that we’re having within those companies. Those companies want to know what Delta has learned about operational efficiency and prowess and premium, we want to learn what it takes to win in those local markets. And over time while we can’t own them in terms of whole-owned consolidation we can have meaningful enough investment that we create an international network of carriers that will be uniquely tied where you have Delta as the centerpiece. That’s our goal.
But how is success measured? What is value? Is that a fair assessment of SkyTeam?
A SkyTeam spokesperson told me:
Alongside its 19 members, SkyTeam has been reflecting on the value drivers of the alliance. How to build on its strong foundations while evolving into an alliance fit for the future. SkyTeam is undergoing a digitally-driven transformation, we are very open about this. We are focused on generating value for customers and members through creating a more seamless travel experience enabled by technology, a strategic direction all members support.
I Remain A Believer In Alliances
Alliances have evolved over the years and no longer represent the sort of behemoth unions that never actually existed but were once thought possible. Alliance-driven joint-purchasing projects and other large-scale initiatives have largely taken a backseat to a more service and compliance-oriented role
And SkyTeam, being the third and final major alliance formed, represented the leftovers. That is not to say that Delta is worse than American or United or Air France/KLM is worse than Lufthansa or British Airways. Rather, it is to say that SkyTeam has key holes in Australia, India, Japan, and much of the African and South American continent. That does make creating a cohesive and exclusive network harder.
But I appreciated that rather than attack Bastian, SkyTeam pointed out the true value it brings–and that alliances in general continue to bring.
What I love about alliances is that you can earn status with one airline and enjoy luggage, priority boarding, lounge, preferred seating, and sometimes even upgrades on other airlines. I appreciate seamless connections and the ability to earn points in one loyalty program across many carriers. Finally, I appreciate technology that makes my life easier like the ability to assign seats across several alliance airlines no matter which carrier ticketed my reservation.
While all of that is feasible under the bilateral investment model that Bastian outlines (or under a joint-venture model), alliances allow for an even wider web of seamless connections and reciprocal benefits that make traveling so much more of a pleasure. These sorts of value adds truly keep me loyal and should be looked at not as token gestures that have little practical bearing on loyalty. Naturally, the bulk of that loyalty goes to the alliance member closest to home. Delta should not underestimate that.
Bastian’s sentiment is not totally off-base and Delta is certainly not leaving SkyTeam anytime soon. Still, I think the business case for alliances remains and the potential for a more seamless customer experience is an important factor that bilateral investments will never fully cover versus a loser federation like an alliance.