Airline Alliances: The Benefits for You
The concept of the Airline Alliance is relatively new - the major alliances: Star
Alliance, Sky Team and One World only came to fruition at the end of last
century. The airline alliance has economic advantages for airlines, put
simply; it enables them to cover more ground at less cost. The airline
alliance allows carriers to expand into new markets without the exorbitant
set-up costs. Further, the sheer size of the alliances means they are able
to offer price cuts. The modern-day alliance allows airlines to avoid
competition rules by setting up business within an existing carrier.
Passengers do benefit from such alliances. In theory fares should be lower
due to reduced operating costs. Frequent Flyers can claim loyalty points
in a number of different regions and thus increase the perks of flying with one
particular alliance. Theoretically alliances should make some destinations
more accessible. The alliance should also provide passengers with at least a
limited form of �quality guarantee� with passengers ensured the same standards
throughout the various groupings.
Last year the three alliances enjoyed 57.8% of global market share, and with
many more airlines set to join the groupings in the next few years, this figure
is sure to increase. Airline alliances are here to stay, for better or
worse.
Frequent Flyer Programs: Have they reached their Use-By
Date?
Whilst the Frequent Flyer program concept celebrated its 25th Birthday last
month, some financial analysts were beginning to ask the question: Are they
beginning to show their age?
One analyst suggests that the Frequent Flyer customer base is increasingly
becoming disillusioned by an inability to cash in their points for valuable
rewards. Disillusionment among passengers may cause major partners like
credit card companies to pull out of the business altogether.
Joseph Nunn of the Harvard Business Review suggested the true Frequent Flyer
that travel thousands of miles per year are reaping rewards from the programs.
It is the travellers who only fly occasionally that are finding the issue of
seat availability the biggest challenge.
Freddie Awards Fanfare
Starwood, Emirates, Swiss and Alaska Airlines took home the top gongs at the Freddie Awards, the �Oscars� of airline and hotel loyalty programs.
Based on votes cast by 392,000 Frequent Flyers, Virgin Blues reward program, Velocity, was voted �Best Reward Redemption� in the 18th Annual Freddie awards.
Qantas highest position was fifth place for its 20 per cent fare-reduction offer to launch Jetstar.
More Qantas Job Cuts
The soaring fuel prices means Qantas is set to cut more than 1,000 administrative jobs by the end of the year.
Qantas CEO Geoff Dixon warned staff in a memo that 20 per cent of management and
administration positions were to be removed to combat the annual fuel bill,
which has increased by over $2 billion. The union has warned that Qantas
staff are prepared for industrial action if the cuts go ahead.
Customers are also losing out over the fuel crisis. Customers are forced
to pay exorbitant fuel surcharges, which have climbed to $31 for domestic
flights and $98 for international in the two years since they were introduced.
Virgin�s Dodge Deal
The Australian newspaper last month revealed that Virgin chief executive Brett Godfrey lured a US company into an elaborate financial scheme allegedly created to avoid $70 million in GST payments.
It is alleged Brett Godfrey planned to personally gain up to 2.1 million dollars by restructuring the leases of the airlines 11 Boeing planes. The restructuring proposed by Mr Godfrey was allegedly designed solely to extract extra GST credits by creating a series of transactions to shuffle the ownership of the airliners between different companies.
The airline has refused to comment on the deal and the ATO are hot on the heels of Mr Godfrey.
Qantas Consolidating Asian Carriers
Qantas is integrating its low-cost offshoots so that passengers can now travel from Jakarta to Singapore to Bangalore in one continuous journey. The move by Qantas means passengers no longer have to check out their bags at the separate airports.
In what appears to be a first move towards consolidation of Qantas-controlled airlines' operations, Jetstar Asia and Valuair have synchronised their ticketing to offer passengers an easy connection from one airline to the other.
