Business of Loyalty: Oneworld Alliance Has a New Hole in Its European Network

It’s been in the cards for some time now, but last week, Air Berlin finally threw in the towel and filed for bankruptcy as its last financial lifeline, investor Etihad pulled further funding. The move came suddenly August 15 in contrast to earlier reports that Etihad had agreed to an additional 18 months of funding in May.

Air Berlin never became widely popular as an international airline due to a litany of issues, and its shortcomings made it largely unprofitable. And though it will be missed as an airline if operations cease (the carrier is still running through the summer on a loan from Lufthansa), the biggest gap that it may leave could be in the Oneworld alliance, the network of partner carriers to which Air Berlin subscribes.

Among other partners, the Oneworld alliance includes American Airlines, British Airways, Cathay Pacific, Iberia, and Qantas, giving Air Berlin and its customers reach across much of the world. Just as importantly though, Air Berlin gave its partners deep access into central Europe. That reach was particularly important to carriers like American Airlines, which could operate international flights into Germany and then quickly offer connections on Air Berlin throughout the region.

By contrast, as partners, British Airways and Iberia approach central Europe from corners of the continent that make it harder for a North American traveler to cleanly connect to destinations like Budapest or Istanbul.

Air Berlin was also the closest thing to a low-cost carrier that Oneworld had. The airline frequently offered low-cost flights from the United States into Europe, giving American customers a new channel to get into Europe while still earning miles and elite status.

As Air Berlin begins its sunset, many speculate that Cologne-based Lufthansa may step in and acquire the airline’s assets and routes — after all, it’s already leasing a handful of the smaller carrier’s aircraft. If that transition happens, though, Air Berlin’s network will effectively be absorbed into Lufthansa’s, expanding the reach of the rival Star Alliance network.

That network, in stark comparison to Oneworld, is currently well-positioned throughout central Europe. Austrian, Brussels, Croatia, LOT Polish, Lufthansa and Swiss all contribute to the Star Alliance, while several other carriers at the edge of the region also operate flights throughout continental Europe.

Skyteam, the third airline alliance and the second largest in terms of scheduled traffic, also can’t compete with Star’s reach, with only Air France/KLM, Alitalia and Czech in the region.

Losing Air Berlin from Oneworld to Star Alliance may thus end up increasing the stranglehold that Lufthansa and its partners have on the region. And by extension, U.S. travelers who fly on United, the U.S. Star Alliance member, will get better reach into continental Europe.

Alliance concerns, of course, are secondary to the survival of Air Berlin’s assets and employees. But if the Lufthansa takeover actually happens, those flying within the Star Alliance may have a much wider network to look forward to.

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