AIRLINES
AIRLINE
PARTNERSHIPS As an educational tool or refresher course to our readers, we run an occasional series of briefing articles to explain key aspects of the airline industry that often cause confusion. This month we provide an overview of the range of airline alliances, codeshares, partnerships and joint ventures.
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HE GROWTH OF THE AIRLINE hub and spoke network model transformed the way Airlines serve their passengers in terms of the range of destinations on offer. However, due to the route limitations inherent in hub-and-spoke networks, airlines formed alliances to broaden their route networks beyond the restrictions of the hub-and-spoke model. Alliances between airlines are as arrangements entered into between airlines to share routes, and to a lesser extent to share ground infrastructure such as booking systems and offices. The key advantages of such alliances are that the airlines can expand their route network and feed their own operated routes, thus achieving economies of scale.
encourage people to choose certain routes over others. The airlines then decide on how to share the earnings equitably among the partners. A key driver of alliances is the need to have tied, or dedicated, feeder routes to the hubs to connect longhaul services. In South Africa a good example of this are SA Express (While it operated) and Airlink airlines, which were both tied airlines to feed the SAA long-haul route network.
Africa’s small, badly run airlines cannot compete against the super-connectors
Alliances also give airlines multiple options for routing passengers. One such example is ‘sharing metal’ – when a passenger flies on an alliance partner’s aircraft. This has become common practice globally and means that airlines need to provide pricing incentives that 12
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Alliances and partnerships between airlines have therefore become a necessary characteristic of the global air travel market. These partnerships cover a continuum from the most basic arms-length interlining agreements to joint ventures, and in the most complete sense, mergers involving equity partnerships. These partnerships and mergers are discussed in the following paragraphs. THE HUB AND SPOKE MODEL The hub-and-spoke model has come to dominate long-
