By Doug Cameron
Former British Airways (BAY.LN) chief Robert Ayling was an early
champion of the virtual airline, where bothersome tasks like planes
and flying were outsourced, and carriers became marketing vehicles.
The next few weeks will determine whether his former charge becomes
part of the first virtual alliance "- that is, virtually
meaningless.
BA, American Airlines and fellow members of the Oneworld
grouping -" one of three alliances that dominate the global
industry -" will soon learn whether bankrupt Japan Airlines will
jump ship to the rival SkyTeam grouping headed by Delta and Air
France-KLM.
Meanwhile, U.S. regulators are close to deciding whether
Oneworld will be given parity with SkyTeam and the Star grouping,
with antitrust immunity to coordinate services, especially across
the Atlantic. Losing JAL will not cripple Oneworld, already the
smallest of the global trio. It still has Cathay Pacific and Qantas
to hold the fort in Asia, as well as the best partner in Latin
America, Chile's Lan Airlines.
But failure to secure antitrust immunity at the third time of
asking would call its future and competitiveness into question.
The alliances have transformed from their early rationale as a
means to circumvent outdated global aviation regulations that limit
cross-border deals by requiring airlines to be owned and controlled
by nationals of the country in which they are based.
At first, alliances allowed airlines to put a few more pins in
their route maps, with some cost savings thrown in for good
measure. Antitrust immunity opened a panacea of revenue
opportunities, helping steer those profitable business travelers
through the enlarged networks. Spoils were shared with regulators
blessing.
Competition officials are taking another long, hard look at this
arrangement, amid skepticism about the benefits to travelers faced
with fewer options outside the big three alliances. But Oneworld
needs to join the party, even if its one where the drink is running
low.
If it wins immunity, Oneworlds attention will shift to
preserving what it has in Asia. Diminished access to Japan is one
thing, but a larger concern is China.
Willie Walsh, BAs current chief executive, will likely be
well-prepared as he has form in the alliance-defection business.
His former charge, Aer Lingus, dumped Oneworld to go it alone in
2007. Delta, it should be remembered, also learned plenty from
reluctantly helping Continental depart SkyTeam for Star last
year.
For Walsh, the worry is Cathay, its meal ticket in the region.
The Hong Kong-based carrier insists it will stay in Oneworld
despite the allure of Star, in which part-owner Air China is a
leading member. The final decision on any future move may not,
however, be of Cathay's making if the Chinese government - "a
regular meddler in the business "- decides otherwise.
With JAL set to file for bankruptcy protection and defect to
Delta and SkyTeam, the industrys near-term future is likely to be
one of more bed-hopping between alliances.
The virtual airline has not yet come to pass, but the
virtually-useless alliance is closer than some airline managers
would like to admit.