Will global airline service eventually be decided in a few boardrooms?

Skift Take

The trends are clear as consolidation takes hold in the U.S. and global alliances become all-powerful. Fewer, more stable airlines, maybe, but it's not necessarily advantageous for passengers trying to get from here to there with a reasonable fare.

-Dennis Schaal

by Dennis Schaal, Skift

Sep 04, 2012 7:24 am

If you think that airline consolidation is increasingly placing decisions about routes and schedules at your local airport into fewer hands, then get ready for what’s in store.

“In the next decade, air service planning programs will be influenced, if not completely decided, on global strategic imperatives, not necessarily local needs,” states Boyd Group International, an aviation consulting and forecasting company.

In other words, it would be the Star Alliance, OneWorld and SkyTeam calling the shots.

Global, not local

“… It will be connectivity to global alliances that will be the main determinant of economic growth,” Boyd Group states.

Air Canada, a Star Alliance member. Photo by BriYYZ.

In such a scenario, regional service can easily fall victim to the demands of the global alliances.

Boyd Group got into crystal ball mode, speculating about the future of aviation in 2017, as a pitch to attend its International Aviation Forecast Summit September 16-18 in Dallas.

It may be a prettier picture for airlines, but it gets a little grimy for passengers.

“Air travel demand will no longer be the caboose on the economic growth train,” Boyd states. “Increases in GDP and increases in air travel will no longer track together. By 2017, annual increases of 2% or less will be the norm. Airline economics, airline consolidation, and other factors have resulted in the need to grow revenue versus costs, not chase more passengers.”

Not chasing passengers

And, an upcoming forecast from Boyd Group, on 2012 trends already shows that the passenger chase is easing up to get airlines into the black.

Boyd Group’s upcoming Airports: USA report, previewed by Air Transport World, forecasts that during the second half of 2012, U.S. airlines will offer 7 million fewer seats and almost 3% fewer departures than they did during the second half of 2011.

That occurs as U.S. airlines are cutting capacity to cope with higher fuel costs, ATW notes.

That means your next flight will probably be more crowded, and more profitable for the airline.

Tags: alliances, loyalty

Henry Harteveldt

This is not new news. We’re already seeing airlines make decisions in this manner.

Lufthansa recently added daily A380 flights between its Frankfurt hub and the Houston-Intercontinental hub of Star Alliance partner United. Qantas Airways launched flights between Sydney and the DFW hub of its oneworld partner, American. To increase feed from the western US, Delta Air Lines added nonstops between its Salt Lake City hub and Paris-CDG, home of SkyTeam partner Air France. these decisions aren’t made in vacuums.
Joint ventures and joint business agreements, which provide anti-trust immunity and allow airlines to pool revenues and operating expenses, are increasingly common. Airline route decision-making is already being done at the global level.
http://www.facebook.com/profile.php?id=707976432 Dennis Schaal

Henry: I think the question is: how much will this trend, which you document, accelerate over the next few years. Boyd Group’s prognostication is the pace will really quicken.
http://twitter.com/evankonwiser Evan Konwiser

Poor timing on Boyd’s part, as the QF/EK announcement this week proves this at least partly wrong. Turns out that while global strategic imperatives do and will continue to play a major role in decisions, it’s not the 3 big alliances who hold the cards — it’s the big member airlines who can still threaten to leave or build relationships outside.

So while connectivity remains important, non-alliance airlines (especially the gulf carriers) will play spoiler to the alliance oligopoly and keep everyone on their toes. QF certainly showed a little muscle this week that could spell the beginning of the end for OneWorld.

Bad timing for this article, as the first big chink in the alliance armor has now been made.