Air Berlin takes next step with oneworld move

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German carrier Air Berlin's move to become the 14th member of oneworld signals new ground for the airline, the grouping and alliances in general.

Air Berlin has signed a memorandum of understanding with oneworld regarding its membership of the group and says a formal alliance agreement will be "signed soon". It aims to complete membership in time to enter the alliance in early 2012, shortly before the opening of Berlin's new Brandenburg International Airport in June of that year.

In the meantime Air Berlin is already planning to co-operate with oneworld carriers American Airlines and Finnair through codeshares this year, and says bilateral agreements are intended with British Airways and Iberia.

Air Berlin will bring 75 more points to the alliance's network and take its destination count close to 900 when it joins the alliance. "One area where we [oneworld] have been keen to expand our network has been central Europe, Germany in particular," says Willie Walsh, chief executive at Air Berlin's oneworld sponsor British Airways. "Germany is the biggest country in the EU, Europe's largest economy." While he points to the number of services oneworld carriers fly into Germany - 10 of its 11 members serve the country - he adds: "We don't currently have a network within the region. With the addition of Air Berlin, our alliance will be able provide even more flights to Germany and also a much more extensive network within central Europe. The opening of the new Brandenburg airport in Berlin makes it an even more attractive proposition."

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Chief executive of Air Berlin, Joachim Hunold, describes the move as the fourth stage in the carrier's development which after a number of acquisitions has seen it evolve from a small charter operation into one of Europe's largest airlines - generating $4.5 billion in revenues in 2009. "Now we have reached a fork in the road as far as our future strategy is concerned. Go it alone or take advantage of the growing trend for partnerships and globalisation." Following a review he says it is clear the industry is following a path of alliances and consolidation and that joining a global alliance is the most promising option. "It puts our airline firmly on the global stage," he adds.

Air Berlin's oneworld move though also signals a further meeting between the traditional full service and low-cost carrier worlds, already evident earlier this year when American unveiled a partnership at New York JFK with US low-cost carrier JetBlue. Air Berlin has itself always shied away from defining itself in the pure low-cost carrier bracket and has a successful frequent flyer programme, operates out of primary airports and has a premium class product on its long-haul services. "We call ourselves a hybrid carrier, that means we aim to offer high quality product at favourable prices," says Hunold. "We clearly differentiate ourselves from the no-frills carriers and offer a product that is comparable with legacy carriers."

But Air Berlin's low-cost credentials are recognised by the alliance members. "The low-cost structure [of Air Berlin] will provide oneworld a real advantage when competing with airlines in rival alliances in this part of the world. It will give oneworld a fantastically cost-effective feeder network in Europe," says Walsh, adding oneworld members will be able to "learn a thing or two about cost control from our new found friends in Berlin".

The agreement with Air Berlin marks the latest development in what oneworld managing partner John McCulloch describes as a "breakthrough year" for oneworld. Hot on the heels of Mexicana becoming its 11th member in November last year, oneworld will later this year add Russian carrier S7 - itself an existing partner of Air Berlin - as the 12th member of the alliance. It also earlier this year formally invited Indian carrier Kingfisher into the alliance and secured the continued commitment of Japan Airlines to oneworld. American and JAL have just filed for antitrust immunity, while American, BA and Iberia have just secured European and US approval for their transatlantic joint venture.

"We have waited 14 years for the benefits of the transatlantic joint business for our customers and to compete on an equal base with the other two global alliances," says McCulloch.