SkyTeam chief executive Patrick Roux believes alliances are proving their worth to members, providing ways to accelerate co-operation among partners and to develop seamless travel options for customers.
Global alliances had appeared to fall out of fashion in the middle of the last decade, as the focus of many carriers seemed to shift towards establishing market-focused joint ventures and equity partnerships.
That narrative was given more weight as carriers like Aer Lingus, China Southern Airlines and LATAM Airlines dropped out of the global alliances, while there was little activity in directly replacing or adding to alliance ranks.
However, alliances, having invested in technology which helped facilitate seamless travel solutions among their members, have found a renewed vigour, and in SkyTeam’s case with the arrival of Virgin Atlantic in March this year, its first all-new member in nearly a decade.
Speaking to FlightGlobal during a November interview in London, Roux says: ”You remember a few years ago [people] were even questioning the future of alliances, saying the ultimate model is JVs, is equity partnerships. Why do we need an alliance?
“We believe that we have shown the power of alliances,” he says, pointing to new tools and initiatives SkyTeam has rolled out in recent years – notably during the pandemic.
“We see that to create big, transcontinental equity-partnership groups, it’s complicated. And JVs are nice, but it’s also not easy to plug in a new airline individually.
“We want to work with our members towards new models of co-operation that could allow some hybrid models within JVs, tactical partnerships. You can still do a lot even without anti-trust immunity,” he says.
“It’s really about tools for the members, it’s about new ways of co-operation.”
Roux has plenty of insight into what airlines are looking for from global alliances having served as Air France senior vice-president alliances before taking the helm of SkyTeam just over a year ago.
“The idea is that whatever we do is for the members,” he says. “We should be in sync with the members. When they have difficulties, we should take care of that. So now again they are entering quite a tough [economic] period, we are managing very carefully our budget to be in sync. But keeping the ambition.”
His first task on taking the helm of the alliance a year ago was to develop a five-point strategy for SkyTeam. “We work in full co-operation with our members. We call it co-creation and co-ownership,” he explains. ”So we build some transformation projects and for each of them we have one of the airlines as executive sponsor for that.
We are not in a hunting mindset, but people are knocking at our door
”After more than one year, we are in the phase of taking off. I changed the organisation to be totally in line with the five-year plan and the priorities. It’s about getting the basics right and building foundations.
”One foundation is digital and IT; to create seamless solutions for customers so they can check-in on multi-airlines, and track their bags when they are not in their home carrier, see if their flight is on time.”
He cites for example development of technology to enable the app of the alliance’s most recent recruit, Virgin Atlantic, to connect with the SkyTeam network. ”Because we have created a digital hub, once an airline is connected to this hub, it is connected to all other airlines that are connected,” he says. ”The fact that we do that for the airlines is an accelerator on the cost-cutting effort.”
Much of the focus has been on developing a seamless travel experience for customers travelling across member carriers.
”It started with loyalty and network extensions, that was the first dimension of seamlessness,” says Roux. ”Now seamlessness is on the digital tools, which is a natural extension of that. And the ambition is to have it a little bit wider than the airline world.”
That could include, for example, train operators. He notes that a passenger flying to Paris via a SkyTeam carrier could later be travelling by rail in Europe on the same trip a few days later. “It’s a work in progress… but that is one of the examples of extended scope and reach of what SkyTeam can do as far as customers are concerned,” he says.
Another key foundation area is sustainability. That has seen SkyTeam complete the second running of its sustainable flight challenge. “It’s a friendly competition among all members to find new ideas and to share these ideas among members,” he says. ”What we want to do now after two years is to build on the success and to turn it into adoption. That there were a lot of new ideas tested, we want to turn that into processes and products.”
SkyTeam members also this year adopted 12 sustainability standards. “It is not only CO2 reduction, it’s all dimensions of sustainability,” says Roux. “We want to turn those standards into commitments for our customers. The purpose was to share best practice, but now we want to turn that into a real customer proposition.”
SKYTEAM DEPARTURES AND ARRIVALS
A further sign of the sustained appeal of alliances was Virgin joning SkyTeam earlier this year. The UK carrier has long been a partner with shareholder Delta Air Lines, before later joining another SkyTeam partner Air France-KLM in a wider transatlantic joint venture.
But it was not until this year that it tightened links with full alliance membership, in part reflecting the greater significance of network connectivity at Heathrow after focusing its London operations on the hub since the pandemic.
|Source: FlightGlobal * membership suspended, ** succeeded Alitalia
|Delta Air Lines
|Middle East Airlines
Virgin marked SkyTeam’s first all-new member since Garuda Indonesia joined the grouping in 2014 – though Alitalia successor carrier ITA Airways is another recent addition, it represents continuity having followed its predecessor into SkyTeam.
However, more membership changes are on the cards – both in and out – if planned consolidation moves take hold.
Arrivals are set to include Star Alliance carriers Asiana and SAS. SkyTeam member Korean Air is in the process of merging with compatriot carrier Asiana under a deal first announced three years ago, while more recently Air France-KLM announced SAS is to join SkyTeam after it agreed to take a near 20% stake as part of the Scandinavian carrier’s financial restructuring.
Notably, those deals are yet complete amid seemingly heightened regulatory scrutiny in Europe.
Roux notes that in the meantime Air Europa remains “a very active” member of SkyTeam. “If their equity operation goes through, it will be a different story. The same for ITA and also for SAS.
”But it shows also that things are changing. That airlines that were a little bit isolated want to join an alliance. I cannot say more, but there will be more,” he hints. ”We are not in a hunting mindset, but people are knocking at our door.
“If you create competitive advantage in an alliance, people will be interested in joining an alliance.”
”We don’t want to be the biggest alliance. We want to be the more integrated one, the one that is creating the most benefits for the members, and we are today the alliance that contains the most number of JVs, for instance. That is a solid base to build on.”
He adds: ”We also have the opportunity to connect some airlines with our technology without them being full members of SkyTeam. It was what we did with WestJet, what we are doing with LATAM, what we did in the past with Virgin before they joined. So it’s a way to create customer benefits when a SkyTeam airline has a strong partnership in the region without entering a full discussion about membership.”