Airline alliances are in danger of becoming superfluous in an ever-changing aviation landscape, according to respondents to a survey mounted by the Institute of Travel Management.
Airline alliances are in danger of becoming superfluous in an ever-changing aviation landscape, according to respondents to a survey mounted by the Institute of Travel Management. Three-quarters of the 165 buyers surveyed — representing a collective annual spend of more than 1.2 billion pounds — could not quantify the benefits provided to their companies or travelers by airline alliances. Half said they are confused by alliance brands and which airlines they represent.
"The market is evolving," says Paul Tilstone, ITM's executive director. "The drive to increase load factors, work with cleaner fuels, reduce the impact of the cost of those fuels and the effects of Open Skies should mean that the alliances play a more important role in streamlining costs and services and that the travel buyer recognizes this. Yet, in our research, despite over 30 percent of respondents spending more than 5 million pounds a year on air, not one buyer admitted to solely negotiating direct with an alliance."
The survey also revealed that more than half of the buyers manage airline relationships directly, and more than 25 percent do so quarterly. And despite airlines' protests that net fares are more targeted nowadays, the ITM survey found that 54 percent of respondents sometimes or frequently find cheaper long haul fares outside preferred channels, further questioning the value of traditional airline corporate channels.
The subject of Open Skies and the European Commission's proposals for parity of airfares across Europe was also tackled in the survey, with the majority predicting lower fares and more carriers coming onto transatlantic routes.
However this optimism is guarded, says ITM's Tilstone: "Despite a cautious thumbs-up from buyers, there's uncertainty as to how much TMC working practices will need to change. Crucially, buyers are split on whether their TMCs will be able to effectively buy fares in different currencies from other European markets when these changes start to take hold."
All of this suggests that airline alliances could be missing a massive opportunity, says Colin Goldney of Argate Consulting, ITM's research partner. "In a very challenging market, there's a huge opportunity for the application of efficiencies to attract buyers. The alliances are ideally placed to act on this, but they must address the basic issue of what benefits they provide to the corporate market other than better check-in and slicker transfers between carriers."