By Doug Cameron
The Oneworld global airline alliance on Thursday shrugged off
the effect of plans by Qantas Airways Ltd. (QAN.AU) to loosen links
with fellow member British Airways in favor of a wide-ranging pact
with Dubai's Emirates Airline.
Emirates rapid expansion has attracted fierce criticism from
some members of Star and SkyTeam, the two other global groupings
that look to coordinate members' schedules and services in an
effort to woo highly prized business travelers.
The decision by Qantas to outsource much of European flying to
Emirates-a long-time critic of the big alliances-appears to be a
blow to Oneworld's network in Asia, which has already been hit by
the delayed entry to its ranks of Malaysia Airlines and India's
Kingfisher Airlines Ltd. (532747.BY).
Oneworld played down the move, noting Qantas will continue to
code share-an arrangement to cross-sell seats-with British Airways,
part of International Consolidated Airlines Group S.A.
(IAG.LN).
"We have a pretty flexible attitude towards our members having
relationships outside our alliance," said Michael Blunt, a Oneworld
spokesman.
That has long been evident in the relationship between Oneworld
member Cathay Pacific Airways Ltd. (0293.HK) and Air China Ltd.
(0753.HK), which is part of the rival Star grouping led by United
Continental Holdings Inc. (UAL) and Deutsche Lufthansa AG (LHA.XE).
Cathay and the Chinese flag carrier have cross-shareholdings, a
cargo joint venture and other links that both view as consistent
with their wider alliance roles.
Alan Joyce, Qantas' chief executive, was at pains on Thursday to
stress that the airline plans to enhance its ties with other
Oneworld members, singling out Chile's Lan Airlines, American
Airlines and the rejuvenated Japan Airlines Co.
Qantas is also sponsoring the planned entry of loss-making
Malaysia Airlines to Oneworld-expected around the turn of the
year-while Kingfisher's entry remains "on hold," according to Mr.
Blunt.
SriLankan Airlines recently announced plans to join, probably
next year, and the arrival of Air Berlin PLC (AB1.XE) both
strengthened Oneworld's position in continental Europe and
highlighted its relative flexibility compared to Star and SkyTeam.
Abu Dhabi's Etihad Airways has a minority stake in the German
carrier, as well as a 10% holding in Virgin Australia Holdings Ltd.
(VAH.AU).
Qatar Airways, the second largest of the three fast-growing Gulf
carriers, has also been linked with potential membership of
Oneworld, though the alliance and the airline have declined
comment.
Mr. Blunt said Brazil remains a focus, with the key being
whether Tam-a member of Star-will follow Lan into the grouping
after the two carriers merged during the summer to form Latam
Airlines Group S.A. (LAN.SN). A decision is expected within six
months.
The other big uncertainty is whether American parent AMR Corp.
will consummate a merger with US Airways Group Inc. (LCC), a member
of Star, a move that would expand Oneworld's U.S. foothold. US
Airways' CEO Doug Parker has said a merged carrier would be in
Oneworld.
An enlarged American would overtake United as the world's
largest airline by traffic, but lag the broad Asian presence of its
Chicago-based rival and Delta Air Lines Inc. (DAL). Executives at
AMR and US Airways have said Oneworld partners would help close
that gap.
Tom Horton, AMR's chief executive, said in an interview earlier
this year that the alliances were changing toward deeper joint
ventures between individual members, rather than the looser
marketing ties that expand global networks.
It is a view widely shared in the industry as airlines secure
antitrust immunity to coordinate schedules, fares and marketing
with partners inside and outside their formal alliances.
Tim Clark, Emirates president, has long argued that the big
alliances distract management.
"They are an anachronism of the 1990s," he said in an interview
Thursday from Sydney.
"We would not go into an alliance to do this," he said of the
planned Qantas link, which will see the airlines coordinate flights
between Europe and Australasia and mesh their frequent flyer
programs. It involves no equity stakes.
"[This deal] will have a fairly seismic shift on the alliances,"
he said.
The 10-year pact with the Australian flag carrier is by far the
most comprehensive undertaken by Emirates. Mr. Clark said Emirates
hadn't yet examined similar arrangements with airlines in other
regions, but didn't rule them out.
Emirates held a minority stake in SriLankan Airlines, selling
out in 2008 after effectively running the airline for a decade. It
was a link that Mr. Clark has in the past said was enormously
time-consuming.
With the Dubai airline entering a new growth phase, analysts
wonder how disruptive the planned Qantas deal will be both to
Emirates and the wider industry.
"It's of a different order of magnitude," said Craig Jenks,
president of Airline/Aircraft Projects, an aviation consulting firm
in New York. "It really opens a question about the future of
monogamous alliances [and will] likely will stimulate more such
deals."
-Dan Michaels contributed to this article.
Write to Doug Cameron at doug.cameron@wsj.com
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