Will Star Alliance recruit a new airline?

For several weeks the web has been buzzing with more or less plausible rumors about the arrival of a new airline in Star Alliance. Given the weight of the alliances in air transport, the addition of a new airline to an alliance can have a considerable impact, depending on its size, its location or its origin (whether or not it has been poached from another alliance).

Star Alliance Today

Established in 1997, Star Alliance is the oldest and largest airline alliance to date with 26 members.

Source : Star Alliance

26 ? Soon 25 since Asiana will soon join Skyteam following its acquisition by Korean.

Why should Star Alliance recruit new partners?

Like any alliance, Star Alliance has an interest in growing. The wider its network, the more attractive it is to passengers and the more attractive it is to its members and to non-member airlines because it offers a wider range of destinations, frequencies and routing options to their own customers, which helps to attract and retain them. And the higher the quality of service of its members, the better.

Of course, when an alliance includes major airlines known for the quality of their product, it indirectly benefits the others.

But Star Alliance has two specific concerns.

As the world’s largest alliance, it must maintain its status, whether by poaching airlines that are members of a competing alliance or by recruiting airlines that do not belong to any alliance.

And then there is, as we said, the loss of Asiana which we think should be logically compensated.

What is the logic of external growth for Star Alliance?

We are talking about external growth, not organic growth.

Organic growth is when a member airline buys a non-member airline and logically makes it change alliance. This would be the case, for example, if Lufthansa finally bought ITA or if Air France acquired TAP.

External growth is when the alliance recruits an airline outside of any capital operation.

One can identify two directions for Star Alliance, one not precluding the other.

First, to replace Asiana with the concern of maintaining the geographical coverage of its network, which implies finding a new member in Asia.

Or recruit one or more airlines without geographic preference, as long as it does not hurt a member airline because of competition in the same market.

Replacing Asiana with a geographical logic

The first instinct would be to think that Star Alliance will find a new ally in Asia, if possible in Asiana’s geographical area. This would be very complicated, if not impossible.

So let’s look at the geographic coverage of the alliance.

Source : SAS

It is clear that Star Alliance is already very present in Asia, which paradoxically limits the possibilities. When you are dominant in a geographical area it is indeed harder to progress. There are hardly any “interesting” airline to attract to the region.

Korean ? They are with Skyteam and have just bought Asiana.

Cathay Pacific? Firstly, it has no reason to leave OneWorld, and secondly, in the current context, Hong Kong will certainly not be the shining platform it once was for a long time to come, if it ever becomes one again.

JAL ? Married for life with OneWorld. And Star Alliance already has ANA in Japan.

A Chinese airline? They already have Air China but given the size of the market why not. But the context is even worse than in Hong Kong in a country mired in its zero COVID policy and is not likely to become an attractive platform again for a long time. There was China Southern which left Skyteam but it is in advanced talks with OneWorld.

Vietnam Airlines ? We do not see what interest it would have in leaving Skyteam, especially since its privileged ties with France, and therefore with Air France, are important.

Malaysia Airlines ? The airline should already reassure about its own fate. Today its health is more than fragile and we only see it changing alliances as part of a takeover. By Singapore Airlines?

Garuda Indonesia ? Too far away to provide a really interesting hub and an airline whose health and management never cease to worry. The Asian Alitalia. It’s hard to imagine them leaving Skyteam.

Or go for a bet on the future with an “Airline startup”. Starlux which is not a member of any alliance? Today it is an airline store with a mainly regional network, it has only 14 aircrafts and is just starting to move into the long haul market. This would be a very long term gamble. Moreover it is a Taiwanese airline, and Star Alliance already counts EVA Air as a member. Highly unlikely.

The truth is that Star Alliance is already well-stocked in terms of Asian partners and already offers an impressive number of connecting hubs, so it will be very difficult for them to do better.

Recruit partners in another geographical area

If the opportunities in Asia are small, let’s look elsewhere.

North America? Difficult. In the US, the sector is already consolidated, with United in Star Alliance, American Airlines in OneWorld and Delta in Skyteam. The other players do not have the profile to join an alliance and it is not even their interest.

And in Canada, Air Canada is already in Star Alliance.

South America. It is difficult to find reliable partners and they already have Copa and Avianca.

Europe. Star Alliance is already very dominant there and if, in addition, Lufthansa manages to buy Alitalia or even TAP to prevent it from falling into the fold of Air France-KLM, its room for maneuver is small. Or it will be organic growth through Lufthansa and the acquisition of regional players.

Africa? A complicated region, reliable partners are rare and Star Alliance already counts Ethiopian, South African Airways and EgyptAir among its members.

Oceania? Not very interesting because it is an “end of route” destination. And then the choice is meager. Air New Zealand is already in Star Alliance, Qantas in OneWorld. A regional airline like Virgin Australia perhaps?

The Gulf and the Middle East? This may be the place to look, as it may be the hole in the Star Alliance network. Skyteam has Saudia (okay, that’s not a game changer) but, above all, OneWorld has Qatar Airways and soon Oman Air.

So it cannot be said that Star Alliance is totally deprived in the region, given that it has Turkish Airlines, the airline that serves the most countries in the world, and which also has a superb hub in Istanbul that is well sized for the future. Okay it’s not exactly the Gulf but in terms of Hub it works just as well.

But the Gulf has two “non-aligned” airlines: Emirates and Etihad.

A presence in the Gulf for Star Alliance?

It is thus mainly these two airlines that the rumors concerned.

Emirates ? It is the non-aligned airline that every alliance dreams of welcoming. But the chances of that happening are virtually nil. Emirates recently signed a codeshare agreement with United and this has opened the door to all possible rumors.

But this means absolutely nothing. Already the agreement between the two airlines is very modest and Emirates has many partnerships with airlines outside any alliance. Then it has always been the airline’s strategy to remain deeply independent and to use partnerships tactically when necessary. And given the character of its CEO, Tim Clark, we don’t see him bending to the rules and constraints of an Alliance he would not lead.

Etihad ? It would be a good catch. Or rather it would have been. The airline is now in decline and has lost some of its former glory, so much so that it was long thought that the only way out for it was a marriage with Emirates. This idea was vigorously denied by the airline’s management, who considered it “clownish”.

Seeing Etihad join Star Alliance is not likely, but it is the least unlikely of options in the Gulf, and perhaps it would even help it get back on the path to strong growth. And this is a recurring rumor that has been around for several years…but has never materialized. So never say never, it would be a great catch for Star Alliance but we have our doubts.

Bottom line

Finding a new partner will be complicated for Star Alliance, whether to grow or just replace Asiana. Its potential for expansion is by definition limited in the regions where it is firmly established, and credible options are scarce elsewhere, especially in the Gulf, where Etihad would be the least unlikely of possibilities.

But this reflects a situation that is not its own: the situation seems to be frozen on the front of the major airline alliances, at least in the medium term. If there is a big move, it will be the result of a takeover by a member airline, not a spontaneous membership.

Image : A319 Lufthansa in Star Alliance livery by Roberto Chiartano via Shutterstock

Bertrand Duperrin
Bertrand Duperrinhttp://www.duperrin.com
Compulsive traveler, present in the French #avgeek community since the late 2000s and passionate about (long) travel since his youth, Bertrand Duperrin co-founded Travel Guys with Olivier Delestre in March 2015.
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