Air travel used to be purchased from airlines, and then there were alliances. In the past year a new order has emerged. Subsets of the global air alliances have created strategic partnerships to gain more business on specific routes such as between the US and Europe or the US and Japan.

Alitalia recently joined its fellow Skyteam members Air France-KLM and Delta in their transatlantic joint venture. This followed the establishment last year of a North Atlantic alliance of the members of Star which flew across the North Atlantic, namely Air Canada, Lufthansa, United and Continental. Earlier this month (July), British Airways, American Airlines and Iberia received both final EU approval to enter into a joint business agreement on transatlantic flights and final DOT granting of anti-trust immunity.

Alliances are a means for airlines to replicate a global organization within existing legislative and regulatory restrictions. Gaining anti-trust immunity enables airlines to cooperate much more closely commercially, specifically in matters of coordinating schedules and deciding pricing.

It is by no means a North Atlantic phenomenon. Fellow Star members United and ANA have applied for anti-trust immunity over the Pacific between Japan and the US as have Oneworld members American and JAL. 

Why it matters

• Price and schedules Anti-trust immunity effectively gives the different airlines the ability to discuss and cooperate on pricing and schedules without fear of prosecution. This not only will drive efficiencies for the airlines but should deliver a more competitive (lower) price for buyers.

• Benefits for travelers The closer that airlines become, the greater the likelihood that frequent travelers gain benefits from other carriers at the same level as their main carrier.

• Supplier relationships Non-home carriers have traditionally been willing to offer larger discounts in secondary markets. Alliances on specific routes inevitably mean that the non-home carrier and home carrier act as one.

What to look out for in the future

• Contracts As the commercial relationship between airlines alters, expect corporate contracts also to change. Buyers should clarify whether target volumes must be with a specific carrier or with any brand owned by the carrier or with any carriers with which it has a commercial relationship on routes concerned.

• Appropriate tickets These new associations raise the question of which tickets are eligible for corporate rates or for any rebate such as an override. Buyers need to establish whether it is all tickets or just those booked on the corporate rate or as part of a route deal.

• Route deals With strategic alliances on strategic routes, expect carriers to try to drive/retain traffic on competitive routes. There could be big opportunities for savings.