Stop. Wait. Listen. Think. The whole world is alliance-mad. The fanatical alliance worshippers of this world might think this is heresy, but a fundamental question needs to be asked. Is the crazy web of continuously changing alliance relationships actually going to produce workable results?
Alliance-building is basically an egotistical activity. It's all about that wonderful concept, strategy, and everybody likes to be a strategist. Which relationships will provide the best network synergies? Which will allow us to access lucrative markets more effectively? Which will give us the highest market-share? Which will damage our competitors the most?
So far, a great deal of effort has been made to answer these questions. Even more effort has been expended in obtaining regulatory approval for alliances - or, in some cases, trying to fight off unwelcome regulatory attention.
The danger here is that three vital ingredients to the success of an airline, and its alliances, have been forgotten - customers, labour and computers.
Few airline customers could care less about airline alliances, and even fewer can keep track of the constantly changing alliance landscape. All they care about is getting from A to B safely and efficiently. They would like some basic information, like which airline they are flying on - an almost impossible feat these days. They would like their baggage to arrive at the same time and place that they do. The premium customers expect to be able to alter their travel plans at will and also value their lounges and loyalty programmes.
That is why the Star Alliance is right to create a single brand and focus on delivering commodities which are of value to customers, like a global range of airport lounges and frequent flyer points. But true seamless service cannot happen until labour issues are settled and there is IT transparency across airline partners.
The airline business is a service industry, and can only deliver a high standard of service with the full understanding and cooperation of customer-facing staff. To achieve this, all employees need to understand the strategy which lies behind the alliance, and be able to deliver a comparable standard if service to all the customers of all the airline partners.
In fact, the requirement goes beyond this. If an alliance group is to have any meaning to its customers, all the employees in the group must own all the customers of the group's members. So if a United customer is stranded in Hamburg, Lufthansa employees must be as able and willing to solve the problem as if the customer was a Lufthansa client. Few if any alliances have achieved this degree of mental integration yet.
Unfortunately for many airlines, the labour issue does not stop there. Many airlines are having trouble with their labour forces at the moment. Air France's pilots began a lengthy strike just ahead of the World Cup; Philippine Airlines dismissed most of its pilots, who were on strike; Northwest and Iberia are among other carriers with pilot problems.
In most cases, it's the familiar issues of money and productivity which dog airline-pilot relations. Inevitably, better financial results for the airlines are resulting in a harder line being taken by their labour forces. But these problems do not create the ideal atmosphere for solving the labour issues which alliances create.
Many airline workers are sceptical about alliances. Codesharing could be a vehicle for shifting flying away to other airlines, perhaps with lower costs, they say. Alliances could dull the the brands of which most airline workers are proud. Later, they could lead to mergers, with attendant losses of jobs or seniority. As a result, the labour unions are now cooperating across borders to mirror the alliance activities of their employers. This could introduce a new, complex and unpredictable element to alliance activity.
No airline operation can survive for long without information technology. Yet as the two features in this issue demonstrate, most major alliances have yet to develop a coherent strategy to ensure that their computers can talk to each other. In some cases, there is a lack of the trust needed before carriers are willing to make commercially sensitive data openly available to alliance partners. Some carriers worry about exit strategies should the alliance break up. All have yet to work out the most appropriate way of integrating different systems. This activity is vital to the success of an alliance, especially when viewed from the customers' perspective.
In the final analysis, alliances can only be effective if their members spend less effort on strategy and more on getting the basic building blocks right, winning over customers and employees and ensuring that the technology permits truly seamless travel.
Source: Airline Business
